Short answer

If an LLC operating agreement does not say what happens to a member’s ownership when that member dies, Hawaii’s LLC law and general probate rules supply the default outcomes. Typically the deceased member’s economic interest (the right to distributions and share of profits/losses) passes to the estate or whoever inherits under the will or intestacy. Management rights and the formal status of “member” often do not automatically pass to the heir or devisee; admission as a member usually requires either the LLC’s governing rules or the consent of the remaining members. For the exact controlling provisions, see Hawaii’s LLC statutes (Chapter 428) and consult a Hawaii attorney or probate professional for your situation.

Detailed answer — what practically happens under Hawaii law

1. Two different things: economic interest vs. membership/management rights

When someone owns an LLC interest, the ownership typically contains two parts:

• Transferable (economic) interest: the right to receive distributions of money or other assets and allocations of tax items (profits and losses). This interest usually can pass to the member’s estate or beneficiaries on death.
• Membership and management rights: voting power, management authority, and other participatory rights. These rights are often nontransferable by default and require the LLC’s approval to pass to another person.

2. If the operating agreement is silent

When the operating agreement says nothing about death:

• The deceased member’s estate or beneficiaries will usually inherit the economic interest; they can collect distributions and receive tax consequences tied to that share.
• That transferee (estate or heir) typically does not automatically become a full member with voting/management rights unless the LLC’s default rules or the remaining members consent to admit them as a member.
• In multi-member LLCs, the remaining members often have the right to buy out the deceased member’s interest under default buyout or dissociation rules, or to block admission of an heir to preserve management control.

3. Practical steps after a member dies

1. Obtain a certified death certificate and the member’s operating agreement, certificate of formation, membership ledger, and any buy-sell agreements.
2. Determine whether the deceased left a will or whether intestate succession applies. The executor or personal representative will normally be the person to deal with the LLC interest on behalf of the estate.
3. Notify the LLC and review the LLC’s governing documents for any silent-but-related clauses (transfer restrictions, buy-sell procedures, valuation methods, or required consents).
4. If heirs want distributions, the personal representative may need a court-issued document (letters testamentary or letters of administration) so the LLC will recognize the representative’s authority.
5. The LLC and the estate may negotiate admission of the heir as a member or a buyout of the interest. If the parties cannot agree, litigation or probate court directions may be required.

4. Valuation and buyout issues

If the LLC or remaining members want to buy the deceased member’s interest, the valuation method may be in the operating agreement. If the agreement is silent, the parties must agree on a valuation method (appraisal, formula, book value, etc.). Disputes commonly arise over valuation and timing of payment.

5. Tax and probate implications

Passing an LLC economic interest to an estate or heir can create income tax consequences for the estate and the LLC. The estate may also be required to report and pay taxes on distributions. Probate and estate administration rules will govern transfer of title to the deceased member’s transferable interest.

6. Why relying on default rules can be risky

Default statutory rules are generic and may not reflect members’ expectations. Silence in the operating agreement can cause uncertainty, disagreements, delay, and expense in probate or business disruption. To avoid these problems, most LLCs include explicit death, disability, and buy-sell provisions in their operating agreements.

7. Where to look in Hawaii law

Hawaii’s statutes governing LLCs set default rules about transferable interests, membership admission, dissociation, and related matters. See Hawaii Revised Statutes, Chapter 428 — Limited Liability Companies for the state’s default rules and definitions: https://www.capitol.hawaii.gov/hrscurrent/Vol8_Ch0401-0433/HRS0428/. For business registration procedures and resources, the Hawaii Department of Commerce & Consumer Affairs Business Registration Division can be helpful: https://cca.hawaii.gov/breg/.

Note: specific section numbers may apply depending on the precise issue (transferable interest, admission of transferee, dissociation, buyout, etc.). Because statutes and rules change, consult the current provisions in Chapter 428 or an attorney for binding guidance.

Example hypotheticals (illustrative)

Hypothetical A — Multi-member LLC, silent operating agreement

Member A dies. A’s will leaves everything to a sibling. Under default rules, the sibling inherits A’s right to distributions but does not automatically get A’s voting or management rights. The remaining members may vote whether to admit the sibling as a member or may negotiate a buyout of the estate’s economic interest.

Hypothetical B — Single-member LLC, silent agreement

If the sole member dies and the operating agreement is silent, the estate controls the economic assets of the LLC until probate transfers those assets to heirs. Practically, without a plan the LLC may face administrative closure, tax issues, or forced dissolution unless the estate takes action or the LLC’s formation documents provide guidance.

Helpful hints — actions you can take now

• Check the operating agreement first. If it is silent, find any buy-sell or transfer restriction documents and the articles of organization.
• If you own an LLC interest, add explicit succession language now: specify whether heirs become members, set valuation and payment terms, and name who may be admitted.
• Executors: obtain letters testamentary/administration promptly to assert the estate’s rights to distributions and to negotiate with the LLC.
• LLC managers and members: adopt a written policy for member death/dissociation and consider filing an amended operating agreement to avoid future uncertainty.
• Keep accurate membership ledgers and records of capital accounts, distributions, and profit allocations — these simplify valuation and estate administration.
• Talk to both a probate attorney and a business attorney experienced with Hawaii LLC law to coordinate estate administration and business continuity planning.