Given that an LLC allows you as a member to avoid liability in case someone sues your business, you should be sure that the company will not fall apart if one of its other members dies. Fortunately, an LLC can survive by passing the ownership interest and rights to someone else.
There are multiple ways for a Florida LLC to transfer the rights and interest of a deceased owner.
The operating agreement
The founders of an LLC determine how the company will operate and establish the rights of the members when they draft an operating agreement. This document should also describe what will happen in the event of incapacitation, resignation or death of one of the members.
Generally, the agreement will arrange for a buyout of the share of the departed or deceased member. This may include a valuation formula of the ownership share to determine a fair price. One, more or all of the members might buy the share.
The estate plans of the deceased member
Some LLC owners use an operating agreement to forbid members from transferring their ownership after they die. If this is not the case, a member may create a succession plan to transfer the ownership and rights to another person, which may include voting rights and the right to act as an LLC manager.
It is important that an LLC and its members have legal documents to establish an ownership transition. Otherwise, a Florida court might get involved if the ownership interest ends up in the estate of the deceased member. With a firm succession plan in place, you may keep your LLC membership in the hands of people you know and trust.