Quick answer
No. A last will cannot unilaterally override a valid Massachusetts limited liability company operating agreement that governs transfers of membership interests. At death, your will disposes of your property rights subject to any binding contracts and the company’s rules. If the operating agreement contains transfer restrictions, buy‑sell rules, or other post‑death procedures, those contractual rules typically control whether and how an ownership interest can pass to an heir or assignee.
Detailed answer — how transfer of an LLC interest at death works in Massachusetts
This section explains the typical legal framework you will encounter in Massachusetts and the practical consequences when a member attempts to pass LLC ownership through a will.
1. Two different things: economic interest vs. membership rights
When an owner of an LLC dies, two separate categories of rights may be at issue:
- Transferable (economic) interest — the right to receive money (distributions) and the financial value of the decedent’s share. Many states, including Massachusetts under the state LLC law, treat this as transferable personal property.
- Membership rights (management, voting, admission) — the right to participate in management, vote on company matters, or be admitted as a member. Those rights are often subject to the operating agreement and generally require other members’ consent to transfer or to admit a transferee as a full member.
2. Operating agreement and contracts govern
An operating agreement is a contract among the members. If it includes clauses about death, transfer restrictions, buy‑sell or mandatory purchase rights, or consent requirements, those contract terms usually bind the decedent and the decedent’s estate. In short: a will cannot unilaterally defeat contractual provisions that were effective before death.
For Massachusetts LLC law, see the state statute on limited liability companies: M.G.L. c. 156C (Limited Liability Companies).
3. What a typical operating agreement might require
Common provisions you will find in operating agreements that affect testamentary transfers:
- Right of first refusal or buy‑sell: Other members or the company have the right to buy the decedent’s interest (often at a valuation formula) before it can pass to an outside heir.
- Consent requirement: A transferee may only become a member if the remaining members consent.
- Automatic conversion: On death, the decedent’s membership can automatically convert to a purely economic/assignable interest with no management rights.
- Valuation and payment terms: The agreement can dictate how the interest is valued and how purchase payments are made.
4. Practical consequences for an attempted testamentary gift
If you attempt in your will to leave your LLC interest to your child, one of these outcomes is likely:
- If the operating agreement allows free transfer, the gift can succeed and your heir receives both economic and membership rights (subject to any statutory rules).
- If the agreement restricts transfers or requires consent, your heir may receive only the economic interest — they may get distributions but not the right to participate in management unless other members agree to admit them.
- If the agreement contains a buy‑sell, the company or the remaining members may be able to purchase the decedent’s interest from the estate under the agreement’s terms.
5. Probate and estate administration
Your will controls your property that is part of your probate estate. But during probate, the executor must honor preexisting contracts. The executor should provide notice to the company, comply with any contractual transfer procedures, and, if necessary, negotiate sales or exercise rights under the operating agreement. For Massachusetts rules on wills and probate procedure, see: M.G.L. c. 190 (Wills, probate matters).
6. Options to accomplish a transfer despite restrictions
If you want your child to end up with management control or membership rights, consider these planning approaches (each needs careful drafting and may require other members’ consent):
- Amend the operating agreement now (if other members agree) to permit the transfer on death or to name your child as an acceptable transferee.
- Use a buy‑sell arrangement funded by life insurance so the company or members can buy out your estate and then sell to your child if allowed.
- Have members agree in writing to admit your chosen heir as a member on your death.
- Consider holding the interest in a trust with clear directions and preapproved terms for succession that the operating agreement permits.
7. Why you should examine the actual documents
The exact answer depends on the operating agreement language, any side agreements, the company’s formation documents, and applicable Massachusetts law. Start by locating:
- The operating agreement and any amendments
- The certificate of organization or articles of organization
- Any buy‑sell or redemption provisions
- Your will, trust, and beneficiary designations
8. Example (hypothetical)
Suppose an LLC operating agreement says that on a member’s death the remaining members have 90 days to purchase the decedent’s interest at a formula price. If you leave the interest by will to your son, the estate receives the purchase price (not full control of the business), and your son receives the purchase proceeds unless the members decline to buy. If the agreement instead allows free transfer, your son could step into your membership role after administration and any required paperwork.
Helpful hints
- Review the operating agreement now. Identify transfer restrictions, buy‑sell clauses, and consent requirements.
- Talk to the other members about your succession goals early. Voluntary agreement is often simpler than litigation or forced transfers after death.
- Consider amending the operating agreement if other members will agree to your chosen successor.
- Use a trust or buy‑sell funded by life insurance to provide liquidity to buy out an estate if the members prefer to retain control.
- Keep business records organized and inform your estate planner and executor where to find company documents.
- If you want management control transferred to an heir, get written consents or agreements from the other members now if possible.
- Consult a Massachusetts attorney with experience in business succession and estate planning to draft or review documents and to explain tax consequences.