Real Estate Articles

Death of an LLC Member | By: Dona Myers

Article courtesy of First American Title Underwriting Counsel: Steven Zablocki

Limited Liability Companies (LLC) are organizations authorized under Wis. Stat. §183 governed by their operating agreements. Upon the death of a member, unless the operating agreement provides otherwise, the member is disassociated from the LLC.(1) Disassociation means the person ceases to be a member of the limited liability company. (2) This brings up a quandary.

On the one hand, if the operating agreement provides for the death of a member, things are clear. There may be an orderly succession and we can follow the operating agreement. What if it does not? There could be a problem with the authority of the signing party. LLC operating agreements may rely on a majority of members or a certain percentage of ownership to approve a sale. There may also be claims by the heirs of the disassociated member.

In those instances, it may warrant a call to your title company to review the impact of the death of an LLC member and how the interest affects the LLC's decision-making ability. It may be necessary to get additional documentation or further consent.

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