Connecticut — What Happens to My LLC Share if I Die?

Detailed Answer

Short answer: If your LLC operating agreement is silent about what happens to your ownership when you die, Connecticut’s default LLC rules and the LLC’s formation documents control. Typically, your economic interest (the right to distributions and allocation of profits/losses) will pass to your estate or heirs, but your heirs will not automatically become full members or gain management rights unless the remaining members agree or the LLC’s governing law/admission rules allow it. The company may treat the event as a member dissociation and may have buyout rights or steps required to admit a new member.

What Connecticut law says (overview)

Connecticut’s limited liability company statutes set default rules that apply when an LLC’s operating agreement does not say otherwise. Those statutes govern membership, transferability of membership interests, dissociation, and dissolution. You can read the state LLC statutes here: Connecticut Limited Liability Company statutes. For probate and estate administration issues, the Connecticut Probate Courts provide guidance at: Connecticut Probate Courts.

Key legal distinctions you should know

• Transferable (economic) interest vs. membership interest: Most states, including Connecticut under its LLC rules, separate an owner’s economic rights (money distributions, tax allocations) from membership rights (voting, management). Unless the operating agreement says otherwise, an heir usually receives the decedent’s economic interest but not automatic membership rights.
• Death typically causes dissociation: A member’s death is generally a dissociation event. That means the deceased stops being a member for management purposes, though the estate keeps the right to receive distributions and may have a buyout right.
• Admission of new members: The LLC agreement or statute usually requires existing members’ consent to admit a transferee as a full member. Without consent, the transferee is a non‑member transferee with economic rights only.
• Buyout or valuation provisions: If the operating agreement lacks direction, Connecticut law may provide default buyout or valuation procedures or the LLC members may negotiate one through the estate or heirs.

What typically happens step-by-step after a member dies

1. Notify the LLC and review the operating agreement and articles of organization to see if they state what happens on a member’s death.
2. The estate executor or administrator collects documents proving the executor’s authority (letters testamentary or administration) from Connecticut Probate Court.
3. The executor notifies the LLC of the transfer of the decedent’s economic interest to the estate or named beneficiaries and provides the probate authorization documents.
4. The LLC determines whether the heirs can be admitted as members or whether the estate is entitled only to distributions and a possible buyout. If the operating agreement is silent, members often vote to approve admission or to effect a buyout under default statutory rules or negotiated terms.
5. If the LLC chooses/needs to buy out the estate’s interest, the parties obtain a valuation and pay the estate for the decedent’s economic interest, or they agree on installment payments if permitted.
6. If members cannot agree on admission, buyout, or winding up, the dispute may lead to judicial relief or dissolution procedures under Connecticut law.

Practical examples (hypothetical)

Example A: Alice owned 30% of an LLC; her operating agreement is silent about death. When Alice dies, her will leaves 30% to her son. The son receives Alice’s economic interest through her estate but cannot vote or manage the LLC unless the other members approve his admission. The members negotiate a buyout and pay the estate for Alice’s economic interest.

Example B: Bob was a manager-member in a small two-person LLC. He dies without an agreement. The remaining member can refuse to admit Bob’s heir as a member, which could force the heir (or the estate) to demand a buyout or seek court intervention if a fair settlement cannot be reached.

When silence in the operating agreement causes problems

When an operating agreement is silent, confusion and disputes commonly arise about valuation, management control, and timing of payments. That uncertainty can threaten business continuity. Connecticut’s default rules will fill gaps, but they may not reflect the parties’ intentions or be favorable to heirs or remaining members.

What you should do now (recommended steps)

1. Locate and carefully read the LLC operating agreement and articles of organization.
2. If you’re an executor or heir, open a probate matter with the Connecticut Probate Court to obtain authority to act and to transfer property from the estate: Connecticut Probate Courts.
3. Notify the LLC in writing and provide the probate documents showing your authority.
4. Ask the LLC for any buyout formulas, valuation method, or membership-admission procedures. If none exist, propose a neutral valuation method (independent appraisal) and written settlement terms.
5. Consider whether the LLC should amend its operating agreement to clarify transfer and death provisions going forward to avoid future disputes.

Options to prevent problems before death

• Include clear buy-sell or transfer-on-death provisions in the operating agreement.
• Adopt appraisal and valuation procedures for buyouts.
• Allow or restrict admission of heirs as members explicitly.
• Use estate planning tools (wills, trusts, powers of appointment) that coordinate with the LLC agreement to control who receives economic and membership rights.

When to talk to an attorney

If you are an executor, heir, or a remaining member and the operating agreement is silent, consult a Connecticut attorney experienced in business and probate law. An attorney can:

• Interpret Connecticut LLC statutes that apply to your situation.
• Help obtain probate letters and communicate properly with the LLC.
• Negotiate buyouts or membership admission terms.
• Draft amendments to the operating agreement to protect future interests.

Relevant Connecticut resources

• Connecticut Limited Liability Company statutes (state statutory chapter): https://www.cga.ct.gov/current/pub/chap_613.htm
• Connecticut Probate Courts (for letters testamentary/administration): https://www.jud.ct.gov/probate/

Disclaimer: This article provides general information about Connecticut law and does not constitute legal advice. I am not a lawyer. For advice about a specific situation, consult a licensed Connecticut attorney.

Helpful Hints

• Always check the operating agreement first—many issues are resolved there.
• Keep an up-to-date estate plan that coordinates with business documents.
• If you inherit an economic interest only, ask for written confirmation of your rights from the LLC.
• Insist on an independent valuation if the buyout amount is unclear or disputed.
• Consider mediation to resolve disputes between heirs and remaining members before pursuing court action.
• Amend operating agreements proactively to include clear death and transfer provisions.
• Record communications and keep copies of probate papers when dealing with the LLC.