How to transfer an inherited membership interest in a single-member LLC in New Hampshire

Short answer: After probate, the personal representative (executor/administrator) must determine whether the LLC’s operating agreement or New Hampshire law controls the transfer. Often the estate can assign the deceased member’s economic interest to the heir, but the transferee may need member consent to obtain full membership (voting/management) rights. Update LLC records and the New Hampshire Secretary of State filings, and consider tax consequences. This is educational information, not legal advice.

Detailed answer

1. Understand the basic distinctions

A membership interest in an LLC generally has two sets of rights: (a) economic rights (the right to receive distributions) and (b) governance rights (voting, management, or being the “member” for control). Many state LLC statutes and most operating agreements allow transfer of economic rights by assignment but restrict transfer of governance rights without the consent of other members. In a single-member LLC the deceased person was the sole owner, so the operating agreement and New Hampshire LLC law control what happens next.

2. Follow probate procedures first

The estate’s personal representative must be appointed by the probate court and receive authority (often called letters testamentary or letters of administration) before transferring estate assets, including membership interests. Contact the local probate court for forms and procedures. See the New Hampshire Probate Court resources: New Hampshire Judicial Branch — Probate.

3. Check the operating agreement and any member agreements

Locate the LLC’s operating agreement and any buy-sell or transfer restriction provisions. Typical provisions you will find:

• Whether membership interests pass automatically to heirs or only to the estate as an assignee.
• Whether other members (or managers) must consent before a transferee may become a full member with voting rights.
• Whether there is a mandatory buyout price or right of first refusal.

4. Transfer mechanics after probate

1. Obtain certified letters testamentary or administration and a certified copy of the death certificate.
2. If the will specifically devises the membership interest, follow the will’s directions subject to the operating agreement. If intestate, the state’s intestacy rules (administered by probate) determine the heir.
3. Prepare an assignment of membership interest or other transfer document. If the operating agreement permits assignment only of economic rights, the assignment should say so; if the transferee will become a full member, prepare a membership admission agreement or amendment to the operating agreement, with any required consents or resolutions attached.
4. Provide the LLC with the certified probate documents and the assignment. The LLC should record the transfer in its member ledger and update any membership certificates.
5. If the LLC requires management or membership changes to be reported, file an amended annual report or other required statements with the New Hampshire Secretary of State’s Business Services. See: New Hampshire Secretary of State — Business Services.

5. What if the operating agreement is silent?

If the operating agreement does not address transfers, the New Hampshire Limited Liability Company Act governs default rules. Default rules commonly allow assignment of economic rights by the estate, but the transferee may not obtain governance rights without member approval. For the statutory framework, see the New Hampshire Limited Liability Company Act: RSA Chapter 304-C (Limited Liability Companies). (Review the specific sections on transfer and admission of members.)

6. Single-member LLC special considerations

When a single-member LLC’s only owner dies, the estate temporarily holds sole ownership. If the heir becomes the new sole member and the operating agreement or statute allows admission without other members’ consent (there are none), the transfer can be straightforward. However, if the LLC has managers or outside members in other roles (e.g., investors), the operating agreement may require formal consent or an amendment to admit the heir as member.

7. Tax and banking consequences

• Federal tax: the estate may owe income or estate tax issues; transferring a single-member LLC can change how the IRS treats the business (disregarded entity versus partnership). Consult a tax advisor or CPA before finalizing transfers.
• Employer Identification Number (EIN): ownership changes can require new EINs in some circumstances. Check IRS guidance.
• Bank accounts: banks typically ask for probate letters and LLC documents before allowing access and updating signatories.

8. Practical documentation checklist

Gather these documents to present to the LLC and to update records:

• Certified letters testamentary or administration from the probate court
• Certified copy of death certificate
• Will or intestacy information
• Assignment of membership interest (drafted to match the operating agreement)
• Signed consents or resolutions admitting the transferee as member (if required)
• Updated operating agreement or amendment (if the heir becomes member)
• Updated annual report or filings with the New Hampshire Secretary of State

9. When to get a lawyer

Talk with an attorney if any of the following apply:

• The operating agreement has complex restrictions, buyouts, or valuation formulas.
• Multiple heirs claim rights to the membership interest or the probate estate faces disputes.
• There are tax, creditor, or estate-planning complications.
• The LLC’s governance will change materially with the transfer.

If you hire counsel, look for a New Hampshire attorney experienced in probate, estates, and business/LLC law. The New Hampshire Bar Association provides lawyer referral resources.

Helpful Hints

• Start by locating the operating agreement — it usually controls transfer rules.
• Do not attempt to access LLC bank accounts or sign as owner until probate letters are issued.
• If the will is ambiguous about the membership interest, get probate court construction or legal advice before transferring.
• Keep a clear paper trail: dated assignments, consents, and certified probate documents protect the estate and the LLC.
• Update the Secretary of State annual report after the transfer to avoid future disputes and to maintain good standing: New Hampshire Secretary of State — Business Services.
• Consult a tax professional about federal tax reporting and whether a new EIN is required.

Relevant New Hampshire resources

• New Hampshire Limited Liability Company Act (RSA Chapter 304-C): https://www.gencourt.state.nh.us/rsa/html/XXX/304-C/304-C-mrg.htm
• New Hampshire Judicial Branch — Probate: https://www.courts.state.nh.us/nhcourts/probate/
• New Hampshire Secretary of State — Business Services: https://sos.nh.gov/business-services/

Disclaimer: This article provides general information about New Hampshire law and common practice. It is not legal advice. For advice about your specific situation, contact a licensed New Hampshire attorney experienced in probate and business law.