When the member of an LLC voluntarily leaves the business, the parties involved have time to discuss the terms of the withdrawal and the company’s subsequent steps. The unexpected death of a member results in a complex scenario, especially considering the interests of heirs and family members.
What Happens with a Decedent’s Interest Share in a Florida LLC? – The Fundamentals
Chapter 605 of the Florida Statutes encompasses the state’s Revised Limited Liability Company Act. Florida Statutes 605.0602 (7)(a) specifies that an LLC’s member is dissociated from the entity upon death.
While the deceased member loses ownership interest, he or she continues to retain a financial interest in the company. Any assets held solely in the decedent’s name at the time of death must go through probate before distribution.
If a person dies owning an interest share in a Florida LLC titled in his or her name only, it is considered an asset subject to probate.
Single-Member LLC vs. Multi-Member LLC – What Happens After a Member’s Death in Florida?
Whether an LLC has only one or multiple members, the key aspect to determining the entity’s outcome after a member’s death is the terms written in the operating agreement. Even though it is not mandatory, an operating agreement is fundamental to outline the LLC’s:
- Financial decisions
- Functional management
- Internal regulations and provisions
When the sole member of a single-member LLC dies, there is no remaining party to take control of the company. Unless the operating agreement states otherwise, Florida law allows the member’s estate to elect a replacement member within 90 days.
Depending on the nature of the activities developed by the decedent’s sole-member company, it may result in uncertainty if no one is prepared, available, or willing to assume the LLC’s ownership.
If the estate does not elect a person to replace the decedent, the entity will go through dissolution and will not be re-established.
In a multi-member LLC, there is at least one remaining member to take control of the deceased member’s share of interest. Unless the operating agreement features specific language for probate avoidance, the decedent’s interest in the LLC must be transferred to his or her estate.
During probate, a Florida court will supervise the distribution of the deceased member’s estate according to the terms written in his or her last will. If the decedent died without a will, the estate must be distributed through the state laws of intestacy.
LLC Operating Agreement vs. Last Will in Florida – Key Elements
If you own an interest share of a Florida LLC, you must draft a solid operating agreement and a proper last will. With the help of a well-versed attorney, you can include language to avoid probate and direct the transfer of your interests in the entity outside of the court.
A last will is fundamental to avoid intestacy, which determines the distribution of the decedent’s assets based on a statutory order of preference. Hence, it may result in a distribution that will not meet the decedent’s wishes.
Waste no Time with Uncertainty – Immediately Contact Jurado & Associates, P.A.
A seasoned estate planning attorney from Jurado & Associates, P.A. is willing to help you today. Call us at (305) 921-0976 or email Romy@juradolawfirm.com to schedule a consultation.