Short answer: If your LLC operating agreement is silent about what happens to a member’s ownership when they die, Maine’s default rules and your estate/probate process generally control. The deceased member’s estate usually inherits the economic (financial) interest, but the right to participate in management or vote typically does not automatically pass to the heir without the other members’ consent. How this plays out depends on the LLC’s governing documents, Maine law, and whether the deceased left a will or other estate plan.
Detailed answer — how this usually works under Maine law
1) Membership interest has two separate components.
- Economic (financial) rights — right to share in profits, distributions, and receive buyout proceeds.
- Management/membership rights — right to vote, participate in management, or serve as a manager/member.
In most LLC statutes (and in practice in Maine), the economic portion is treated as transferable property that can pass to heirs or beneficiaries. Management rights are distinct and often require the other members’ consent before they transfer to someone outside the LLC.
2) If the operating agreement is silent, default statutory rules and the LLC’s articles may control.
• The deceased member’s transferable interest (economic rights) will usually pass according to that member’s will or, if there is no will, by Maine’s intestacy rules administered through probate. See Maine’s probate and intestacy rules: Maine Revised Statutes (probate titles and intestacy provisions).
3) The estate or a beneficiary ordinarily receives only the financial rights unless the LLC agreement or law provides otherwise.
• The transferee (heir or beneficiary) can collect distributions and receive buyout payments. But the transferee usually cannot step into the deceased member’s management role or vote as a member unless the LLC members agree. This helps protect the company from unwanted third-party control.
4) Death may trigger dissociation or a buyout right.
• Many LLC laws treat certain events (including death) as events causing a member’s dissociation. Dissociation can trigger a right for the LLC or remaining members to buy the departing member’s interest under statutory procedures or an operating agreement. If your operating agreement is silent, statutory default rules and the LLC’s articles may prescribe buyout timing, valuation method, and payment terms.
5) Probate can be necessary to transfer the deceased member’s ownership to heirs.
• If the deceased left a will, the executor will handle the transfer of the economic interest through probate. If there is no will, Maine intestacy laws determine who inherits. The heir may receive only the transferable interest; membership status may require approval from other members.
6) Practical consequences for the LLC and the deceased’s family.
- Business continuity — the LLC can often continue operating if the remaining members choose to do so.
- Potential disputes — ambiguities can lead to disagreements over valuation, buyout terms, and who should manage.
- Cash flow issues — funding a buyout may require liquidity (insurance, installment payments, or company funds).
Relevant Maine resources and statutes
• Maine Revised Statutes and titles on business and probate: https://legislature.maine.gov/legis/statutes/
• Maine Secretary of State — business services and information about forming and managing LLCs: https://www.maine.gov/sos/cec/corp/
What you should do right now
- Locate the LLC’s operating agreement and articles of organization. Even if silent, other provisions (buy-sell clauses, consent requirements, or valuation methods) may apply.
- Check the deceased member’s estate planning documents (will, trusts, powers of attorney). A trust or properly drafted beneficiary designation may keep the transfer out of public probate and make the transition smoother.
- Talk with the LLC’s other members quickly. Decide whether you want the heir to become a full member, prefer to buy the interest, or want another arrangement.
- Get a valuation. If a buyout is required, you’ll need an agreed or statutory valuation method. Consider a neutral business appraiser.
- Consider life insurance or other funding mechanisms for buyouts to avoid liquidity problems.
- Consult both a probate attorney and a business/LLC attorney in Maine to navigate probate, statutory defaults, and any required filings.
Examples (hypothetical)
Example A — No operating agreement provision, member dies with a will naming spouse as beneficiary: The spouse inherits the deceased’s economic interest through probate but cannot vote or manage the LLC unless the other members agree. The LLC’s remaining members may have the option to buy the interest under state default rules or company practice.
Example B — No operating agreement provision, member dies intestate (no will): State intestacy rules determine heirs. The heirs get the financial interest via probate. If the LLC wants to remove outside heirs from management, members may redeem the interest for fair value.
Helpful Hints
- Don’t assume family members automatically become members — confirm membership status in writing.
- Always check the LLC’s articles and any written policies; even silence in the operating agreement doesn’t mean the articles are silent.
- Use a buy-sell agreement or member buyout clause to avoid ambiguity. Fund buyouts with life insurance if possible.
- Keep LLC records and capitalization schedules up to date so valuations and transfers are simpler after a death.
- If you own an LLC interest and want it to pass cleanly to a specific person, update your estate plan (will or revocable trust) and coordinate it with the operating agreement.
- Consult an attorney early — small drafting changes can prevent costly disputes later.
Disclaimer: This information is educational only and is not legal advice. It does not create an attorney-client relationship. For advice about a specific situation in Maine, consult a licensed Maine attorney experienced in estate planning, probate, or business law.