[WSBAPT] Transferring LLC Units

[Jeff at bellanddavispllc.com]

This is all very interesting.  The problem I have is I did not do the
"older" member's estate plan.  They are married, most likely have and CPA,
so if older member dies first that person's Will would not be probated.
That member also has children who think the other member is a "gold digger."
I am trying to get copies of what EP documents they have to see what can be
done.  However, what happens if you sign an operating agreement like a Will?
How will that insure the transfer is made.  Would it not be better to do a
separate "Buy-Sell" for a nominal sum?

 

Jeff

 

W. Jeff Davis

BELL & DAVIS PLLC
P.O. Box 510

720 E. Washington Street, Suite 105
Sequim WA 98382
Phone: (360) 683.1129 
Fax: (360) 683.1258 
email: jeff at bellanddavispllc.com <mailto:jeff at bellanddavispllc.com> 
 <http://www.bellanddavispllc.com/> www.bellanddavispllc.com
 
The information contained in this e-mail message may be privileged,
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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com>
On Behalf Of Eric Nelsen
Sent: Thursday, July 7, 2022 3:31 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Transferring LLC Units

 

I'm against having such a provision in the LLC documents, and agree that it
would have to be executed with testamentary formalities in order to be
valid.

 

My analysis has been that an ownership interest in an LLC is an asset, just
like a stock share. In every other instance of a non-probate transfer of an
asset at death, there is an enabling statute that provides for survivorship:
bank accounts, transfer on death deeds, pay-on-death accounts, etc. There is
no enabling statute in the LLC rules that authorizes survivorship of an
ownership interest. Therefore, it would have to be a testamentary
disposition, and so must meet the formalities of a will.

 

At most, I have included in the LLC agreement a right of first refusal,
mandatory buy-back, or some other mechanism for the deceased individual's
share to be purchased or otherwise cashed out from their Estate. Those are
merely restrictions on transfer, and so aren't testamentary and would be
valid (assuming no violation of the common-law prohibition against
restraints on alienation).

 

Sincerely,

 

Eric

 

Eric C. Nelsen

Sayre Law Offices, PLLC

1417 31st Ave South

Seattle WA 98144-3909

206-625-0092

eric at sayrelawoffices.com <mailto:eric at sayrelawoffices.com> 

 

Covid-19 Update - All attorneys are working remotely during regular business
hours and are available via email and by phone. Videoconferencing also is
available. Signing of estate planning documents can be completed and will be
handled on a case-by-case basis. Please direct mail and deliveries to the
Seattle office.

 

From: wsbapt-bounces at lists.wsbarppt.com
<mailto:wsbapt-bounces at lists.wsbarppt.com>
<wsbapt-bounces at lists.wsbarppt.com
<mailto:wsbapt-bounces at lists.wsbarppt.com> > On Behalf Of
Jeff at bellanddavispllc.com <mailto:Jeff at bellanddavispllc.com> 
Sent: Thursday, July 7, 2022 2:33 PM
To: 'WSBA Probate & Trust Listserv' <wsbapt at lists.wsbarppt.com
<mailto:wsbapt at lists.wsbarppt.com> >
Subject: [WSBAPT] Transferring LLC Units

 

Listmates:

 

Two member LLC.  They are not related and each is married (to different
people).  They want a deceased member's Units to go to the surviving member.
I know it can be done with a Will.  But can members enter into an agreement,
or better yet, amend the operating agreement to say that a deceased member's
units go to the surviving member.  If you do it that way, must the agreement
be signed like a Will?

 

Your thoughts.

 

Jeff Davis

 

W. Jeff Davis

BELL & DAVIS PLLC
P.O. Box 510

720 E. Washington Street, Suite 105
Sequim WA 98382
Phone: (360) 683.1129 
Fax: (360) 683.1258 
email: jeff at bellanddavispllc.com <mailto:jeff at bellanddavispllc.com> 
 <http://www.bellanddavispllc.com/> www.bellanddavispllc.com
 
The information contained in this e-mail message may be privileged,
confidential, and protected from disclosure. If you are not the intended
recipient, any dissemination, distribution, or copying is strictly
prohibited. If you think that you have received this e-mail message in
error, please e-mail the sender at  <mailto:info at bellanddavispllc.com>
info at bellanddavispllc.com  or call 360.683.1129.

 

 

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