Detailed answer — what to know and the steps to take

If you inherit a membership interest in a single‑member limited liability company (LLC) in Massachusetts, you will generally need to do three things: (1) confirm how the interest passes under the decedent’s estate plan and Massachusetts probate rules, (2) check the LLC’s governing documents for transfer rules, and (3) complete the formal transfer and update LLC records. Below are the details and practical steps.

1. Confirm how the interest passes (probate or non‑probate)

First determine whether the LLC interest was part of the decedent’s probate estate. If the interest was owned outright by the decedent (not in a trust, not subject to a beneficiary designation, and not jointly owned), it typically passes through probate. If it was placed in a living trust or otherwise titled to avoid probate, the trustee or beneficiary designation governs transfer.

Start with these documents: the decedent’s will, any trust documents, the decedent’s death certificate, and the LLC’s membership ledger or operating agreement. If the asset is in probate, the Probate and Family Court issues letters testamentary or letters of administration that give the personal representative authority to transfer estate property. See Massachusetts Probate and Family Court information: https://www.mass.gov/orgs/probate-and-family-court.

2. Review the LLC’s governing documents (operating agreement and certificate)

Massachusetts LLCs are governed by the Massachusetts Uniform Limited Liability Company Act (Chapter 156C). The LLC’s operating agreement and any buy‑sell or transfer restriction clauses usually determine whether an inherited membership interest transfers automatically, whether only the economic rights transfer, or whether other owners must consent before the heir becomes a member. Review the operating agreement closely and check the certificate of organization for any dissolution or transfer triggers. The statute governing LLCs is here: Mass. Gen. Laws ch. 156C.

Important points to look for in the operating agreement:

• Whether membership interests are freely transferable or subject to consent.
• Whether the death of the sole member triggers dissolution or a mandatory buyout.
• Whether management rights (voting, control) pass automatically or require formal admission of the successor as a member.

3. Practical transfer steps after probate (typical process)

Below is a practical sequence most inheritors follow. The exact steps depend on the operating agreement and whether the decedent’s estate is in probate.

1. Obtain authority to act for the estate. If probate is required, secure letters testamentary or letters of administration from the Probate and Family Court. Those documents prove you have authority to transfer estate property.
2. Gather LLC documents and corporate records. Get the operating agreement, certificate of organization, membership ledger, and any prior membership assignments or buy‑sell agreements. The LLC should maintain a member ledger; ask the LLC manager or registered agent for these records if you do not already have them.
3. Follow the operating agreement’s transfer rules. If the operating agreement allows assignment and admission of a successor member upon provision of required documents or consent, follow that process. If the agreement requires other members’ consent, obtain written consent. If the agreement requires a buyout, arrange payment per the agreement or seek court guidance if the estate cannot satisfy it.
4. Prepare transfer documents. Common documents include an Assignment of Membership Interest (assigning the decedent’s transferable interest to you or the estate), an Acceptance of Admission (if the LLC requires formal admission of the new member), and any members’ consent or amendment to the operating agreement. The personal representative usually signs the assignment on behalf of the estate.
5. Deliver proof of transfer to the LLC. Provide the LLC manager or registered agent with: (a) the death certificate; (b) letters testamentary or administration; (c) the signed assignment and any consent forms; and (d) an updated membership ledger entry. Request written confirmation that the transfer has been recorded and that you are the new member (if admitted).
6. Update administrative and tax items. If the LLC bank account, contracts, or vendor accounts were in the decedent’s name, update them. Notify the IRS and state tax authorities if the responsible party or owner has changed. Consult an accountant about federal and Massachusetts tax consequences — inheriting an LLC interest can affect income tax, estate tax filings, and how the entity is taxed going forward.
7. If the operating agreement triggers dissolution: If the agreement or state law calls for dissolution upon the member’s death and you do not want to continue the business, you may need to wind up the LLC, sell its assets, and distribute proceeds to the estate. Follow Chapter 156C procedures and the operating agreement’s winding up provisions.
8. If there’s a dispute: If other parties claim the interest, the operating agreement is ambiguous, or the estate lacks cash to satisfy a buyout, contact a probate or business attorney. The Probate and Family Court resolves disputes involving estate administration and property transfers tied to probate authority.

Practical examples (hypotheticals)

Example A — No transfer restrictions: Mary was the sole member of an LLC and died leaving her interest to her son in her will. The operating agreement contains no restriction on transfer. The son, presenting letters testamentary, assigns the interest to himself and the LLC updates its member ledger. He becomes the new sole member.

Example B — Transfer restricted, buyout required: Tom was the single member, but the operating agreement says the LLC must be offered to a designated buyer or requires a buyout at a fixed formula on a member’s death. The estate must follow that buyout procedure before a successor becomes a member; if the estate cannot pay, the LLC may be dissolved or the buyer may acquire the interest under the agreement’s terms.

Statutory references and where to get help

Massachusetts’s LLC rules are in the Massachusetts Uniform Limited Liability Company Act. Review the statute here: Mass. Gen. Laws ch. 156C. For probate procedures and to obtain letters testamentary or administration, contact the Probate and Family Court: https://www.mass.gov/orgs/probate-and-family-court.

If you are unsure how the operating agreement addresses death or transfer, or if the estate must satisfy a buyout provision, consult a Massachusetts probate or business attorney. If tax consequences are a concern, consult a CPA who handles estate and pass‑through business taxation.

Helpful hints

• Locate and read the operating agreement and certificate of organization first — they usually control transfer rules.
• If the LLC was the decedent’s sole asset, consider opening probate early so the personal representative can act without delay.
• Ask the LLC for a written copy of the member ledger and any written policies about transfers, buyouts, or dissolution.
• Keep certified copies of the death certificate and probate letters; many banks and the LLC will require certified copies for formal record changes.
• Assignment and admission paperwork should be signed by the personal representative; keep originals with the estate records and give copies to the LLC.
• Don’t assume economic rights automatically equal management rights. An heir can receive distributions without becoming an admitted member if the operating agreement limits admission.
• Update business registrations and bank accounts promptly once the transfer is completed to avoid disputes and to ensure the estate’s fiduciary duties are met.
• If there is any conflict between beneficiaries, the operating agreement, and the estate, obtain legal advice early — disputes can increase estate costs and delay business operations.
• Consult a tax professional before accepting an interest. Inheriting an LLC interest can change the entity’s federal tax classification and cause immediate tax implications.