[WSBAPT] Nonprobate Transfer of LLC Interest in an Operating Agreement

[Eric Reutter]

Hi all,

Fairly quick question here regarding transfer of an LLC interest:

*If an LLC Operating Agreement has appropriate language designating a
transfer of the interest to another party, will that language effectuate a
nonprobate transfer of the LLC interest? If so, what statute or case law in
Washington do we rely on for the validity of this transfer?*

For example, assume an individual is a sole member of an LLC and had a
provision similar to the following:

*Sole Member designates* the following transfer-on-death beneficiaries to
acquire, upon Sole Member’s death, Sole Member’s entire Interest existing
at the time of Sole Member’s death: [John Doe of Bellingham, WA]

Although I have found supporting authority for this nonprobate transfer
language in other states and in national publications, I have not found a
clear Washington statute or case law that directly addresses this. For
example, the Uniform Probate Code, Section 6-101 typically authorizes such
a disposition, but I do not believe that Washington directly adopted
Section 6-101. Also, the Florida case of Blechmen v. Estate of Blechmen
clarified this nonprobate transfer issue nicely in Florida, but I have not
found a similar Washington case.

I also found a national law article ("Issues Arising upon the Death of the
Sole Member of a Single-Member LLC" from the Marquette Law Review) that
explained that "No express provision of the Uniform LLC Acts or typical
state LLC statutes forbids the use of transfer-on-death provisions in an
LLC operating agreement. Consequently, as long as the member complies with
the jurisdiction’s transfer-on-death statute, no barrier seemingly exists
to this technique."

I would be grateful for a quick citation to the statue or case law we rely
on in Washington for a nonprobate transfer of an LLC interest in an
Operating Agreement.

Best regards,

*Eric Reutter, J.D., LL.M.*
*Law Office of Theresa Nguyen, PLLC*
707 S Grady Way, Suite 600 | Renton, WA 98057
Ph. *425.998.7295 <(425)%20998-7295>* | Fax *425.420.2695
<(425)%20420-2695>*
*www.tnguyenlaw.com <http://www.tnguyenlaw.com/>* | *eric at tnguyenlaw.com
<theresa at tnguyenlaw.com> *

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