How a Will Interacts with an LLC Operating Agreement under Pennsylvania Law

Short answer: In Pennsylvania, an LLC member’s operating agreement usually controls what happens to membership interests at death. A will cannot override contractual transfer restrictions or buy-sell rules that were agreed to while you were alive. In many cases a will can pass the member’s economic interest (the right to distributions) to your estate or beneficiaries, but management rights and membership status often require other members’ consent or follow rules in the operating agreement.

Detailed Answer — how wills and operating agreements work together

Start with two basic principles:

An LLC operating agreement is a contract among the members that defines membership, voting and transfer rules.
A will controls how your probate assets are distributed at death, but it cannot unilaterally change preexisting contracts.

Under Pennsylvania business law (see Title 15 of the Pennsylvania Consolidated Statutes for LLC rules), the operating agreement typically governs transferability of membership interests and the process when a member dies. For an overview of Pennsylvania’s business-organization statutes, see: Title 15 — Pennsylvania Consolidated Statutes (Business Organizations).

What a will can usually do

If your operating agreement does not completely prohibit transfer on death, your will can direct that your estate or a named beneficiary (for example, your son) receive the economic interest you owned at death — rights to receive distributions, profits and cash associated with your membership interest. Those economic rights normally pass through probate under your will unless they were otherwise assigned or restricted.

What a will usually cannot do

If the operating agreement contains restrictions — such as a right of first refusal, mandatory buyout by remaining members, a requirement that new members be unanimously approved, or a provision that converts a deceased member’s interest into a “transferable economic interest” only — your will cannot override those contractual provisions. In those circumstances the operating agreement’s transfer mechanics (buy-sell price, how to value the interest, and whether the heir can become a member) will control.

Common outcomes for a deceased member’s interest

Heir receives only the economic interest (distributions) but not membership rights — the estate gets distributions but cannot vote or manage the LLC.
Heir becomes a full member, but only if the operating agreement allows admission or the other members approve admission as required by the contract.
Company or other members buy out the deceased member’s interest according to buy-sell terms in the operating agreement.

Practical example (hypothetical)

Suppose you own 30% of a Pennsylvania LLC and your operating agreement says that, on a member’s death, the LLC or the remaining members have 90 days to buy the deceased member’s interest at a valuation formula in the agreement. Even if your will leaves “all my business interest” to your son, the operating agreement’s buyout provision will likely determine the result: your estate may receive the buyout proceeds, and your son might not automatically become a member unless the agreement allows it or the members consent.

What to check in your operating agreement

Transfer restrictions: Does the agreement prohibit transfers to non-members or heirs?
Buy-sell provisions: Is there a mandatory buyout on death, and how is price determined?
Admission rules: Is member admission automatic for an heir or subject to vote/consent?
Assignment vs. membership: Does the agreement distinguish between an assignable economic interest and an assignable membership interest?
Any nomination of a transferee or succession plan included in the agreement.

Options to make sure your son receives the business interest you want him to have

Amend the operating agreement now. If other members agree, you can change transfer rules or admit your son as a successor member.
Create or revise a buy-sell agreement with clear terms that allow or require transfer to your son, backed by funding (life insurance) to pay other members if a purchase is required.
Transfer some or all of your interest during life by gift or sale, subject to tax and consent rules, to avoid probate complications.
Use an estate planning device such as a revocable trust that owns your LLC interest; a trust can be designed to avoid probate and can be accepted as a member more easily in some cases.
Negotiate a written consent from other members admitting your son as a transferee or member while you are alive.

When to get legal help

If your operating agreement is ambiguous, contains conflicting clauses, or you are unsure whether your will will accomplish your goals, consult a Pennsylvania attorney who handles both business and estate planning. An attorney can:

Interpret the operating agreement and map the interaction with your will.
Draft amendments, buy-sell documents, trust language, or other estate-planning tools to effect your wishes.
Coordinate tax and probate planning so a transfer minimizes taxes and friction with other members.

Relevant Pennsylvania law resources

Pennsylvania business statutes (Title 15): https://www.legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=15
Pennsylvania laws on wills and estates (Title 20): https://www.legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=20

Disclaimer

This information is educational only and is not legal advice. I am not a lawyer. For advice specific to your situation, consult a Pennsylvania attorney who practices business and estate law.

Helpful Hints

Gather your operating agreement, any buy-sell agreements, and your membership ledger before meeting an attorney.
Look for clauses titled “transfer,” “death,” “buyout,” “assignment,” or “successor” — these control what happens at death.
If you want your son to be a manager or voting member, don’t rely on a will alone — get written member consent or an operating agreement amendment now.
Consider funding a buy-sell with life insurance so the company or members can buy the interest without cash problems.
Even if your will leaves your interest to your son, be prepared for valuation disputes; include valuation methods in agreements where possible.