Short answer: If an LLC’s operating agreement does not say what happens to a member’s ownership when that member dies, New Mexico law and the LLC’s governing documents will control. In most cases the decedent’s estate or heirs inherit the economic rights (distributions), but they usually do not automatically inherit the management or voting rights of a member unless the other members agree or the LLC’s documents say otherwise. The interest will also typically pass through the member’s will or trust (or by intestate succession if there’s no will) and may have to clear probate or trust administration before the LLC recognizes a change in ownership.

Why this happens

Membership interests in an LLC generally consist of two separate bundles of rights:

• Economic rights — the right to receive distributions of profits or liquidation proceeds.
• Management and voting rights — the right to participate in running the company, vote, or be a manager/manager-member.

When an operating agreement is silent about death, many state LLC laws (including the default rules that apply in New Mexico) treat these bundles differently: the economic component passes to the decedent’s estate or heirs, but the transferee typically steps in only as a transferee of economic rights, not as a full member with management or voting authority, unless the LLC members consent to admit the transferee as a member.

How New Mexico procedures typically play out

1. Notification and documentation: The LLC should be notified of the member’s death. The executor or personal representative should provide a death certificate and proof of authority to act for the estate.
2. Estate administration or trust transfer: If the member left a will or placed the interest in a trust, the transfer will follow those documents. If not, state intestacy rules apply and the interest moves through probate to heirs.
3. Rights a transferee receives: Absent a governing provision to the contrary, the estate or heirs usually receive the right to distributions attributable to the deceased member but not necessarily management or voting rights. That means they receive money the LLC owes the deceased member but cannot force company decisions unless admitted as a member.
4. Member admission or buyout: Other members can agree to admit the heir as a member. Alternatively, many LLCs arrange a buyout—either by agreement among members, by a mandatory buy-sell clause (if present), or by negotiation—where the LLC or remaining members buy the departed member’s economic interest.
5. Valuation and timing: If a buyout is required or agreed, the operating agreement (if it exists) may prescribe valuation and timing. If no procedure exists, parties may need to negotiate a price or seek a court resolution or appraisal.

Relevant New Mexico resources and law

State law provides default rules for LLCs and governs probate and estate transfer processes. For general information and to see applicable statutes or guidance, consult:

• New Mexico Secretary of State — Limited Liability Companies: https://www.sos.state.nm.us/business-services/limited-liability-companies/
• New Mexico Courts—Probate information (how estates are administered and how property passes on death): https://www.nmcourts.gov/courts/probate/
• New Mexico statutes and legislative resources (search statutes and codes): https://www.nmlegis.gov/

These resources help explain statutory defaults and the probate process in New Mexico. If you need a precise statutory cite for a specific issue (for example, the precise default rule about transferees’ rights), an attorney or the statute search at the New Mexico Legislature site can point you to the exact provision that applies.

Practical outcomes — common scenarios

Below are illustrative examples of how the company and the deceased member’s estate commonly handle a silent operating agreement.

• Estate keeps economic rights; no management role: The decedent’s heir receives money distributions but cannot vote or run the company until the members approve admission of the heir as a member.
• Members buy out the interest: Remaining members buy the estate’s economic interest under negotiated terms or a court-determined process if parties cannot agree.
• Heir becomes member by agreement: If members unanimously (or as the operating agreement requires) consent, the heir can be admitted as a full member with management and voting rights.
• Trust avoids probate: If the deceased put the membership interest into a revocable trust with a successor trustee, the trust may transfer the economic rights (and possibly membership rights if the trust was structured to hold the membership) without probate, but admission as a member may still require member consent depending on the LLC’s rules.

What to do next

If you face this situation, take these steps:

1. Locate the operating agreement and any amendments, the articles of organization, and the member ledger.
2. Check the decedent’s estate planning documents (will, trust, beneficiary designations).
3. Notify the LLC in writing and provide the death certificate and documents showing executor or trustee authority.
4. Ask whether the LLC or members have a buyout policy or life insurance that funds a purchase of the deceased member’s interest.
5. Consult a New Mexico attorney experienced in LLC and probate matters to determine estate administration steps, valuation processes, and any default statutory rules that apply.

Why it matters to fix an operating agreement now

Silence in an operating agreement leaves key matters to default law and later negotiation, which can cause delay, disputes, and unexpected outcomes. Common preventive measures include:

• Clear buy-sell provisions for death, disability, or divorce.
• Procedures for valuation and timing of payments.
• Rules for admission of successors or transferees as members.
• Funding mechanisms (life insurance, escrow) to pay buyouts.

Limiting surprises: a short checklist

• Review whether the membership interest is held by a trust or in the member’s individual name.
• Confirm whether the operating agreement restricts transfers or requires member consent to admit transferees.
• Check whether the LLC has a member buyout or cross-purchase agreement in place.
• Preserve corporate records and avoid unilateral actions until documentation (death certificate, letters testamentary) is in place.

Disclaimer

This article explains general principles and common New Mexico procedures. It is educational information, not legal advice. For advice about the specific facts of your situation and binding legal guidance, consult a licensed New Mexico attorney familiar with LLC and probate law.