Short answer

When the sole member of a single-member South Dakota LLC dies, the decedent’s membership interest is part of the decedent’s probate estate. The interest passes to whoever inherits under the decedent’s will or by intestacy rules, subject to the LLC’s operating agreement and South Dakota law. The personal representative (executor) must identify the interest, follow any transfer restrictions in the operating agreement, gather required documents (like a certified death certificate and letters testamentary), notify the LLC, and either transfer the economic interest to the heir or seek admission of the heir as a full member if allowed. If transfer or admission is prohibited, the personal representative may need to wind up the LLC, sell the interest with any required consents, or seek court guidance.

Detailed answer — step-by-step guide under South Dakota law

1. Confirm that the membership interest is part of the probate estate

A membership interest in an LLC is generally personal property included in the decedent’s estate. The personal representative appointed in probate has authority to manage and transfer estate property, including membership interests, subject to the operating agreement and applicable statutes. For general South Dakota statutes on probate and fiduciary authority, see the South Dakota Codified Laws for probate (Title 29A) at sdlegislature.gov/Statutes/Title/29A.

2. Review the LLC’s governing documents

Find and read the LLC’s Articles of Organization and Operating Agreement. These documents often:

• Describe whether a membership interest is transferable on death.
• Require consent of remaining members to admit a transferee as a member.
• Provide buyout procedures or valuation methods.
• Specify who can manage the LLC if the only member dies.

If the operating agreement is silent, state law will supply default rules for transfers, admission of transferees, and winding up.

3. Determine whether the heir becomes a member or only an economic transferee

Two outcomes are common:

• Economic transferee only: Many LLC acts and operating agreements treat an heir or beneficiary as a transferee who receives distributions and financial rights but not management or voting rights unless existing members (or the operating agreement) admit the transferee as a member.
• Full member admission: The heir can be admitted as a full member if the operating agreement or remaining members (if any) approve admission. In a single-member LLC, there are no other members to approve, so the operating agreement will be especially important.

If no admission occurs, the personal representative can act on behalf of the estate to receive distributions and dispose of the interest during probate or estate administration.

4. Gather documentation the LLC will require

Typical documents the LLC’s manager or records custodian will request:

• Certified copy of the death certificate.
• Letters testamentary or letters of administration (proof of the personal representative’s authority).
• Copy of the will (if applicable).
• Information about the proposed transferee (heir/beneficiary).

5. Follow the transfer or sale procedures

Common procedural options:

1. If the operating agreement allows admission, the heir can be admitted as a member following the stated procedure (often a written consent or membership amendment).
2. If admission is restricted, the estate may sell the economic interest (with any required consents) to a permitted transferee or to the LLC itself under buyout terms in the operating agreement.
3. If neither sale nor admission is available, the personal representative may need to petition the probate court for instructions or for authority to sell the interest on behalf of the estate.

6. Update LLC records and tax reporting

After transfer or admission:

• Record the transfer in the LLC’s membership ledger and update the member list and capitalization schedule.
• Update any tax information (e.g., provide K-1s to the heir or estate; consult a tax professional about filing requirements and basis adjustments).

7. Consider winding up if necessary

If the single member has died and the LLC has no mechanism to admit a successor, the personal representative or heirs may choose to wind up the LLC, sell the business or its assets, and distribute proceeds through probate. Operating agreements often include wind-up procedures. If the parties disagree or the situation is unique, a probate court may be asked to appoint a representative to sell or wind up the business.

8. When to get court involvement

Consider asking the probate court for directions if:

• There is a dispute among heirs or between heirs and the LLC about admission or sale.
• The operating agreement is unclear or silent and the parties cannot agree on handling the interest.
• The LLC refuses to recognize the estate’s representative despite proper documentation.

Relevant South Dakota resources

For general business-formation materials (forms and filing guidance) see the South Dakota Secretary of State business services: sdsos.gov/business-services. For South Dakota statutory provisions that may govern LLCs and probate matters, consult the South Dakota Codified Laws on the state legislature website: sdlegislature.gov — Title 47 (Businesses & Corporations) and sdlegislature.gov — Title 29A (Probate/Estates).

Helpful hints — practical checklist for executors and heirs

• Locate the LLC Operating Agreement and Articles of Organization immediately. These will drive what you can do.
• Obtain certified copies of the death certificate and letters testamentary/administration from the probate court before approaching the LLC.
• Do not assume an heir automatically becomes a manager or has voting rights — check the operating agreement and state law.
• If you need to sell the membership interest, document compliance with any right-of-first-refusal or buyout procedures in the operating agreement.
• Keep clear records of all communications with the LLC and transfers made on behalf of the estate.
• Work with a South Dakota probate or business attorney when the operating agreement is unclear, there are creditor claims, multiple heirs disagree, or a sale of the business is contemplated.
• Consult a tax professional early. Transfers at death can have tax consequences for the estate and the recipient(s).
• If the LLC is the primary asset of the estate and the business must continue operating, consider short-term management arrangements (e.g., hiring a manager) while probate proceeds.