Detailed answer — what actually controls under Michigan law

When an owner of a limited liability company (LLC) in Michigan dies, two documents commonly come into play: the member’s last will and the LLC’s operating agreement. Which document controls depends on what you want to transfer and what the operating agreement and Michigan law allow.

Basic rule: an operating agreement governs transfer and admission of members. A will cannot unilaterally change rules in the operating agreement. If the operating agreement limits transfers, requires consent, or sets a buyout procedure, those rules continue to apply after death.

Key distinctions to understand:

• Transferable (economic) interest vs. membership (governance) rights: Many LLC statutes, and most operating agreements, treat the decedent’s economic right to receive distributions (the “transferable” or “financial” interest) differently from membership or management rights (voting, management, information). In many cases the will or probate can pass the decedent’s economic interest to an heir, but the heir does not automatically get the right to become a member or to exercise governance rights unless the operating agreement (or the other members) permit.
• Operating agreement restrictions: If the operating agreement contains restrictions (for example, a prohibition on transferring membership interests, a requirement that the remaining members approve any new member, a right of first refusal, or a mandatory buyout on death), those contractual restrictions generally remain binding on the estate and any transferee.
• Probate vs. contract: A will controls property that falls into the decedent’s probate estate. But contractual rights that affect how business ownership is transferred are interpreted under the contract (the operating agreement) and statutory law. A court will typically enforce the parties’ contract terms unless unlawful.

Michigan’s LLC law sets the background rules that apply when an operating agreement is silent. The Michigan Limited Liability Company Act provides rules on transferability and admission of transferees. Where the operating agreement is explicit, its terms usually control. For the text of Michigan’s LLC statutes, see the Michigan Legislature: Michigan Compiled Laws, Chapter 450 (Limited Liability Companies).

Common scenarios and outcomes

• Operating agreement allows free transfer on death — If the operating agreement expressly authorizes a member to devise their full membership interest by will, the heir named in the will can typically receive both the economic interest and the membership rights (unless other members exercise any procedural rights set in the agreement).
• Operating agreement restricts transfers but allows economic assignment — Often the heir receives the decedent’s right to distributions and proceeds from any liquidation (the economic interest), but does not automatically become a voting member or manager. The estate (or heir) will be a transferee of economic rights and may need member approval to be admitted as a member with governance rights.
• Operating agreement requires consent or provides buyout on death — The decedent’s interest may be subject to a mandatory buyout at a contractually defined price or procedure. The will cannot override a contractual buyout provision; the estate may be paid instead of the heir becoming a member.
• No operating agreement or no clear provision — If there is no operating agreement or the agreement is silent, Michigan statutory default rules will apply. These default rules often allow transfer of economic interests by will but impose conditions on admission as a member (for example, requiring consent of other members).

Practical steps to make your intention effective

1. Read the operating agreement carefully. Look for clauses about transfer on death, admission of transferees, rights of first refusal, buyout pricing methods, and required consents.
2. Check whether the operating agreement expressly permits devising membership interests by will. If it does, the will can be effective to transfer membership subject to any conditions in the agreement.
3. If the agreement restricts transfer, consider revising the operating agreement while you’re able. Amendments often require specified member approval (follow the amendment process in the agreement).
4. Consider non-probate strategies: transferring LLC interests into a revocable living trust avoids probate and may accomplish a seamless transfer of economic and (if provided for) membership rights on your death.
5. Discuss buy-sell provisions and valuations with your co-members and put clear procedures in the operating agreement: this reduces conflict at death and can make your wishes effective.
6. If you are an heir who receives an interest by will, consult the operating agreement and the estate attorney/LLC counsel immediately to determine whether you are admitted as a member or only hold an economic (transferable) interest.

How probate interacts with LLC transfers

When a will transfers a decedent’s property, the transfer is effective through probate. However, contractual rights in the operating agreement (including restrictions and buyout provisions) are enforced against the decedent’s estate. If the operating agreement requires the consent of other members to admit a successor as a member, the executor or personal representative must follow that consent process.

When you should get an attorney involved

LLC ownership can combine personal, tax, and business consequences. Talk to both an estate planning attorney and a business (LLC) attorney if you want your will to transfer business ownership effectively. An attorney can help:

• Interpret the operating agreement and applicable Michigan law;
• Amend the operating agreement or draft trust transfers to achieve your goal;
• Draft buy-sell provisions or valuation clauses;
• Coordinate probate steps so the estate’s executor complies with the LLC’s rules.

For Michigan statutory background on LLCs, see the Michigan Legislature’s chapter on limited liability companies: Michigan Compiled Laws, Chapter 450.

Short answer: In most cases, your will cannot unilaterally override an existing operating agreement. The will can transfer your economic interest (what the estate can collect), but the operating agreement usually controls admission of new members, restrictions on transfers, and buyout rights. To ensure your son receives the membership and governance rights you intend, coordinate the operating agreement, estate plan, and (if appropriate) a trust or other transfer device.

Helpful hints

• Locate and read the LLC’s operating agreement before you write or rely on any provision in your will.
• If the operating agreement prohibits transfer on death, consider transferring your interest to a trust while you are alive if you want a nonprobate transfer to a beneficiary.
• Ask whether the operating agreement contains a buyout clause and a valuation method; those clauses typically determine what an heir receives in cash if other members buy out the interest.
• Put clear directions in your estate plan about whether your heir should be admitted as a member or only receive financial distributions.
• If you are a co-member concerned about a deceased member’s interest, preserve company records, review the agreement’s notice and consent requirements, and consult counsel before admitting anyone as a member.
• Keep tax consequences in mind — the transfer of membership interests can have income, gift, estate and basis implications; involve a tax advisor as needed.
• When in doubt, update both the operating agreement and your estate plan together so they’re consistent with your wishes.