Detailed answer — what actually happens and the steps to take

This overview explains what typically happens when the sole member of a Texas single‑member LLC dies and someone inherits that membership interest. It assumes no unusual facts beyond the member dying owning a membership interest in a Texas LLC.

1. Ownership at death and the role of probate

If the decedent owned the membership interest in their individual name (not in a trust or another entity), that interest is part of the decedent’s probate estate. The membership interest itself is a transferable asset — but the rights that pass with a transfer are governed by the LLC’s governing documents and Texas law.

To move the interest out of the estate you usually need one of these paths:

• Probate administration: The personal representative (executor/administrator) is appointed by the probate court; the representative can transfer estate property according to the will or intestacy law.
• Non‑probate transfer: If the interest was owned in a revocable trust, had a beneficiary designation, or qualifies for a Texas small‑estate process or affidavit, the interest may pass without full probate. Whether those alternatives are available depends on the situation and documentation.

2. Check the LLC’s certificate of formation and operating agreement

The operating agreement (and any buy‑sell, membership certificate, or written membership transfer restriction) controls how membership interests transfer, whether a transferee gets full membership rights, and whether the LLC or other parties have the right to buy the interest on death.

Common provisions to look for:

• Transfer restrictions (e.g., prohibition on transfers or requirement that any transferee be admitted as a member by consent).
• Buy‑sell or redemption clauses (LLC or other members may have right/obligation to buy the decedent’s interest).
• Successor member provisions (named successor, admission requirements, or special rules when the sole member dies).
• Provisions about management continuity (who will manage the LLC if sole member dies).

3. Distinguish economic rights from membership/management rights

Under typical LLC law, a transferee of a membership interest may get the economic rights (right to distributions) but not automatically gain membership rights (voting or management) unless admitted as a member per the operating agreement or the LLC statute. That means an heir might receive the right to distributions but not the right to act as the member or manager without formal admission.

For Texas LLC rules generally applicable to membership rights and transfers, see the Texas Business Organizations Code (LLC provisions):
Texas Business Organizations Code, Chapter 101.

4. Practical transfer steps

1. Locate documents: certificate of formation, operating agreement, membership certificates, will or trust, and any buy‑sell agreement.
2. Open probate or obtain authority: If required, open probate and get Letters Testamentary or Letters of Administration appointing a personal representative. If the membership interest passes by trust or beneficiary designation, follow those documents instead.
3. Notify the LLC: Provide the LLC manager or registered agent with a certified death certificate and proof of your authority (letters or trust documents).
4. Follow the LLC’s transfer provisions: If the operating agreement allows transfer only with consent, obtain that consent. If the LLC has a buy‑out right, price and pay the buy‑out or follow procedures in the agreement.
5. Prepare transfer paperwork: Typical documents include an assignment of membership interest, an admission resolution (if admitting heir as member), and an amendment to the LLC’s membership ledger or member list.
6. Update records and accounts: Issue a new membership certificate (if used), update the LLC’s records, notify banks and the Franchise Tax/IRS as needed, and update any contracts or licenses in the LLC’s name.

5. What if the operating agreement is silent or there is no agreement?

If the LLC has no operating agreement or the agreement does not address transfers on death, Texas default rules and common practice fill gaps. The estate can usually transfer the decedent’s membership interest, but the transferee may be limited to receiving distributions until admitted as a member by the LLC’s remaining members or managers. In a single‑member LLC where the decedent was the only member, practical outcomes vary: the LLC could continue with the heir admitted as the sole member, the LLC could be wound up and its assets sold, or the LLC might buy the interest from the estate if there’s a buy‑out clause or the parties agree.

6. Filing with the Texas Secretary of State

Texas does not require a filing with the Secretary of State to record a change of members for every LLC. Certificates of formation generally do not list members. Still, you should update internal LLC records and ensure any public filings required by other agencies (tax filings, licensing boards, bank accounts) are handled. For Texas business filing and forms, see the Texas Secretary of State’s LLC resources: Texas Secretary of State — Business Filings.

7. Tax, liability, and business continuity considerations

• Federal and state tax consequences may follow a transfer; consult a tax advisor. The transfer may affect how the LLC is taxed (disregarded entity, partnership, or corporation) if membership changes.
• Creditors of the estate or the LLC may assert claims that affect distributions or transferability.
• Practical continuity: banks, customers, and vendors will want evidence of the authority to act for the LLC (letters, membership documentation, or membership admission documents).

8. If other members exist or there is a buy‑sell

Although your question concerns a single‑member LLC, if any other members or managers exist by agreement, they may have rights to approve transfers or to buy the interest. Buy‑sell agreements often set a valuation method and a timeline. Follow those contractual provisions carefully.

9. When to hire an attorney

While an uncomplicated transfer where the will plainly devises the interest and the LLC admits the heir may be handled without heavy legal help, consult a probate or business attorney if any of these are present:

• No operating agreement or conflicting documents
• Transfer restrictions or buy‑sell disputes
• Multiple potential heirs or contested probate
• Significant value, unpaid debts, or creditor claims
• Tax planning or changes in the LLC’s tax classification

Probate and business attorneys can prepare assignments, admission resolutions, amendments to the operating agreement, and ensure compliance with Texas statutes and local probate court rules.

Helpful Hints

• Start with the operating agreement. It controls most transfer questions.
• Get certified copies of the death certificate and letters appointing the personal representative — LLCs and banks will ask for them.
• If the decedent used a trust, transfers often happen faster and outside probate; locate trust documents early.
• Remember the difference: economic interest (distributions) versus membership/management rights (voting/manager duties).
• Do not use or change LLC bank accounts until you have formal authority — that can create claims by creditors or co‑owners.
• Keep clear written records of any transfer, consent, or buy‑out. Update the LLC’s ledger and membership certificate if used.
• Notify the IRS and Texas Comptroller if the transfer changes tax reporting or franchise tax liabilities.
• If the LLC operates licenses or permits, check whether those require a formal transfer or re‑application after a membership change.