What happens if an LLC operating agreement doesn’t address what happens to a member’s share when they die?

Short answer: If the operating agreement is silent, Mississippi default law and basic probate rules control. The deceased member’s financial interest (the right to distributions) generally passes to the member’s estate or heirs, but management and voting rights usually do not automatically transfer. The LLC and the surviving members may have legal rights to restrict transfer, require a buyout, or treat the death as a dissociation event that affects the decedent’s membership status.

Detailed answer — how this works under Mississippi law

This explanation assumes no special terms appear in the LLC operating agreement. Every reader should understand this is general information and not legal advice. For statutes and formal rules, see the Mississippi Code and the Secretary of State guidance linked below.

1. Two different things: economic interest vs. membership rights

When a member dies, two categories of rights are important:

• Transferable (economic) interest — the right to receive distributions, profits, and the value of the member’s ownership. That interest is usually treated as personal property and can pass to heirs or the estate under a will or by intestacy.
• Membership (management/voting) rights — the right to participate in management, vote on company matters, or act as a member. Under default rules, these rights generally do not pass automatically to the deceased member’s heirs. The new holder of the economic interest is typically an assignee, not a full member, unless the other members consent or statutory conditions are met.

2. Death as a dissociation event

Under common LLC law frameworks, a member’s death is an event of dissociation. Dissociation can trigger buyout rights — the company or the remaining members may have a right (or obligation) to purchase the decedent’s membership interest for a fair value. If the operating agreement is silent, state default procedures and valuation rules apply.

3. Probate and the estate

If the decedent left a will, the membership’s economic interest typically becomes part of the probate estate and passes according to the will (or by intestate succession if there is no will). The personal representative of the estate may act as the assignee or sell the economic interest subject to any restrictions in the LLC’s governing documents or state law.

4. Typical default consequences under state LLC law (Mississippi)

Although LLC statutes vary by state, the common default rules you should expect in Mississippi include:

• An heir or devisee receives the right to distributions that the deceased member would have received, but does not automatically gain management or voting authority.
• The transferee is often treated as an assignee. Assignees can receive distributions but cannot become full members or exercise management rights unless the other members admit them.
• The LLC or remaining members may have a right to purchase the deceased member’s interest (buyout). If the operating agreement is silent, buyout timing and valuation often follow statutory default rules or equitable valuation, which may require appraisal or negotiation.
• If no buyout occurs and multiple heirs own fractional economic interests, management can become fragmented and make future governance and distributions complicated.

5. What can complicate the process

• No clear valuation method — disagreement about fair market value of the interest.
• Multiple heirs with fractional shares — creates management / distribution friction.
• Restrictions in the operating agreement that weren’t noticed — e.g., transfer restrictions, rights of first refusal, or mandatory buy-sell triggers.
• Tax consequences for the estate or transferee — estate tax adjustment, income tax on buyout, stepped-up basis issues.

What you should do next (practical steps)

1. Locate and read the operating agreement carefully. Even a clause buried in “transfer restrictions” or “dissociation” can control what happens.
2. Notify the LLC and other members immediately after death. Prompt notice helps start any buyout or admission process required by members.
3. Get the decedent’s estate representative involved. The personal representative or executor will typically handle the estate’s ownership interest and any required sales.
4. Seek a valuation. If a buyout is required or likely, obtain a business valuation method consistent with the operating agreement or state practice.
5. Consider a negotiated outcome. Remaining members and the estate can agree to a purchase price or other terms to avoid litigation and drawn-out probate disputes.
6. Update estate and business planning documents going forward — add buy-sell clauses, life insurance funded buyouts, or succession planning to prevent the same problem in future.

Relevant Mississippi resources and statutes

Mississippi’s LLC law is part of the Mississippi Code. For the statutory framework and default rules governing LLCs, see the Mississippi Code and official state business resources:

• Mississippi Code (official) — search the Code for the Limited Liability Company Act and related provisions (search for “limited liability company” or chapter that covers LLC rules).
• Mississippi Secretary of State — Business Services — provides practical guidance on forming and maintaining LLCs and links to filing requirements.

Because specific statutory section numbers can change with legislative updates, use the code lookup on the official Mississippi Code site to find the current sections that govern transfers, dissociation, and the rights of assignees and members.

Typical clauses you should consider adding to your operating agreement

• Buy-sell / mandatory purchase on death clause with a defined valuation method.
• Right of first refusal or consent requirement before an interest can be transferred to an heir or third party.
• Cross-purchase agreement funded by life insurance to allow surviving members to buy out the decedent’s estate without cash strain.
• Clear admission provisions explaining when an assignee becomes a full member.
• Dispute resolution provisions (mediation/arbitration) to avoid costly litigation among heirs and members.

Helpful hints

• Don’t assume a will alone controls LLC membership — wills can pass the economic interest but may not change management rights.
• If you are a member: add clear death/transfer provisions to your operating agreement now.
• If you are an heir: review the operating agreement and contact the LLC promptly — you may have rights to distributions but not to manage unless admitted.
• Use life insurance to fund buyouts so the business isn’t forced to use operating cash.
• Talk to an attorney experienced in both business and probate law — these matters sit at the intersection of LLC law and estate law.

Disclaimer

This article is educational and informational only. It does not constitute legal advice, create an attorney-client relationship, or substitute for personalized legal counsel. For help applying Mississippi law to the facts of your situation — for example, to interpret your operating agreement, handle probate administration, or negotiate a buyout — consult a licensed attorney in Mississippi.