What happens if our LLC operating agreement doesn’t address what happens to my share when I die? - Pennsylvania
The Short Answer
If your Pennsylvania LLC operating agreement is silent, your death generally causes you to be dissociated as a member, and your estate typically receives your economic rights (the right to distributions), not automatic management or voting rights. In other words, your heirs may inherit the value of your interest, but they usually do not step into your role as an active member unless the operating agreement (or the other members) allows it.
What Pennsylvania Law Says
Pennsylvania’s LLC statute separates (1) the right to receive distributions (often called a “transferable interest”) from (2) the right to participate in management. When a member dies, the personal representative can generally collect the financial benefits tied to the interest and obtain certain information needed to administer the estate, but the statute does not automatically make the estate or heirs full members with governance rights.
The Statute
The primary law governing this issue is 15 Pa.C.S. § 8854.
This statute establishes that when an LLC member dies, the deceased member’s personal representative may exercise transferee rights (tied to distributions) and, for estate-settlement purposes, certain information rights—rather than automatically stepping into full membership and control.
Relatedly, Pennsylvania law provides that a transfer of a transferable interest does not, by itself, entitle the transferee to participate in management or conduct of the LLC’s affairs. See 15 Pa.C.S. § 8852. And death is an event that causes dissociation of an individual member. See 15 Pa.C.S. § 8861.
Why You Should Speak with an Attorney
While the statutes provide the general default rules, applying them to a real LLC and a real estate plan is rarely simple. Legal outcomes often depend on:
- Strict Deadlines: Estate administration and business decisions often move on tight timelines, and delays can trigger disputes over distributions, valuation, and control—especially if the LLC needs quick decisions after a member’s death.
- Burden of Proof: If there’s disagreement about what the members intended (or what the operating agreement means), the estate may need strong documentation to support valuation, distribution rights, and any claimed governance role.
- Exceptions and Deal Terms: The operating agreement may still contain transfer restrictions, buy-sell provisions, or consent requirements that change the outcome. Even when the agreement is “silent” on death, other clauses (or later amendments) can control, and a transfer in violation of restrictions can be ineffective. See, e.g., 15 Pa.C.S. § 8852(f).
Practically, this is where families get stuck: the estate may be entitled to money, but the surviving members may control timing of distributions, business direction, and access to information. A Pennsylvania probate attorney can coordinate with business counsel to protect the estate’s rights, reduce conflict, and ensure the interest is handled correctly under both the LLC statute and the decedent’s estate plan.
If you want more Pennsylvania probate context on what does (and does not) pass automatically at death, you may also find these helpful: Do joint bank accounts and jointly owned property automatically transfer at death in Pennsylvania? and Does tenants-in-common property have to go through probate in Pennsylvania?.
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Disclaimer: This article provides general information under Pennsylvania law and does not create an attorney-client relationship. Laws change frequently. For legal advice specific to your situation, please consult with a licensed attorney.