Detailed Answer

When a person who owned 100% of a Colorado limited liability company (a single-member LLC) dies, their economic and ownership interest in the LLC is a form of personal property that passes through the decedent’s estate. The practical process for moving that interest from the decedent to an heir or devisee depends on three sets of rules:

1. the Colorado Limited Liability Company Act and the LLC’s governing documents,
2. Colorado probate and estate administration rules, and
3. any contractual transfer restrictions in the operating agreement or articles of organization.

Below are the key legal and practical points you should know and the typical steps you will follow.

1. Check the LLC’s operating agreement and articles of organization

The operating agreement (or, if none exists, the statutory default rules) usually controls what happens to a member’s interest after death. Many operating agreements:

• require consent of the remaining members before an assignee becomes a member;
• create buy‑sell rights (the LLC or other members may have the right to buy the decedent’s interest at a specified price); and
• distinguish between a transferable economic interest (the right to distributions and allocations) and actual membership/management rights.

Under Colorado’s LLC law, a transferee of a member’s “transferable interest” generally receives economic rights but does not automatically obtain management or voting rights unless the LLC admits the transferee as a member. See the Colorado LLC statutes (Title 7) for the statutory framework: Colorado Revised Statutes (CRS), Title 7.

2. Identify whether probate or a nonprobate transfer applies

If the decedent left a valid will or died intestate (without a will), membership interests that are owned by the decedent may have to pass through probate before legal title passes to the beneficiary. The personal representative (executor/administrator) appointed in probate has authority to collect, value, and transfer estate assets under Colorado probate rules. See general probate resources and forms on the Colorado Judicial Branch website: Colorado Courts — Probate forms.

Some membership interests pass outside probate if the decedent used a valid transfer-on-death designation, joint ownership with right of survivorship (rare for LLC membership interests), or other nonprobate mechanisms. Whether a nonprobate device exists will affect the transfer route.

3. Probate administration and authority to transfer

If the interest is part of the probate estate, the personal representative will typically:

• obtain letters testamentary or letters of administration from the probate court,
• collect any estate records (certified death certificate, LLC docs, membership ledger),
• determine whether the operating agreement restricts transfers or requires member approval or an internal buyout, and
• obtain court approval if necessary to complete a transfer.

Colorado’s probate statutes and rules guide the representative’s powers. General statutory material for probate can be found at: Colorado Revised Statutes (CRS), Title 15 and the Colorado Judicial Branch probate pages: Probate forms and resources.

4. How the LLC typically treats an heir or devisee

Even after probate transfers the decedent’s ownership interest to an heir or beneficiary, that transferee may initially hold only the decedent’s economic/financial rights (an assignment of the transferable interest). Most state LLC laws treat an assignee differently from a full member: the assignee can receive distributions and tax allocations but cannot exercise management or voting rights without formal admission.

In a single-member LLC, there are no “remaining members” to consent, but the operating agreement or the LLC’s manager may still require a formal admission process. The estate or the transferee should follow the LLC’s internal procedures to obtain membership status (amend membership ledger, execute admission documents, or sign an amended operating agreement if required).

5. Practical transfer steps (typical checklist)

1. Assemble documents: certified death certificate, will, letters testamentary or administration, certified probate order (if any), LLC operating agreement, articles of organization, membership ledger, and the decedent’s membership certificate (if issued).
2. Review the operating agreement carefully for transfer restrictions, buyout rights, valuation methods, and admission procedures.
3. Value the interest: get a formal valuation if the operating agreement requires a buyout or if heirs disagree about value.
4. Follow probate or small‑estate procedures to transfer title. If the estate qualifies for Colorado’s small estate procedures or other simplified processes, use those (check local probate rules and statutes or court forms).
5. Notify the LLC: deliver certified death certificate and the probate appointment to the LLC and request the records be updated. Provide any required assignment or admission documents signed by the appropriate parties.
6. File any internal amendments: update the membership ledger, execute any required admission paperwork, and, if the LLC requires, amend the operating agreement or execute a buy‑sell settlement.
7. Address tax and administrative issues: obtain a new EIN if the entity’s tax status changes, notify banks and service providers, and consult a tax professional about basis, estate tax, and income tax consequences.

6. When disputes or restrictions block transfer

If the operating agreement imposes tight limits — for example, the LLC or other members have a mandatory buyout right or refuse to admit the heir as a member — options include negotiation, completing a buyout per the agreement, or seeking a probate court order to resolve a deadlock or interpret the operating agreement. If the estate representative suspects the LLC or other parties are acting improperly, the probate court can sometimes provide relief.

7. Recordkeeping and Secretary of State filings

Colorado does not require member names to be filed publicly in most LLC formation filings, so you will usually not need to file a public amendment to the Articles of Organization simply because membership changed. However, you should keep internal company records current and file any required periodic reports with the Colorado Secretary of State. For business filing guidance and specific forms, see the Colorado Secretary of State: Colorado Secretary of State – Business Services.

8. When to get legal and tax help

Because LLC operating agreements vary and probate processes can be complex, you should consult an attorney experienced in Colorado probate and business law if any of the following apply: the operating agreement is unclear or contains transfer restrictions; multiple heirs dispute rights or valuation; the LLC refuses to recognize the transferee; or you need court approval to effect a transfer. Also consult a CPA or tax attorney about estate, gift, and income tax consequences.

Statutory references and resources (for research):

• Colorado Revised Statutes, Title 7 (Corporations and Associations) — includes the state LLC provisions: https://leg.colorado.gov/publications/colorado-revised-statutes-crs.
• Colorado Revised Statutes, Title 15 (Probate, Trusts, and Fiduciary Relations) — probate statutes and administration rules: https://leg.colorado.gov/publications/colorado-revised-statutes-crs.
• Colorado Judicial Branch — probate forms and local court guidance: https://www.courts.state.co.us/Forms/Forms_List.cfm?Category=Probate.
• Colorado Secretary of State — business entity filing information: https://www.sos.state.co.us/biz/.

Important: The links above point to Colorado government resources where you can read the statutes and locate local probate court forms. Exact statute sections governing transfers of membership interests and admission of transferees are found in the Colorado LLC Act within Title 7; consult the statutes and an attorney for how those provisions apply to your facts.

Disclaimer: This article explains general legal principles under Colorado law and provides practical steps to consider. It is educational only and does not constitute legal advice. For advice specific to your situation, contact a licensed Colorado attorney experienced in probate and business/LLC law.

Helpful Hints

• Find the operating agreement first — it usually controls transfer rules and buyout mechanics.
• Get certified copies of the death certificate and the personal representative’s letters; most LLCs will require them to update records.
• If the operating agreement requires member consent for admission, document any consent in writing and update the membership ledger.
• Consider a professional business valuation if the estate or LLC must value the decedent’s interest for a buyout.
• Check whether a simplified “small estate” transfer procedure applies in your county to avoid full probate — local court websites or an attorney can confirm thresholds and forms.
• Keep careful records of distributions, tax allocations, and any payments to or from the estate to avoid later disputes.
• Notify the LLC’s bank, accountant, and service providers promptly to prevent operational or tax complications.
• Talk to both an estate attorney and a tax advisor early — probate, membership admission, and tax consequences often intersect.