Transferring an Inherited Membership Interest in a Hawaii Single-Member LLC | Hawaii Probate | FastCounsel
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Transferring an Inherited Membership Interest in a Hawaii Single-Member LLC

August 11, 2025 6 min read

Disclaimer: This is general information, not legal advice. For case-specific guidance, consult a licensed Hawaii attorney or probate counsel.

Detailed Answer

When the sole owner of a Hawaii limited liability company dies, the ownership interest becomes part of the decedent’s probate estate and will pass under the will or Hawaii intestate succession law. The process to move that interest out of probate and into the hands of an heir or beneficiary follows two tracks: (A) the probate process that transfers legal title to the personal representative or successor, and (B) steps required to reflect the transfer on the LLC’s books and with state agencies. The Hawaii Revised Statutes that govern LLCs (Chapter 428) and probate (Chapter 560) set the legal framework for these steps. See the Hawaii Revised Statutes: HRS Chapter 428 (LLC) and HRS Chapter 560 (Probate).

How title transfers in probate

During probate, the probate court issues documents (for example letters testamentary or letters of administration) that give the personal representative authority to administer and distribute estate property. The membership interest is estate property and will be distributed to the persons named in the will or to heirs under Hawaii’s intestacy rules if there is no will. For help with the court process, see the Hawaii Judiciary probate pages: Hawaii Courts — Probate.

What the heir or personal representative must do after probate

  1. Obtain proof of authority. The personal representative or successor should obtain certified copies of the probate order and letters from the probate court. These documents show authority to act for the estate.
  2. Review the LLC’s governing documents. Read the LLC’s articles of organization and operating agreement. Many operating agreements control transfers of membership interests. They may: require consent from other members, limit transfers, convert a transfer into an assignment of economic rights only, or require admission procedures for new members. Even in a single-member LLC, the operating agreement can dictate how and whether a transferred person becomes a full member.
  3. Determine what actually transfers. Under many LLC laws, a decedent’s estate may transfer the economic (financial) rights in an interest more readily than management or voting rights. The operating agreement and Chapter 428 determine whether an assignee becomes a member immediately or only on consent or admission. If the operating agreement is silent, check Article provisions in Chapter 428 and consult an attorney. See HRS Chapter 428 for statutory rules that may apply.
  4. Document the transfer internally. Prepare an assignment of membership interest or other transfer document signed by the personal representative (or by the devisee if the will directs distribution). If the transferee will become a member, prepare an amendment to the operating agreement or a joinder admitting the transferee as a member. Keep the certified probate documents together with the assignment and any acceptance or joinder in the LLC minute book or member records.
  5. Get any required consents or approvals. If the operating agreement or the LLC’s articles require member or manager approval to admit a new member, obtain those approvals in writing. In a single-member LLC there are no other members to approve; however, the operating agreement may require procedural steps or an explicit acceptance to change membership status.
  6. Update state records if necessary. Hawaii does not require the names of all members to appear on the Articles of Organization in every case, but if the LLC’s articles or annual reporting identify members or managers, you should file an amendment or the next annual report with the Hawaii Department of Commerce & Consumer Affairs, Business Registration Division (BREG) to reflect manager or registered agent changes. See the DCCA guidance: Hawaii DCCA — Business Registration.
  7. Notify banks, vendors, and insurers. Provide copies of the probate letters and the assignment to financial institutions, insurance carriers, and major contract counterparties so they accept the new owner or signatory. Update account signers and authorized contacts as needed.
  8. Address tax and creditor issues. Coordinate with a tax adviser. Transferring or admitting a new member has income and estate tax consequences. Also confirm whether estate creditors have claims that affect the LLC interest before completing a distribution from probate.

Practical issues specific to Hawaii single-member LLCs

  • If the decedent was the sole member, the company itself continues as the same legal entity. The estate (or heir) receives the member’s interest rather than the LLC dissolving automatically.
  • The transferee may be treated as an assignee of economic rights until the LLC admits the person as a member under the operating agreement or statutory rules.
  • Because single-member LLCs often operate informally, creditors or banks may ask for clear probate documentation before recognizing a change of ownership. Keep certified court documents and recorded assignments handy.

Helpful Hints

  • Start with the certified Letters of Administration or Letters Testamentary from the probate court. Most third parties will not accept a transfer without those documents.
  • Locate and read the operating agreement first. It usually controls transfers and admission of new members.
  • Prepare a formal written assignment of the membership interest and, if required, an admission (joinder) signed by the LLC (or manager) accepting the transferee as a member.
  • Keep corporate records up to date. Add the assignment and proof of admission to the LLC’s member ledger and minute book.
  • File an amendment or update the annual report with Hawaii DCCA if the LLC’s public filings list managers or members who have changed: https://cca.hawaii.gov/breg/.
  • Consult a Hawaii probate attorney to confirm distribution steps, and a business attorney to handle admission and documentation. For tax consequences, consult a CPA experienced with estate and pass-through entity taxation.
  • If the operating agreement is missing or silent, seek legal advice. Default statutory rules apply but they may not match the family’s expectations.
  • Keep an eye on deadlines for creditor claims in probate before final distribution. Distributing the membership interest too quickly could expose the estate to claims.

References and resources:

If you would like, I can list the typical documents (assignment form, joinder/admission form, suggested amendment language) that you or your attorney can adapt for a Hawaii single-member LLC transfer.

The information on this site is for general informational purposes only, may be outdated, and is not legal advice; do not rely on it without consulting your own attorney.