FAQ — Transferring an Inherited Interest in a Tennessee Single‑Member LLC

Short answer: After probate confirms who inherits the decedent’s personal property, the executor or personal representative must follow the LLC’s governing documents and Tennessee law to transfer the decedent’s membership interest. In many cases a beneficiary receives the economic rights automatically but must be formally admitted as a member (with management rights) only if the operating agreement or the remaining owner(s) allow it. If the decedent was the sole member, the LLC may continue or dissolve depending on the operating agreement and Tennessee law; get probate letters, review the LLC paperwork, and work with the company and the Tennessee Secretary of State to complete any required filings.

Detailed answer — what you need to know and the step‑by‑step process

1. Understand what the “membership interest” actually is

A membership interest is a bundle of rights: economic rights (the right to distributions and to share in profits/losses) and governance rights (voting, management, or the right to be admitted as a member). Under Tennessee’s LLC statutes the LLC and its operating agreement control how those rights pass after a member dies. See Tennessee’s LLC statutes at Title 48, Chapter 249 for the statutory framework: Tenn. Code Ann. Title 48, Ch. 249.

2. Probate determines who holds the decedent’s personal property

If the membership interest is part of the decedent’s probate estate, the probate court (or small‑estate procedures if applicable) identifies who inherits. The personal representative (executor or administrator) receives Letters Testamentary or Letters of Administration from the probate court; those documents give the representative authority to transfer estate property. For general probate guidance in Tennessee see the Tennessee Courts probate information: Tennessee Courts — Probate.

3. Check the LLC’s governing documents

Locate the Articles of Organization and the operating agreement. Those documents commonly include: (a) whether membership interests are transferable on death; (b) buy‑sell or redemption provisions; (c) procedures for admitting successors; and (d) whether death of the sole member triggers dissolution or continuation. If an operating agreement controls, its terms generally govern membership transfer. If there is no operating agreement or it is silent, consult the LLC statute referenced above and get legal advice.

4. Practical transfer options

Common outcomes after probate:

• Beneficiary holds only economic rights — Many operating agreements or statutes allow a transferee to receive distributions and other economic rights but not management or voting unless the transferee is formally admitted as a member.
• Admission as a member — If the heir wants full membership (management/voting) and the agreement requires consent, the heir must obtain the required consent (often from other members or managers) or follow buy‑in procedures.
• Buyout or redemption — The LLC or other members may have the right (or obligation) to purchase the decedent’s interest at a specified valuation or by a defined formula.
• Dissolution vs. continuation of a single‑member LLC — If the decedent was the only member, the operating agreement should state whether the LLC continues with the successor or dissolves. If silent, the LLC’s future may be uncertain; you will likely need to rely on probate documents and possibly a member vote or court guidance.

5. Steps the personal representative or heir should take

1. Obtain certified copies of the death certificate and Letters Testamentary/Administration from the probate court.
2. Provide those certified documents to the LLC (manager or registered agent) to show authority to act for the estate.
3. Review the operating agreement and Articles of Organization for transfer, admission, or buyout rules.
4. If the heir should be admitted as a member, follow the admission procedures in the operating agreement (execute any required joinder, amendment, or member consent form).
5. If the LLC or other members buy out the interest, arrange valuation (per the agreement or by appraisal) and complete the sale with written documentation and distribution of sale proceeds through the estate.
6. If the LLC must file any public forms (for example, if management structure or registered agent changes), consider filing with the Tennessee Secretary of State: Tennessee Secretary of State — Business Services.

6. Watch deadlines and creditor claims

The probate estate must handle creditor claims before distributing assets. The personal representative must follow Tennessee probate timelines and procedures. See the probate resources link above and get probate counsel if you are unsure how creditor claims or estate taxes affect the value or transfer of the membership interest.

7. Tax considerations and EINs

A change in ownership may affect federal and state tax classification (for example, a single‑member LLC taxed as a disregarded entity changes when ownership changes). The IRS rules and Tennessee tax rules can require a new EIN or different tax filings. Consult a tax professional before finalizing transfers.

8. When court involvement may be necessary

If the operating agreement is silent, members disagree, or the estate must force a sale or resolve whether the LLC continues, you may need a court resolution — either in probate court or a chancery/civil court. Get legal counsel early to evaluate litigation risk and alternatives.

Helpful Hints

• Get the certified death certificate and Letters Testamentary right away — most third parties will not act without them.
• Search the company’s operating agreement, amendments, and any buy‑sell or redemption agreements before contacting LLC managers.
• If you are the heir, ask the personal representative to supply estate documentation that proves your inheritance rights (a copy of the will or probate order).
• Preserve financial records: bank statements, tax returns, distribution history, and company meeting minutes help with valuation and transfer negotiations.
• Do not assume you get management rights automatically. Many statutes and agreements give transferees only economic rights until formally admitted as members.
• Notify the Tennessee Secretary of State or file necessary entity amendments only after you understand whether a public filing is required (many ownership changes are internal and do not require amendment to Articles of Organization).
• Consult both a Tennessee probate/estate attorney and a business/LLC attorney if you manage the estate or seek full membership rights; they can coordinate probate transfers and LLC admission steps.
• Check for any estate tax, income tax, or gift tax consequences with a CPA or tax attorney before completing transfers.

Key Tennessee resources

• Tennessee LLC statutes (Title 48, Chapter 249): https://www.capitol.tn.gov/legislation/title-48/chapter-249/index.html
• Tennessee Courts — probate information: https://www.tncourts.gov/programs/probate
• Tennessee Secretary of State — business services (entity filings and forms): https://sos.tn.gov/business-services

When to hire an attorney

Hire a Tennessee probate attorney if you are the personal representative and unfamiliar with the probate steps. Hire an LLC or business attorney if you need to be admitted as a member, a buyout is required, or there is a dispute among heirs or members. If taxes, valuation or creditor claims are involved, get a CPA or tax attorney involved as well.

Disclaimer: This article explains general principles of Tennessee law and is for educational purposes only. It does not constitute legal advice, create an attorney‑client relationship, or guarantee results. For advice about your specific situation, consult a licensed Tennessee attorney.