How probate and LLC law work together in Utah

When the only member of a single‑member LLC dies, that membership interest is part of the decedent’s estate. Transfer of title to that personal property normally occurs through probate (or a valid small‑estate procedure) before anyone can rely on probate authority to act for the LLC interest. For practical guidance about opening probate or using summary procedures, see the Utah Courts probate resources: https://www.utcourts.gov/howto/probate/.

Utah’s laws governing LLCs are found in the Utah Code (Title 48). The state’s LLC provisions control questions about membership admission, transferees’ rights, and whether a transferee becomes a member or only an assignee of economic rights. See Utah Code, Title 48 (Business entities): https://le.utah.gov/xcode/Title48/.

Key legal principles (plain language)

• Membership interest = personal property. A deceased member’s ownership interest is part of the estate and transfers under probate or by operation of law (e.g., trust or beneficiary designation).
• Probate first. The estate representative (executor or administrator) typically must obtain authority from the probate court (letters testamentary or letters of administration) to act with respect to the decedent’s assets, including an LLC interest.
• Economic vs. managerial rights. Under the typical structure of modern LLC law, a person who receives a membership interest by inheritance may immediately receive economic rights (right to distributions) but may not automatically receive management or voting rights unless the remaining members (if any) or the LLC’s governing documents admit that person as a member.
• Single‑member wrinkle. In a single‑member LLC there are no other members whose consent to admit a transferee is needed. Still, the LLC’s operating agreement or articles may specify an admission procedure or conditions that must be met.

Step‑by‑step practical process

1. Locate key documents. Gather the decedent’s will, death certificate, the LLC’s articles of organization, operating agreement, membership certificates, bank records, and any buy‑sell or transfer agreements.
2. Open probate or use a small‑estate procedure. If a will exists, the executor will typically present it to the probate court to be appointed. If there is no will, an administrator will be appointed. For small estates, Utah provides simplified procedures; the Utah Courts site explains available forms and thresholds: https://www.utcourts.gov/howto/probate/.
3. Review the operating agreement and articles. These documents often contain (a) restrictions on transfer, (b) buyout or right‑of‑first‑refusal provisions, and (c) rules for admitting new members. If the agreement is silent, default Utah LLC law applies. See Utah Code, Title 48: https://le.utah.gov/xcode/Title48/.
4. Understand immediate rights of the heir. In many LLC statutes, including the statutory structure used in Utah, an assignee of a transferable interest generally gets economic rights (right to distributions) but not management or voting rights until admitted as a member. If the decedent was the sole member, practical admission of the heir is often straightforward, but you must document it according to the operating agreement.
5. Obtain probate authority to transfer the interest. The personal representative can use letters testamentary/administration to transfer the decedent’s property. The representative should prepare an assignment or transfer instrument and present court authority and the death certificate to the LLC to effect the transfer or to request admission of the heir as member.
6. Update LLC records and state filings. After admission or transfer, update the LLC’s internal records (membership ledger, amended operating agreement, meeting minutes). If the LLC’s public records must change (e.g., change of organizer or manager listed with the Division of Corporations), file the required form with the Utah Division of Corporations: https://corporations.utah.gov/.
7. Close estate and adjust tax and bank accounts. The estate representative should handle final tax returns, settle debts and distributions, and arrange for bank and account signatory changes. The LLC itself may need to update its bank authority if the decedent was an authorized signer.
8. If a buyer or minority members object, expect negotiation or litigation. If the operating agreement requires buyouts or if other parties contend the decedent’s interest should be purchased rather than admitted, you may need a negotiated buyout or court resolution.

Common scenarios — short examples

Scenario A (typical, simple): The decedent left the membership interest to their spouse in a valid will. The spouse is appointed executor and, after probate, signs the LLC’s admission paperwork and becomes the sole member. LLC records and the Division of Corporations filings are updated.

Scenario B (operating agreement restricts transfers): The operating agreement requires member consent or a buyout price before admitting a transferee. The heir receives economic rights from the estate but must follow the buyout/consent process to get full member rights. That may require negotiation or using the estate’s assets to purchase the interest.

Scenario C (no will and creditors exist): The interest passes by intestacy to heirs under Utah probate rules. Creditors of the estate may have claims that affect the estate’s ability to transfer property. The personal representative should consult probate counsel to protect estate and heir interests.

When you need a lawyer or other professionals

Get legal help if any of the following apply:

• Operating agreement or articles contain transfer restrictions or ambiguous language.
• Multiple heirs claim the interest or family disagreements arise.
• Creditors or IRS claims threaten the estate’s assets.
• You need help negotiating a buyout price or resolving admission disputes.

Also consult a tax professional about estate and income tax implications of inheriting an LLC interest.

Helpful Hints

• Immediately obtain several certified copies of the death certificate—LLCs, banks, and government agencies will ask for them.
• Locate the LLC’s operating agreement and articles first—these documents control transfer procedures more than default law.
• If the estate is small, check whether Utah’s small‑estate affidavit procedure can transfer the membership interest without full probate.
• Keep detailed records of all communications with the LLC and any signatures or admissions by the company.
• Update the LLC’s internal membership ledger and any written operating agreement amendments promptly after admission.
• Notify the Utah Division of Corporations of relevant changes when required: https://corporations.utah.gov/.
• Have the estate’s and the LLC’s tax advisors review the transfer to address basis, potential estate tax, and future income tax issues.