Detailed Answer

Short answer: When the sole member of a New Mexico single‑member LLC dies, the decedent’s membership interest becomes part of the decedent’s estate and is handled through probate (or small‑estate procedures). Whether the heir or devisee immediately becomes a member of the LLC or only receives the economic (distribution) rights depends first on the LLC’s operating agreement and then on default New Mexico LLC law. In most cases an executor or personal representative must present probate documents to the LLC, comply with any transfer restrictions in the operating agreement (for example, consent, buyout, or right of first refusal), and either be admitted as a member by the LLC or hold only the transferrable economic interest until admission.

Key legal concepts

• Membership interest vs. transferable interest: A membership interest typically contains two parts — the economic rights (right to distributions) and the management/ governance rights (the right to be a member and participate in management). Many LLC laws treat the economic portion as freely transferable unless the operating agreement restricts it, while the management membership (voting, management rights) requires admission by the other members or compliance with the operating agreement.
• Operating agreement controls: If the LLC has an operating agreement, its terms about death of a member, transfer, buyouts, or admission of successors usually control. If the agreement is silent, default statutory rules apply.
• Probate and the personal representative: The executor or personal representative of the estate has authority to collect and manage the decedent’s assets, including their LLC interest. That representative will typically use probate letters (letters testamentary or of administration) to prove authority to the LLC and third parties.
• Single‑member issues: When the LLC truly had only one member and that member dies, the company can become “memberless.” The operating agreement (or the articles of organization) may provide instructions for that situation. If not, state law and practical business considerations — including possible dissolution, appointment of a manager, or admission of a new member — will determine next steps.

Practical step‑by‑step process

1. Locate the LLC’s formation documents and operating agreement.

   These documents may include a clause about what happens when a member dies — buyout price, right of first refusal, or automatic transfer provisions. The operating agreement can override default statutory rules.

2. Identify whether the LLC is member‑managed or manager‑managed, and whether it was truly single‑member.

   Manager‑managed LLCs can continue to operate with a manager even if a member dies. A single‑member LLC without a surviving admitted member may be at risk of being memberless unless the operating agreement or members act.

3. Open probate (if not already open) and have the personal representative obtain letters testamentary or letters of administration.

   Those documents give the representative authority to act on behalf of the estate and to present proof to the LLC or third parties. New Mexico courts provide guidance on probate steps and forms: New Mexico Courts — Probate & Estate Administration.

4. Notify the LLC and provide required documents.

   Provide a certified copy of the death certificate and the letters testamentary/administration. The LLC’s managers or remaining members will check the operating agreement for transfer rules.

5. Check and follow transfer restrictions or buyout procedures in the operating agreement or articles.

   If the operating agreement requires member consent to admit a successor, the estate may initially hold only the economic interest (the right to distributions). If the agreement provides a buyout mechanism, the estate may be entitled to a buyout at a set price or formula.

6. If the estate can be admitted as member, document the admission and amend internal records.

   Admission usually requires a membership vote or a written consent per the operating agreement or LLC law. Once admitted, the transferee should be listed in internal LLC records; New Mexico does not generally require member names to be filed with the Secretary of State, but you should review the LLC’s annual reporting requirements with the New Mexico Secretary of State: NM Secretary of State — Limited Liability Companies.

7. If the estate is not admitted, manage distribution rights and seek legal or tax advice.

   The estate can usually collect distributions due to the decedent (absent restrictive provisions) but may not be able to vote or manage the company until admission. A failure to promptly resolve membership often leads to negotiation with the LLC (possible buyout) or a court proceeding if disputes arise.

8. Resolve tax and corporate filing issues.

   The estate (or new member) must address federal and New Mexico tax filings and provide any updated contact or agent information the LLC needs. If the LLC needs to record a change in managers or other filings, check requirements with the NM Secretary of State.

What if there is no operating agreement or it is unclear?

If the operating agreement is missing or silent, default New Mexico LLC law governs transfer and admission. In most LLC statutes the transferable economic interest can pass to a successor under probate, but membership (management) rights require the LLC members’ consent. Practically, an assignee (heir or devisee) will be entitled to distributions but not necessarily to vote or manage without being admitted.

Memberless LLC and dissolution risks

If an LLC truly has no remaining admitted member after the owner’s death and no operating agreement guidance, the business may be at risk of being dissolved under state law or by action of a court or creditors. To avoid involuntary dissolution, the personal representative should act promptly — consult the LLC’s governing documents, communicate with any managers, and consider admission or orderly sale of the membership interest.

Common documents you may be asked for

• Certified death certificate
• Letters testamentary or letters of administration
• Copy of the decedent’s will (if any)
• Assignment of membership interest or acceptance of membership (if the LLC admits the transferee)
• Buyout agreement or settlement documents (if applicable)

Sources and where to look in New Mexico

For guidance about estate administration and probate process in New Mexico, see the New Mexico Courts’ probate resources: nmcourts.gov — Probate & Estate Administration. For information about forming and managing LLCs in New Mexico and required business filings, see the New Mexico Secretary of State’s business services pages: sos.state.nm.us — Limited Liability Companies.

Note: New Mexico’s Limited Liability Company Act and probate statutes provide the statutory framework that governs these issues. The precise statutory text and any recent amendments can be found through the New Mexico Legislature or official state code sources.

When to get professional help

Consider hiring a New Mexico probate attorney or an attorney with experience in business/LLC law if you encounter any of the following:

• The operating agreement has restrictions, buyout provisions, or ambiguous death provisions.
• Multiple heirs claim the membership interest or there is a family dispute.
• The estate needs to determine valuation of the membership interest.
• The LLC may become memberless or the business cannot operate properly without resolution.

Disclaimer: This article is for general informational purposes and does not constitute legal advice. It is not a substitute for consulting a qualified attorney licensed in New Mexico about your specific situation.

Helpful Hints

• Start by locating the operating agreement and the LLC’s articles of organization — those documents usually answer the critical questions.
• Obtain probate letters (letters testamentary or of administration) early — most LLCs and third parties require them to recognize the personal representative’s authority.
• If the operating agreement requires consent to admit a new member, be prepared to negotiate a buyout or provide assurances to the remaining managers or members.
• Keep LLC records up to date — even if New Mexico doesn’t require member names on public filings, maintain accurate internal records and minutes documenting any admission or transfer.
• Document every communication in writing: notices to the LLC, offers, consents, and buyout agreements reduce later disputes.
• Get a valuation if the membership interest will be bought out. Valuation disputes are common and often require a qualified appraiser.
• Check tax consequences early — transferring membership interests can have estate, gift, and income tax impacts for the estate and the heirs.
• If the LLC is the decedent’s primary asset, consider engaging both a probate attorney and a business/transaction attorney to coordinate estate settlement and the company’s future.