How do I transfer an LLC membership interest in a North Carolina probate estate without losing liability protection? - Florida
The Short Answer
In Florida probate, a deceased LLC member’s rights are generally exercised by the personal representative (executor) as the member’s legal representative, but the beneficiary who receives the interest does not automatically become a full “member” with management rights. To preserve liability protection and avoid unintended personal exposure, the transfer must follow Florida’s LLC statute and the LLC’s operating agreement—especially rules on who can become a member and what rights a transferee receives.
What Florida Law Says
Florida law distinguishes between (1) the economic rights in an LLC (the right to receive distributions) and (2) full membership/management rights. In probate, the personal representative typically has authority to deal with estate assets, but the LLC’s operating agreement and Florida’s LLC Act often control whether the recipient becomes a member or only a transferee of economic rights.
The Statute
The primary law governing this issue is Fla. Stat. § 605.0504.
This statute establishes that when an individual LLC member dies, the member’s legal representative may exercise the member’s rights for purposes of settling the estate, including any power the member had to give a transferee the right to become a member.
Relatedly, Florida’s LLC Act provides that a transfer of a “transferable interest” generally does not entitle the transferee to participate in management—meaning the recipient may receive distributions without automatically stepping into the deceased member’s governance role. See Fla. Stat. § 605.0502.
On the probate side, a personal representative is also broadly authorized to acquire or dispose of estate assets (other than certain real property transactions) and to execute instruments necessary to exercise those powers. See Fla. Stat. § 733.612.
If you want more background on how Florida treats LLC interests at death when documents are unclear, see: If My Florida LLC Operating Agreement Is Silent, What Happens to My LLC Interest When I Die?
Why You Should Speak with an Attorney
While the statutes provide the general framework, applying them to your specific situation is rarely simple. Legal outcomes often depend on:
- Operating Agreement Restrictions: Many LLCs restrict transfers, require consent for admission of a new member, or limit what the estate can convey—mistakes can trigger disputes or make a transfer ineffective.
- Burden of Proof: If other members or beneficiaries challenge the transfer, you may need clear documentation showing the personal representative’s authority and compliance with the operating agreement and Florida law.
- Liability/Authority Pitfalls: Confusing “economic rights” with “management rights” can lead to someone acting without authority (creating personal risk) or to claims that fiduciary duties were breached during administration.
Because LLC interests sit at the intersection of probate administration and business-entity law, getting it wrong can delay probate, reduce the value of the business interest, or create avoidable personal exposure for the personal representative or beneficiaries.
Get Connected with a Florida Attorney
Do not leave your legal outcome to chance. We can connect you with a pre-screened Probate attorney in Florida to discuss your specific facts and options.
Disclaimer: This article provides general information under Florida 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.