If an LLC’s operating agreement says nothing about what happens to a member’s ownership on death, Alabama’s default rules and the member’s estate/will/intestacy generally control the economic portion of the interest (distributions and capital), but not necessarily the management or voting rights. In practice that often means the decedent’s heirs or estate receive the right to money and distributions, while control of the LLC (the right to participate in management or vote) typically requires the other members’ consent or follow whatever default membership rules Alabama law provides.

How ownership is treated under Alabama practice (two parts of an LLC interest)

Think of a membership interest as two linked but different things:

• Economic rights — the right to distributions of profits or capital. These commonly pass to the decedent’s estate or beneficiaries under a will or by intestacy laws.
• Management and voting rights — the right to participate in management and vote on company matters. Many state LLC laws and common operating agreements treat these as nontransferable by default; a transferee (the heir or estate) often becomes a “transferee” of economic rights only and does not become a full member with management powers unless the other members agree.

Alabama LLC practice follows these general concepts: absent an agreement that says otherwise, the deceased member’s economic interest normally passes according to the member’s estate plan or intestacy; whether the estate or heir becomes a member with governance rights depends on the operating agreement or member consent.

What happens step-by-step if the operating agreement is silent?

1. Locate estate documents: The member’s will or trust usually directs disposition of their personal property, which can include the economic value of an LLC interest.
2. Probate and administration: The person tasked with administering the estate (executor or personal representative) will identify the LLC interest and notify the LLC and other members as required.
3. Economic rights pass to estate/beneficiaries: The estate or beneficiaries typically receive distributions, proceeds, and the right to be paid out under the membership interest.
4. Management rights usually stay with the LLC unless members agree otherwise: The estate’s representative is often a non-member transferee who can receive money but lacks the right to vote or manage unless the LLC’s members consent to admit the transferee as a member.
5. Members may have buyout rights or restrictions: Even if the operating agreement is silent, the LLC’s governing statute or member consensus may authorize the company or remaining members to require a buyout, or the members may negotiate a purchase of the decedent’s interest. If no agreement exists, the estate may have to litigate to force admission as a member, or accept a negotiated buyout.

Why this matters to families and LLCs

If management control passes to someone the other members find unsuitable, the LLC’s business can suffer. Conversely, if the estate or heirs cannot obtain distributions or a fair buyout, family members may face unexpected delays or financial hardship. Clear advance planning avoids disputes and delay in probate.

Relevant Alabama law and where to look

Alabama’s statutes and rules about how LLC interests transfer and the rights of transferees are part of Alabama’s business organizations and probate law framework. For primary statutory text and to search specific code sections, use the Alabama Legislature website: https://www.legislature.state.al.us/. If you want specific statutory language, search that site for the Limited Liability Company Act (business organization statutes) and for probate/intestacy and will administration rules that govern how property passes at death.

Practical actions for LLC members and estates

Executor or surviving family members should:

• Notify the LLC and provide a copy of the death certificate and executor appointment.
• Review the LLC’s formation documents, any buy-sell or redemption provisions, and any state statute references.
• Determine whether the estate’s interest is a transferable economic interest only or whether the estate can (or wants to) be admitted as a member.
• Obtain valuation of the deceased member’s interest (often required for buyouts).
• Negotiate with the LLC or remaining members for a buyout, continued membership, or other settlement. Consider mediation if the parties disagree.
• Consult a probate attorney experienced with business entities about steps in probate and about tax consequences for the estate and LLC.

Common outcomes when the operating agreement is silent

• The estate receives distributions but does not become a member.
• The LLC or other members buy the decedent’s interest (often at a fair value determined by agreement or appraisal).
• The heir or estate is admitted as a member only if the other members consent.
• Disputes end up in probate court or business court if members cannot reach agreement.

Examples (hypothetical)

Example A — Member dies leaving a spouse and two children. The operating agreement says nothing about death. The spouse, as executor, receives distributions due to the decedent but cannot vote in manager elections. The remaining members negotiate a buyout and pay the estate the appraised value.

Example B — Member dies owning 50% of a member-managed LLC. The operating agreement is silent. The other 50% owner refuses to admit the heir as a member. The heir chooses to pursue a buyout or files a claim in probate/business court to enforce membership rights; most parties resolve this by buyout or settlement to avoid prolonged litigation.

Helpful hints

• Don’t assume a will automatically admits an heir as a full member of an LLC; membership admission often requires the consent of existing members.
• Include clear buy-sell and death provisions in the operating agreement: specify valuation method, funding (life insurance), and a timeline for the buyout.
• Use life insurance owned by the LLC or on members’ lives to fund buyouts and prevent estate liquidity problems.
• Keep member asset records and capital account statements current to speed probate and valuation.
• If you inherit an LLC interest, get counsel before acting as a manager or signing documents—acting as a de facto manager can create liability.
• Consult both a probate attorney and a business/LLC attorney in Alabama to coordinate estate and business issues.