Can a Last Will Change Who Owns an LLC Interest in Missouri?
Detailed answer
Short answer: In most cases in Missouri, a last will cannot unilaterally override the LLC operating agreement to force admission of a heir as a full member. A will can transfer whatever property the decedent owned, including the economic value of an LLC interest, but the operating agreement and Missouri LLC law control whether the heir becomes a member with voting or management rights.
Why: Missouri limited liability companies and member rights are governed by the Missouri Revised Statutes and the LLCs own operating agreement. The operating agreement sets the rules for transfer, buyouts, and admission of new members. See Missouri Revised Statutes, Chapter 347 (Limited Liability Companies): https://revisor.mo.gov/main/Chapter.aspx?chapter=347.
What typically happens under Missouri law and common operating agreements:
- Operating agreement controls. If the operating agreement restricts transfers, requires member approval, or contains buy-sell provisions, those rules usually bind the decedent’s estate and any person who receives the interest by will.
- Will transfers economic value, not always membership. A will can pass the decedent s interest in the LLC to a beneficiary. But many operating agreements and LLC statutes treat that beneficiary as an assignee entitled only to distributions (economic rights) unless the existing members admit the beneficiary as a member (management and voting rights).
- Member consent is often required. Many operating agreements require a vote or unanimous consent to admit a transferee as a full member. If the members do not agree, the beneficiary may only receive distributions and not participate in management.
- Buy-sell or forced-sale provisions. Some agreements compel a purchase of the decedent s interest at a formula price or appraisal. The estate receives the cash or payment stream rather than an ongoing membership stake.
Concrete example (hypothetical facts): A Missouri LLC operating agreement says no transfer of membership is effective without approval by members holding a majority of voting rights. A member dies and leaves an LLC interest to a son in a will. The son inherits the economic entitlement to receive the deceased member s share of profits, but the other members refuse to admit him as a member. Unless the operating agreement is amended or the members consent, the son remains an assignee with only distribution rights until and unless admitted under the agreement.
How courts treat conflicts: Courts generally enforce the operating agreement when it governs internal affairs and transfers. The will cannot change the private contractual arrangement among LLC members. However, a will still governs disposition of property the decedent owned subject to those contractual limits. If the operating agreement is ambiguous or invalid, or if members act in bad faith, the estate or beneficiary may need to seek a judicial resolution.
Where to look in Missouri law: Review Chapter 347 of the Missouri Revised Statutes for the statutory framework that complements the operating agreement. The chapter addresses member rights, assignments, and effects of transfer: https://revisor.mo.gov/main/Chapter.aspx?chapter=347.
Practical steps to take now
- Locate the operating agreement and read the transfer and death provisions carefully. Note any restrictions, required consents, or buyout language.
- Check for a buy-sell or valuation formula and confirm how a decedent s interest is priced and paid out.
- Determine whether the operating agreement differentiates between an assignee (economic rights only) and a member (voting/management rights).
- Talk with both an estate (probate) attorney and a business/transactional attorney who understands Missouri LLC law. They will explain whether the operating agreement will block admission and help plan options.
- Consider business estate planning changes now: amend the operating agreement (with member consent), adopt a buy-sell funded by life insurance, gift equity during life, or create a trust that holds the LLC interest subject to clearer admission rules.
- If a dispute arises after death, the estate may need to open probate and possibly litigate to enforce rights or clarify the operating agreement s terms.
Helpful hints
- Start early: Coordinate estate planning with business agreements so a will and operating agreement do not conflict.
- Read the difference: economic rights vs. membership rights. These are distinct in many LLC agreements.
- Search for consent clauses: many agreements require member approval for admission after death.
- Look for buyout triggers and valuation mechanics so your heirs know if they will receive cash instead of an ongoing interest.
- Document member decisions: if members agree to admit an heir, record that consent in writing and amend company records accordingly.
- When in doubt, get both an estate attorney and a business attorney involved—a single attorney may not be sufficient for both probate and LLC governance issues.
- Keep business records current: an up-to-date operating agreement and capitalization records make transfers after death far smoother.