Detailed Answer
This article explains how an Ohio will interacts with a company’s operating agreement when you try to leave your business interest to your child. This is a general explanation using common factual situations — it is not legal advice.
Short answer: Usually no — a last will and testament cannot unilaterally override a valid LLC operating agreement in Ohio. A will can transfer the economic value of your membership interest (the right to receive distributions), but it often cannot force the LLC or other members to grant management rights or full membership unless the operating agreement allows it or the other members consent.
Why a will often won’t override an operating agreement
Ohio law lets LLC members arrange how the company operates and how membership interests transfer. The LLC’s operating agreement governs internal relationships, transfer restrictions, admission of new members, buy-sell rules, valuation methods, and related procedures. In practice:
- If the operating agreement restricts transfers (for example, by requiring member consent, a right of first refusal, or an absolute prohibition on transfers), those rules usually control the fate of a deceased member’s interest.
- If you leave your interest by will, your heirs or beneficiaries generally step into the deceased member’s economic rights (distributions) but not necessarily into management or voting rights unless the operating agreement or the other members admit them as members.
- If the agreement contains mandatory buyout provisions on death, the company or other members may be required to buy the interest rather than admit the heir as a full member.
For the provisions and default rules that govern Ohio LLCs, see Ohio Revised Code, Chapter 1706: https://codes.ohio.gov/ohio-revised-code/chapter-1706.
How probate and your will interact with the LLC
Your will controls how your probate estate distributes your property that is subject to probate, including whatever portion of an LLC interest passes under the will. But two practical limits commonly apply:
- Membership vs. economic interest: Many operating agreements distinguish between an “assignment” (transfer of economic rights) and full “admission” as a member (management and voting rights). A will typically transfers whatever ownership interest you can legally transfer, but it cannot change private contractual limits in the operating agreement.
- Contractual obligations: If the operating agreement requires consent to admit a transferee, surviving members can enforce that provision and refuse to admit the will’s beneficiary as a member. The beneficiary might remain a transferee of distributions only, with no management authority.
Common outcomes when a member dies
- The operating agreement requires buyout on death: the estate receives cash (or other consideration) under the buyout formula.
- The operating agreement allows transfers but requires consent: the estate holds an assigned economic interest until other members consent to admission.
- No restrictions: the beneficiary may be admitted as a member if state law and the agreement permit.
Practical steps to ensure your son receives the business interest you intend
If your goal is to leave full ownership and management rights in the LLC to your son, consider these options:
- Review and, if necessary, amend the operating agreement now to permit the transfer or to name your son as an assumed successor. Amendments typically require the member-consent process described in the agreement.
- Make an inter vivos transfer (give or sell the interest during your lifetime) so your son becomes a member while you are alive.
- Create a buy-sell agreement or succession plan that specifically addresses death and names your son as the transferee, with valuation and payment terms.
- Use a revocable living trust as the owner of your membership interest. If the trust document and the operating agreement allow, the trustee (or trust beneficiary) may more easily be admitted or hold the interest without probate delay.
- Negotiate and document consent now from the other members to admit your son on your death. Place that consent in writing (amend the operating agreement or append a signed waiver).
Hypothetical example
Imagine you wholly own “Maple Ridge LLC” under an operating agreement that states: “No transfer of membership interest is effective without unanimous consent of the members; on death the company must purchase the decedent’s interest at book value.” If you leave your LLC interest to your son in your will, Ohio probate will pass whatever rights you held to your estate. But because the operating agreement requires a unanimous consent and mandates a buyout on death, your son would likely receive the buyout payment rather than become a full member with voting rights—unless the other members agree to admit him or the agreement is amended.
When to consult an attorney
Because outcomes depend on the precise operating agreement language, the company’s structure, and your overall estate plan, you should consult a qualified attorney to:
- Review the operating agreement and any buy-sell or membership transfer provisions.
- Draft or amend estate documents (wills, trusts, assignments) and LLC documents to implement your goals.
- Structure a tax-efficient transfer and address valuation and liquidity for any required buyout.
Ohio probate and estate rules are in Ohio Revised Code, Chapter 2107 (Wills) and related chapters: https://codes.ohio.gov/ohio-revised-code/chapter-2107.
Helpful Hints
- Read the entire operating agreement. Look for words like “transfer,” “assignment,” “admission,” “buyout,” “right of first refusal,” and “consent.”
- Don’t assume a will will give your heir management control. Many operating agreements block that by design.
- If other members need to agree, get their written consent now or amend the agreement to name your son as successor.
- Consider transferring part or all of your interest during life to avoid probate friction and to allow the transferee to step into membership rights immediately.
- Use a trust to hold your membership interest if you want to avoid probate and to specify succession terms more flexibly.
- Plan for liquidity. If the agreement requires a buyout at death, your estate needs a plan to fund the payment (insurance, reserves, payment plan, etc.).
- Keep corporate records up to date: membership ledgers, amendments, consents, and assignments help prevent future disputes.
Disclaimer: This content is informational only and does not constitute legal advice. Laws change and every situation is different. To apply these ideas to your case, consult a licensed Ohio attorney who can review your operating agreement and estate documents.