<HTML xmlns="http://www.w3.org/TR/REC-html40" xmlns:v =
"urn:schemas-microsoft-com:vml" xmlns:o =
"urn:schemas-microsoft-com:office:office" xmlns:w =
"urn:schemas-microsoft-com:office:word" xmlns:m =
"http://schemas.microsoft.com/office/2004/12/omml"><HEAD>
<META content="text/html; charset=utf-8" http-equiv=Content-Type>
<META name=Generator content="Microsoft Word 12 (filtered medium)">
<STYLE>v\:* {behavior:url(#default#VML);}
o\:* {behavior:url(#default#VML);}
w\:* {behavior:url(#default#VML);}
.shape {behavior:url(#default#VML);}
</STYLE>
<STYLE><!--
/* Font Definitions */
@font-face
{font-family:"Cambria Math";
panose-1:2 4 5 3 5 4 6 3 2 4;}
@font-face
{font-family:Calibri;
panose-1:2 15 5 2 2 2 4 3 2 4;}
@font-face
{font-family:Tahoma;
panose-1:2 11 6 4 3 5 4 4 2 4;}
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:12.0pt;
font-family:"Times New Roman","serif";}
a:link, span.MsoHyperlink
{mso-style-priority:99;
color:blue;
text-decoration:underline;}
a:visited, span.MsoHyperlinkFollowed
{mso-style-priority:99;
color:purple;
text-decoration:underline;}
span.EmailStyle18
{mso-style-type:personal-reply;
font-family:"Calibri","sans-serif";
color:#1F497D;}
.MsoChpDefault
{mso-style-type:export-only;
font-size:10.0pt;}
@page WordSection1
{size:8.5in 11.0in;
margin:1.0in 1.0in 1.0in 1.0in;}
div.WordSection1
{page:WordSection1;}
--></STYLE>
</HEAD>
<BODY lang=EN-US dir=ltr link=blue vLink=purple>
<DIV dir=ltr>
<DIV style="FONT-SIZE: 14pt; FONT-FAMILY: 'Calibri'; COLOR: #000000">
<DIV><FONT size=4>Thanks Rick</FONT></DIV>
<DIV><FONT size=4> Good point. Everyone is (currently) on very
friendly terms, so I will shoot them a consent form.</FONT></DIV>
<DIV><FONT size=4>I am going to try and talk them out of their suggested
plan. One member has economic issues.</FONT></DIV>
<DIV><FONT size=4></FONT> </DIV>
<DIV><FONT size=4>Josh</FONT></DIV>
<DIV> </DIV>
<DIV style="FONT-SIZE: 14pt; FONT-FAMILY: 'Calibri'; COLOR: #000000">
<DIV dir=ltr>
<DIV style="FONT-SIZE: 14pt; FONT-FAMILY: 'Calibri'; COLOR: #000000">
<DIV><STRONG><SPAN style="FONT-SIZE: 18pt; COLOR: #004080">Joshua F.
Grant</SPAN></STRONG><SPAN style="COLOR: #004080"><BR></SPAN><SPAN
style="COLOR: black"><IMG title=advocates
style="BORDER-TOP: 0px; BORDER-RIGHT: 0px; BACKGROUND-IMAGE: none; BORDER-BOTTOM: 0px; PADDING-TOP: 0px; PADDING-LEFT: 0px; BORDER-LEFT: 0px; DISPLAY: inline; PADDING-RIGHT: 0px"
border=0 alt=advocates src="cid:F605634822824AAFBDD104B8DBABCDCE@JoshPC"
width=207 height=43><BR></SPAN><SPAN style="FONT-SIZE: 11pt; COLOR: #004080">P.
O. Box 619<BR>Wilbur, WA 99185<BR>509 647 5578</SPAN><SPAN
style="COLOR: black"><o:p></o:p></SPAN></DIV></DIV></DIV></DIV>
<DIV
style='FONT-SIZE: small; TEXT-DECORATION: none; FONT-FAMILY: "Calibri"; FONT-WEIGHT: normal; COLOR: #000000; FONT-STYLE: normal; DISPLAY: inline'>
<DIV style="FONT: 10pt tahoma">
<DIV> </DIV>
<DIV style="BACKGROUND: #f5f5f5">
<DIV style="font-color: black"><B>From:</B> <A title=rhoss@hctc.com
href="mailto:rhoss@hctc.com">Rick Hoss</A> </DIV>
<DIV><B>Sent:</B> Thursday, December 13, 2018 3:55 PM</DIV>
<DIV><B>To:</B> <A title=wsbapt@lists.wsbarppt.com
href="mailto:wsbapt@lists.wsbarppt.com">'WSBA Probate & Trust Listserv'</A>
</DIV>
<DIV><B>Subject:</B> Re: [WSBAPT] LLC vs. Will contrary
provision</DIV></DIV></DIV>
<DIV> </DIV></DIV>
<DIV
style='FONT-SIZE: small; TEXT-DECORATION: none; FONT-FAMILY: "Calibri"; FONT-WEIGHT: normal; COLOR: #000000; FONT-STYLE: normal; DISPLAY: inline'>
<DIV class=WordSection1>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'>Josh,<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'>A
member personal property interest in LLC units is held subject to the LLC
operating agreement. Operating agreements usually restrict transfers of units,
and often have a “pick your member” provision that requires unanimous consent of
the remaining members to allow a new member. If the decedent leaves his
units of ownership to a person not allowed under the operating agreement, that
person becomes an economic interest holder, not entitled to vote, inspect
records and only allowed to distributions from the LLC when made. If there is an
economic interest holder it may be unlikely the LLC will make distributions.
