A single member Limited Liability Company is dissolved when its sole member dies unless:
- The operating agreement allows for continuation of the LLC and sets forth a mechanism to install a successor to the deceased member; or
- The heirs, successors, and assigns of the deceased member’s interest elect to continue the LLC within 90 days of the sole member’s death.
Consequently, a single member LLC can survive the death of its owner. The first exception must be set forth in the Operating Agreement. The second exception is set forth in the California Revised Uniform Limited Liability Company Act (“CRULLCA”) Section 17707.01:
Regarding the second exception, an heir, successor, or assign of the member’s interest can become a substituted member without the permission or consent of the heirs, successors, or assigns or those administering the estate of the deceased member.
Under the CRULLCA, the heirs, successors, and assigns of the membership interest are to be determined by either the deceased member’s estate plan, or if no estate plan exists, by the law of intestate succession.
If the single member wants to ensure the LLC is dissolved, the operating agreement should contain a provision with the proper instructions. Otherwise, the LLC will be subject to the provisions of Section 17707.01 of the CRULLCA allowing for the
potential of unwanted heir(s) to operate the LLC.
If you are the only member of a single member LLC and wish to identify a successor to your interest or require the LLC to dissolve upon your death, contact the LLC’s business attorney to assure that the LLC’s Operating Agreement conforms to your wishes.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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