Planning for Your LLC After Death

by | Nov 18, 2022

What happens to your LLC when you die?

An LLC (Limited Liability Company ) can be an important asset protection and estate planning tool.  But what happens to the LLC after your death?

A Limited Liability Company (LLC) is a simple and adaptable business structure allows for limited liability protection and pass-through taxation.  As with corporations, an LLC exists as a separate entity from its members.  But it is important to remember that the death of an LLC member is treated quite differently than the death of a corporate shareholder.

Because LLCs provide the right to choose its own members, the decedent member is ‘dissociated’ from the LLC.  The decedent’s estate and heirs become assignees of the decedent’s interest.  Normally an assignee of an LLC interest is prohibited from participating in the LLC’s management unless the operating agreement or articles of organization explicitly state otherwise. Generally, assignees are only entitled to receive distributions of profits or income if the remaining LLC members choose to make them.

Without specific provisions in the operating agreement providing for a liquidating distribution upon death, the LLC member’s estate holds an illiquid asset of questionable value.  Consequently, in the absence of adequate estate planning, significant problems can arise upon the death of the LLC member.  Let us review your LLC’s operating agreement to make sure the LLC will not cause problems for your heirs in the future.

What to Do Next

Succession planning for an LLC is imperative in determining the fate of a membership interest.  The issues resulting from an inadequate preparation can be avoided through careful estate planning and LLC arrangements. The Law Offices of Geoff Wiggs has assisted a variety of business owners with maintenance and succession planning for their LLCs to prevent any future burden to family members and friends.

Contact us today if you are ready to begin taking the steps to protect your Limited Liability Company membership interest.

Estate Planning for Digital Assets

When we think of estate plans, we typically focus on those belongings we think of as having monetary value.  Normally we consider both your ‘real property’ (land, homes, buildings) and ‘personal property’ or ‘tangible’ (‘touchable’) assets such as jewelry, artwork,...

Including Digital Assets in Your Estate Plan

Because of the shear volume of your online and digital assets, it might take some time to generate a complete inventory, but it is worth the effort.  In the event of your death or incapacity, either your estate planning attorney or another trusted person should be...

Next Steps for Digital Asset Estate Planning

Next Steps for Your Digital Assets Talk to your estate planning attorney about your digital assets and successors.  Have a conversation with those persons you are considering appointing as successors about their ability and willingness to handle your digital assets. ...

What Are Digital Assets?

Digital Assets: What Are They? Think about your family photos and videos.  In the past we all had shelves of video tapes and photo albums full of our most precious memories.  Now, instead of photo albums, videotapes, and DVDs, most of our family photos and videos are...

Estate Planning – The Critical Documents

What are the most critical documents to have drafted when developing an estate plan? When you visit your attorney to create an estate plan it’s a good time think about all of the ‘loose ends’ that you can wrap up and include. You attorney should, at a minimum, offer...

Love Stinks! – Romance Scam Recovery

Romance scam recovery can seem impossible – you’ve placed your trust in a someone and they have taken everything: your money, your property, and, most importantly, your trust and confidence. Romance scams are an increasingly popular scheme with con-artists. Our office...

Estate Planning Goals

The Law Offices of Geoff Wiggs is proud to announce the firm has entered into an agreement to assume the practice and take custody of the client files of Attorney Robert Boland. Robert Boland has been in active practice on the San Francisco Peninsula for more than 34...

Geoff Wiggs