<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'><o:p></o:p></SPAN> </P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'>Each
member should make other arrangements for their heirs since inheriting an
economic interest might have little value, like when the existing members may
not unanimously consent to having a new member. These provisions can be harsh
(like forcing heirs out of their long time homes) so sometimes you see
individual members, or the LLC, acquire term life insurance, or make other
arrangements, so the heirs receive something of value.<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'><o:p></o:p></SPAN> </P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'>Consider
that one or more of the members may have creditor issues – the unanimous consent
provision makes getting a charging order against the LLC unit holder debtor
difficult and renders the creditor an economic interest holder. So the key is in
the Operating Agreement terms, and these are usually drafted with care to
address specific client plans.<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'><o:p></o:p></SPAN> </P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'>I
like to include another provision in Operating Agreements that deals with one
member acquiring another’s units, calling for a Shotgun buyout. One member sets
the price, not knowing whether she will be a buyer or seller, and the other
member(s) decides whether to buy or sell at that price. This won’t work for your
client but is useful in many contexts.<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'><o:p></o:p></SPAN> </P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'>You
start by saying you have 5 clients – multiple clients with differing concerns
require a detailed consent to potential for conflict of interest. I try hard to
just work for one client when possible but take great care when not. And when
you have 5 sets of client heirs, 4 sets of whom will receive nothing and might
have to move from their homes, it is worth spending extra time and getting the
client consents carefully documented.<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'>Rick<o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #1f497d'><o:p></o:p></SPAN> </P>
<DIV>
<DIV
style="BORDER-TOP: #b5c4df 1pt solid; BORDER-RIGHT: medium none; BORDER-BOTTOM: medium none; PADDING-BOTTOM: 0in; PADDING-TOP: 3pt; PADDING-LEFT: 0in; BORDER-LEFT: medium none; PADDING-RIGHT: 0in">
<P class=MsoNormal><B><SPAN
style='FONT-SIZE: 10pt; FONT-FAMILY: "Tahoma","sans-serif"'>From:</SPAN></B><SPAN
style='FONT-SIZE: 10pt; FONT-FAMILY: "Tahoma","sans-serif"'>
wsbapt-bounces@lists.wsbarppt.com [mailto:wsbapt-bounces@lists.wsbarppt.com]
<B>On Behalf Of </B>Josh Grant<BR><B>Sent:</B> Thursday, December 13, 2018 2:18
PM<BR><B>To:</B> wsbar trust<BR><B>Subject:</B> [WSBAPT] LLC vs. Will contrary
provision<o:p></o:p></SPAN></P></DIV></DIV>
<P class=MsoNormal><o:p></o:p> </P>
<DIV>
<DIV>
<P class=MsoNormal><SPAN style="FONT-SIZE: 11pt; COLOR: black">I have
clients who have inherited real property. They are putting it into a
LLC. 4 out of 5 of the clients reside in different portions of the real
property. Regarding the termination upon death provision in the LLC; they
are wanting it to simply say: as each member dies, their units can not be sold
except for $1.00 to the LLC and the remaining members will equally own their
shares. When there is only one remaining member, that surviving member
will own 100%. I have never seen this with a LLC. It would also have
to preclude rights of members to sell their units to third parties.</SPAN><SPAN
style="COLOR: black"><o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 11pt; COLOR: black">I am wondering
what will happen if one of them makes out a will that says “I give my units in
LLC to my kids/”</SPAN><SPAN style="COLOR: black"><o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 11pt; COLOR: black">Anyone ever do
this?</SPAN><SPAN style="COLOR: black"><o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 11pt; COLOR: black">If so any form
language?</SPAN><SPAN style="COLOR: black"><o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 11pt; COLOR: black">Any other
problems besides the challenge regarding testamentary disposition?</SPAN><SPAN
style="COLOR: black"><o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN
style="FONT-SIZE: 11pt; COLOR: black">Thanks</SPAN><SPAN
style="COLOR: black"><o:p></o:p></SPAN></P>
<P class=MsoNormal><SPAN style="FONT-SIZE: 11pt; COLOR: black">Josh</SPAN><SPAN
style="COLOR: black"><o:p></o:p></SPAN></P>
<DIV>
<DIV>
<DIV>
<DIV>
<P class=MsoNormal><STRONG><SPAN
style='FONT-SIZE: 18pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #004080'>Joshua
F. Grant</SPAN></STRONG><SPAN
style='FONT-SIZE: 14pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #004080'><BR></SPAN><SPAN
style='FONT-SIZE: 14pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: black'><IMG
id=_x0000_i1025 alt=advocates src="cid:F50A12261F694C6AB0ADE01A5387EFF9@JoshPC"
width=207 height=43><BR></SPAN><SPAN
style='FONT-SIZE: 11pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: #004080'>P.
O. Box 619<BR>Wilbur, WA 99185<BR>509 647 5578</SPAN><SPAN
style='FONT-SIZE: 14pt; FONT-FAMILY: "Calibri","sans-serif"; COLOR: black'><o:p></o:p></SPAN></P></DIV></DIV></DIV></DIV></DIV></DIV></DIV>
<P>
<HR>
_______________________________________________<BR>WSBAPT mailing
list<BR>WSBAPT@lists.wsbarppt.com<BR>http://mailman.fsr.com/mailman/listinfo/wsbapt</DIV></DIV></DIV></BODY></HTML>