How do you transfer an LLC membership interest from an estate to an heir under North Carolina probate law?
Detailed Answer
When an LLC member dies, the decedent’s membership interest becomes part of the probate estate. The personal representative must collect, manage, and ultimately distribute that interest to the heir or beneficiary under the will or by intestate succession. North Carolina law treats an LLC membership interest as personal property that can pass through probate.
First, the personal representative obtains Letters Testamentary or Letters of Administration under N.C. Gen. Stat. § 28A-6-1. With authority in hand, the representative identifies and values the decedent’s interest in the LLC. Review the operating agreement for any restrictions on transfer, including buy-sell provisions or approval requirements.
Under the North Carolina Revised Uniform Limited Liability Company Act, a member’s transferable interest includes the right to distributions and the right to assign those rights. See N.C. Gen. Stat. § 57D-3-01. The representative prepares an assignment of transferable interest under N.C. Gen. Stat. § 57D-3-02, assigning the decedent’s distribution rights to the heir. The assignment document must comply with the operating agreement’s terms.
If the operating agreement requires consent of the remaining members before an assignment becomes effective, the personal representative must seek that consent. Some agreements also require payment or a specified valuation method. Each requirement in the operating agreement controls, subject to NC law.
Once the assignment is approved, the personal representative files any required amendment or statement with the North Carolina Secretary of State. That filing corrects the LLC’s membership records. Finally, the representative distributes the assigned interest to the heir under the terms of the will or by intestacy rules in Chapter 29 of the North Carolina General Statutes.
Key Steps to Transfer an LLC Membership Interest
- Open probate and secure Letters Testamentary or Administration (N.C. Gen. Stat. § 28A-6-1).
- Identify and value the LLC interest as part of the probate estate.
- Review the LLC operating agreement for transfer restrictions or approval requirements.
- Prepare an assignment of transferable interest under N.C. Gen. Stat. § 57D-3-02 (§ 57D-3-01 and § 57D-3-02).
- Obtain required member consents per the operating agreement.
- File amendments or statements with the Secretary of State to update membership records.
- Distribute the assigned interest to the heir under the will or intestacy laws (Chapter 29).
Transferring an LLC membership interest through probate can involve complex valuation and approval steps. Pierce Law Group’s attorneys guide families through each phase to protect estate assets and respect the decedent’s wishes. Contact us today to get started.
Contact Pierce Law Group
Get clear, reliable advice on transferring an LLC interest in probate. Email us at intake@piercelaw.com or call (919) 341-7055.
