Detailed Answer
Short answer: usually no. Under Alabama law, an LLC’s operating agreement usually controls what happens to a member’s interest at death. A valid will cannot unilaterally override contractual restrictions or membership-transfer rules contained in the operating agreement. However, a will can sometimes pass the deceased member’s economic interest (money rights) to an heir while membership rights (voting/management) remain subject to the operating agreement.
How this works in practical terms
Two separate concepts matter:
- Economic interest (financial rights) — In many LLCs, a deceased member’s will can direct that the member’s share of distributions or profits pass to an heir. That is the member’s estate receiving the deceased’s economic rights.
- Membership (management and voting rights) — Operating agreements commonly restrict whether an heir becomes a continuing member. Many agreements require consent of other members, impose buy‑sell rules, or convert membership to only an economic interest retained by the estate.
Why a will often cannot override an operating agreement
An operating agreement is a contract among the LLC and its members. Under Alabama law, parties may contractually limit transferability of membership interests, require approval for new members, or specify buyout terms on death. A will cannot rewrite those contractual terms. If the operating agreement says the deceased member’s interest passes only as an economic interest to the estate (and the estate is not admitted as a member without consent), a devise in a will giving the membership to a son will be ineffective to create membership status unless the other members agree or the operating agreement’s procedures are followed.
Where Alabama law is relevant
Alabama’s statutes governing limited liability companies and probate establish the background rules, but they generally allow parties to set their own terms through the operating agreement. For specifics on statutory provisions and definitions, consult the Code of Alabama (Title governing Limited Liability Companies and the probate/wills provisions). The official Alabama Legislature website is a good starting point: https://www.legislature.state.al.us/.
Common operating agreement provisions that affect wills
- Transfer restrictions: prohibiting transfers without member consent.
- Buy‑sell/estate buyout clauses: requiring the LLC or surviving members to buy the deceased member’s interest at a specified price or formula.
- Admission rules: specifying that a personal representative or heir is not automatically admitted as a member.
- Right of first refusal: members get first chance to purchase the interest.
Example scenarios
These hypothetical examples show typical outcomes:
- Operating agreement requires unanimous consent to admit a new member. The will leaves your membership to your son. The son does not automatically become a member. He may receive distributions as the estate’s beneficiary but has no voting rights unless members consent.
- Operating agreement contains a buy‑sell at fair market value. Your will leaves the membership to your son. The LLC or other members buy the interest under the buy‑sell terms; the son receives sale proceeds but not membership rights.
- No operating agreement or silent on death. State default LLC rules apply; the estate may receive economic rights and, depending on the statute and the LLC’s organizing documents, the personal representative may be admitted temporarily or the members may need to act to admit the heir as a member.
Practical steps to achieve your goal
- Read the operating agreement and articles of organization. Look for death, transfer, buy‑sell, admission, and right‑of‑first‑refusal clauses. These control what a will can and cannot accomplish.
- Talk to the other members early. If you want your son to become a member, obtain written consent or negotiate an amendment before you die.
- Consider amending the operating agreement. Members can often amend the agreement to permit transfer on death to a specified person or class of persons.
- Use estate planning techniques. Alternatives include gifting interests during life, creating a trust that holds the membership interest (and can be admitted under agreed terms), or funding a buy‑sell with life insurance.
- Work with counsel. An attorney can draft a will and related business agreements to coordinate estate and business succession planning.
What to expect at probate
If you die leaving a will that devises your LLC interest to your son, the personal representative will present that will to probate. The estate will hold whatever transferable property the decedent owned subject to the LLC’s contractual limits. If admission as a member requires consent or a buyout, probate alone won’t force the LLC to admit the son as a member — the estate may instead receive buyout proceeds or ongoing distribution rights as set by the operating agreement.
When a will can be effective
A will can be effective to the extent the operating agreement allows for transfer on death or is silent. If the operating agreement explicitly permits devise of membership interests or does not restrict admission on death, a will that leaves the interest to your son can accomplish membership transfer. But always verify the current agreement language.
Helpful Hints
- Don’t assume a will automatically makes an heir a member. Check the operating agreement first.
- If you want your heir to manage the business, get member consent in writing or amend the operating agreement now.
- Consider putting the interest into a revocable trust that names the successor manager; a trust can avoid probate and may fit within the operating agreement’s transfer rules if members consent.
- Look for buy‑sell valuation methods and funding (life insurance) so your family can be paid out if required.
- Keep your operating agreement and estate documents together and up to date; inconsistent documents create disputes and delays at death.
- If your LLC is small or family‑run, a clear succession plan and written member approval now will prevent conflict later.
Where to get more information
Start by reading the operating agreement and the LLC’s articles of organization. For statutory background, consult the Code of Alabama sections that govern limited liability companies and probate at the Alabama Legislature site: https://www.legislature.state.al.us/. Because contract language and state law interact in complex ways, you may want to consult an attorney experienced in Alabama LLC and estate law to draft or amend documents to accomplish your goals.