Montana: Can a Will Override an LLC Operating Agreement to Transfer a Business Interest?

Short answer: In Montana, a last will and testament generally cannot unilaterally override an LLC’s operating agreement. A will can name a beneficiary for your ownership interest as part of your estate plan, but the transfer after death is subject to the LLC’s governing documents, Montana law, and any buy‑sell or consent provisions in the operating agreement.

Here’s how this works in practice under Montana law:

• Legal nature of an LLC interest. A membership interest in an LLC is a form of personal property. A member may be able to transfer certain economic rights by will, but membership and management rights are often governed by the operating agreement.
• Operating agreement controls. Most operating agreements include transfer restrictions, rights of first refusal, mandatory buy‑outs at death, or requirements that remaining members consent to a new member. Those contractual rules bind the member and their estate. In short: the operating agreement generally governs what happens to an interest when a member dies.
• Economic vs. management rights. Even if the will transfers your economic interest (the right to profits and distributions) to your son, the operating agreement may prevent your son from stepping into your management role or having voting rights unless the other members consent. Many agreements treat a deceased member’s heir as an assignee with only economic rights until admitted as a full member by consent.
• Probate vs. contractual enforcement. A probate court can apply the terms of your will to distribute probate assets, including a transferable ownership interest. But the LLC and other members may still enforce contractual provisions (for example, requiring the company or other members to buy the interest at a formula price). A will cannot nullify those contract terms.
• Statutory backdrop. Montana’s statutes set the default rules for LLCs and for probate, but the parties’ operating agreement typically fills in the details. For information on Montana statutes related to business entities and probate, see the Montana Code Annotated pages for business entities and for probate and decedents’ estates: https://leg.mt.gov/bills/mca/ and the Montana Secretary of State business pages: https://sosmt.gov/business/.

Example scenarios (hypothetical):

1. If the operating agreement says “on a member’s death the company will purchase the decedent’s interest for fair market value,” then when you die your estate (per your will) can receive payment but your son will not automatically become a member unless the agreement allows admission.
2. If the operating agreement is silent about death and does not restrict transfers, your will can pass your membership interest to your son and he may be admitted as a member under Montana default LLC rules—subject to any statutory requirements and the company’s articles.
3. If the operating agreement allows only unanimous consent to admit a new member, your son may inherit your economic interest but cannot participate in management or voting unless the other members agree.

Because operating agreements vary, the dispositive documents to check are your operating agreement and the LLC’s articles of organization. If those documents conflict with your estate plan, you may be able to change the company documents or amend your estate plan while you are alive to achieve the desired result.

What to do next — practical steps

1. Locate and read the operating agreement and articles of organization. Identify clauses about transfer on death, buy‑sell, rights of first refusal, member consent, valuation method, and admission of transferees.
2. Talk with the other members. If you want your son to step into your role, discuss whether the members will consent and whether buy‑sell financing or valuation rules are acceptable to all.
3. Consider amending the operating agreement. If all members agree, most operating agreements can be amended to allow a designated heir to succeed automatically (or to establish clear buy‑out terms).
4. Update estate documents. If changing the operating agreement isn’t feasible, work with an estate attorney to draft documents (will, trust, assignment, or other arrangements) that coordinate with the operating agreement and Montana law to achieve your goals.
5. Plan for liquidity and taxes. If the company will buy the interest at death, consider life insurance or other funding to allow a smooth buyout. Also review possible estate and income tax consequences of any transfer.
6. Get legal help before making changes. Because contract, corporate, and probate rules interact, consult an attorney who handles Montana business and estate matters to implement a reliable plan.

Helpful Hints

• Don’t assume a beneficiary named in your will immediately becomes a full member. Contracts may limit that result.
• Make a copy of the operating agreement readily available to your executor and to the person you intend to inherit the interest.
• If you want a smooth transfer of management control, get the other members’ written consent now or include clear automatic‑transfer language in the operating agreement.
• Consider using a trust as the owner of your interest. A trust can provide continuity and avoid some probate delays, but it must be consistent with the operating agreement.
• Confirm whether your LLC is manager‑managed or member‑managed—this affects whether the heir can take over operations.
• Document any buy‑sell valuation method in the operating agreement (fixed formula, appraisal, or preset price) to avoid disputes after death.
• Keep estate and business plans coordinated: an estate plan that ignores company contracts often creates conflict, delay, and additional cost for heirs.