Detailed answer — legal framework and step‑by‑step process

When someone dies owning a membership interest in a single‑member limited liability company (LLC) in Washington, that economic and ownership interest becomes part of the decedent’s probate estate (unless there was a valid nonprobate transfer). Moving that interest from the estate to an heir or other transferee usually requires coordinating probate authority, the LLC’s governing documents, and state and federal tax rules. The steps below explain the common legal and practical issues under Washington law and typical business practice.

1) Confirm authority and title through probate

Before transferring anything, the heir or transferee (or the personal representative/executor) must show authority to deal with the decedent’s assets. That usually means either:

• a probated will with letters testamentary, or
• letters of administration if the decedent died intestate.

Washington’s probate procedures are set out in Title 11 of the Revised Code of Washington (RCW). See RCW Title 11 for probate procedure: https://app.leg.wa.gov/rcw/default.aspx?cite=11.

2) Review the LLC’s organizing documents

Locate the LLC’s articles of organization and operating agreement. These documents commonly address what happens when a member dies, including:

• whether membership interests are transferable on death;
• whether a transferee can become a full member or only an assignee (economic interest) without consent of other members;

Washington’s LLC statutes provide the default rules if the operating agreement is silent. See the Washington Limited Liability Company Act: https://app.leg.wa.gov/rcw/default.aspx?cite=25.15.

3) Understand transferable rights vs. membership rights

Under common LLC law (and Washington’s LLC act), a deceased member’s transferee typically receives the economic rights (distribution and allocation of profits/losses) but does not automatically receive management or voting rights unless the other members admit them as a member. In a single‑member LLC, there are no other members to object, but the operating agreement may still require formal admission or specific procedures.

4) If the decedent was the sole member

When the decedent was the only member, practical issues arise:

• The personal representative must preserve and protect the LLC interest while administering the estate. That commonly includes operating the LLC to avoid loss and taking actions needed to maintain the business.
• If the will or intestacy law gives the membership interest to an heir, the personal representative will transfer the economic interest to that heir as part of estate distribution. Whether the heir becomes the new member depends on the operating agreement and any admission rules.
• If transfer will convert the entity from a disregarded single‑member LLC to a multi‑member LLC, that change has tax and administrative consequences (see below).

5) Follow the LLC’s admission/transfer rules and obtain required consents

If the operating agreement requires member consent to admit a transferee, obtain that consent (or follow the buy‑out procedure) before attempting to exercise management rights. If the agreement is silent, consult the Washington LLC act and consider obtaining a written resolution or amended operating agreement documenting the admitted member.

6) Use estate documents to complete the transfer

The transfer typically requires the personal representative to deliver an assignment document or an instrument of transfer together with a copy of the letters testamentary/administration, or other proof of authority. The LLC’s records should be updated (member ledger, operating agreement signature page, capital accounts) to reflect the new owner.

7) Update registrations, contracts, bank accounts, and insurance

Notify banks, vendors, clients, insurers, and the Secretary of State as appropriate. Washington does not require filing member changes with the Secretary of State for most LLCs, but you may need to file an amended annual report or update the company’s registered agent or organizers. Washington Secretary of State business resources: https://www.sos.wa.gov/corps/.

8) Tax consequences and EIN/tax classification changes

If the LLC was a single‑member LLC taxed as a disregarded entity, adding a second member (or transferring an interest to a new member) typically changes the federal tax classification to a partnership. That change may require obtaining a new Employer Identification Number (EIN) and beginning partnership tax filings. The IRS provides guidance for single‑member LLCs and partnerships: https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies and https://www.irs.gov/businesses/small-businesses-self-employed/partnerships. Consult a tax advisor before finalizing the transfer.

9) Practical checklist

1. Obtain letters testamentary or letters of administration from the probate court.
2. Locate the LLC operating agreement and articles of organization.
3. Confirm whether the interest transfers automatically or requires admission or consent.
4. Prepare and sign an assignment or transfer instrument and update the LLC’s records.
5. Obtain member consent or follow buy‑out procedures if required by the operating agreement.
6. Notify banks, insurers, vendors, and the Secretary of State if necessary.
7. Address federal and state tax implications (EIN, partnership tax returns, basis adjustments).
8. Consider getting legal and tax advice before making final decisions.

Where Washington law is particularly relevant

Washington’s LLC Act sets default rules about transferability and rights of transferees; probate law determines who has authority to transfer estate property during and after administration. See:

• Washington Limited Liability Company Act (RCW Title 25.15): https://app.leg.wa.gov/rcw/default.aspx?cite=25.15
• Washington probate and estate administration rules (RCW Title 11): https://app.leg.wa.gov/rcw/default.aspx?cite=11

Because operating agreements often override default statutory rules, closely review the LLC documents before relying on default rules.

Helpful hints

• Start by finding the operating agreement. It usually answers the most important transfer questions.
• Keep certified copies of probate letters with any transfer paperwork; many institutions will insist on them.
• If the LLC is still operating, preserve business continuity (pay taxes, keep insurance current, cover payroll) while you determine the permanent owner and structure.
• Be careful about immediately exercising management control without documented admission if the operating agreement requires consent.
• If the decedent’s interest passes to more than one heir, decide whether heirs will be co‑members or whether the LLC will redeem interests per the operating agreement.
• Consult a Washington probate attorney to confirm whether the personal representative has the power to transfer membership interests under the will or by court order.
• Talk with a CPA about basis, step‑up rules, and whether the transfer will change the entity’s federal tax status (and trigger a new EIN).
• Keep meticulous records of all communications and consent forms to protect against future disputes among heirs or third parties.