Short answer

If an LLC’s operating agreement is silent about what happens when a member dies, Colorado’s default LLC rules apply. Generally, the deceased member’s economic interest (the right to share in profits and distributions) passes to the member’s estate or heirs, but membership and management rights typically end on the member’s death unless the other members agree to admit the heir or devisee as a new member. If the LLC is a single‑member LLC, the business can face practical and legal disruptions unless succession steps are taken in advance.

Detailed Answer — how Colorado law treats a member’s interest after death

1) Two different kinds of rights: economic vs. membership/managerial. In most LLC frameworks (including Colorado’s), a member’s interest splits into at least two parts:

• Transferable (economic) interest: the right to receive distributions and allocations of profits and losses. This interest is generally transferable by the member’s estate to heirs or a transferee, so heirs can receive money the LLC pays out.
• Membership and management rights: the right to vote, to participate in management (if member‑managed), and to be treated as a member for decision‑making. These typically do not automatically pass to an heir. Other members must usually consent to admit a transferee as a member.

2) Death usually causes dissociation from management. On death, the deceased member is typically dissociated from the LLC’s management. The estate steps into the deceased member’s economic position (right to future distributions if the LLC decides to distribute), but not the decision‑making role unless the other members approve admitting the heir as a member.

3) What happens to the business depends on LLC structure and membership count.

• Multi‑member LLC: The LLC normally continues to exist. The estate or heirs hold the economic interest but do not become managers or members by automatic right. The remaining members may have rights to buy out the estate under default rules or an agreement (if one exists).
• Single‑member LLC: If the sole member dies and there is no operating agreement provision or succession plan, the LLC risks administrative disruption. The estate may be treated as owner of the economic interest, but practical control, bank accounts, contracts, and tax status can become uncertain. State default rules and probate law will determine transfer and continuation.

4) Probate, buyouts, and creditor claims. The deceased member’s transferrable economic interest generally becomes part of the probate estate. Creditors can pursue that interest through estate collection procedures. If the LLC or remaining members want to buy the interest, they and the estate can follow either any buyout process in an operating agreement or the default statutory or equitable procedures.

5) Tax and operational implications. Admission (or non‑admission) of an heir as a member can change who is responsible for management actions, signatory authority, and how the LLC is taxed. For tax classification (partnership vs. disregarded entity), a membership change may alter federal/state tax treatment—consult a tax advisor.

6) Where to read the law in Colorado. Colorado’s default business organization and LLC statutes govern these situations when an operating agreement is silent. See the Colorado Revised Statutes, Title 7 (Business Organizations) for the state’s default LLC provisions: https://revisor.colorado.gov/statutes/title-7. For practical filing and LLC guidance from the state, see the Colorado Secretary of State’s LLC resources: https://www.sos.state.co.us/pubs/business/llc/.

Common hypothetical examples (to illustrate)

Example A — multi‑member LLC: Maria, a member in a three‑person Colorado LLC, dies without an operating agreement provision. Her will leaves her assets to her child. The child receives Maria’s right to distributions, but the two surviving members continue to manage and vote. If the surviving members and the child agree, the child can be admitted as a member; otherwise the child remains an economic transferee and may be bought out under applicable rules.

Example B — single‑member LLC: Sam is the sole member of a Colorado single‑member LLC and dies intestate. Sam’s estate owns the LLC’s economic interest, but banks and counterparties may question who can sign or make decisions. The estate executor and heirs should act quickly to provide documents, check the LLC’s articles and any successor designations, and consult counsel to preserve the business value and avoid forced administrative dissolution or lost contracts.

Practical steps for heirs, executors, and remaining members

1. Locate the operating agreement and articles of organization. Even if the operating agreement is silent on death, it might contain transfer, buyout, or valuation provisions that apply.
2. Notify the LLC and other members. Provide a certified death certificate and identify the personal representative or executor handling the estate.
3. Check for buy‑sell, right of first refusal, or valuation clauses. If present, follow them; they often require a timeline and method to value and pay for the interest.
4. Determine whether admission as a member is desired or required. If heirs want management power, they may need written consent from the other members to be admitted as members.
5. Consult the probate court or an estate lawyer to transfer the economic interest under Colorado probate rules if the transferee is named in a will or inherits by intestacy.
6. Consider tax and banking steps: update IRS forms, notify the LLC’s bank and service providers, and preserve evidence of distributions and accounting.

How to avoid disputes and business disruption (planning tips)

Prevent future uncertainty by adding clear clauses to the operating agreement and regular estate planning documents. Useful provisions include:

• Buy‑sell agreements tied to death with a clear valuation formula and payment terms.
• Mandatory admission or mandatory buyout of heirs (with timelines and funding sources).
• Right of first refusal for remaining members or the LLC before a transferee receives economic distribution rights.
• Succession designations for single‑member LLCs or management nominee provisions.
• Clauses addressing tax treatment and allocation of profits/losses after dissociation.

Helpful Hints

• Act quickly: gather the operating agreement, articles of organization, member ledger, and the decedent’s will.
• Get certified copies of the death certificate—LLCs, banks, and probate courts will require them.
• Ask whether the operating agreement authorizes a buyout; if so, follow its timeline to avoid disputes.
• If you are an heir who only inherited economic rights, know you likely cannot run the business without other members’ consent.
• For single‑member LLCs, include successor language in estate planning (pour‑over will, trust ownership of membership interest, or express successor designation in the operating agreement).
• Hire a Colorado attorney experienced in LLC and probate matters when there is uncertainty, a contested buyout, or significant business value at stake.

Disclaimer: This article provides general information about Colorado law and is not legal advice. It does not create an attorney‑client relationship. For advice specific to your situation, consult a licensed Colorado attorney or the Colorado Secretary of State resources linked above.