How Virginia law treats LLC membership interests and wills

Virginia’s business laws are found in Title 13.1 of the Virginia Code and your estate/will matters are in Title 64.2. In practice, the LLC’s operating agreement typically governs transfer, admission of new members, buy-sell or death provisions, and restrictions on transfers. Where the operating agreement controls, its terms usually bind the decedent’s estate and will. See Virginia Code Title 13.1: https://law.lis.virginia.gov/vacode/title13.1/ and Virginia Code Title 64.2: https://law.lis.virginia.gov/vacode/title64.2/.

Key legal concepts you need to know

• Economic interest vs. membership interest. An owner’s economic interest (right to share profits and distributions) is often treated differently from the right to participate in management or vote. Your will can usually pass your economic interest to an heir, but the transferee may not gain management or voting rights without the LLC’s approval.
• Operating agreement priority. Most Virginia LLCs use an operating agreement that sets transfer rules, buy-sell rights, and admission procedures. Courts generally enforce those agreements, so the operating agreement’s transfer controls usually override contrary provisions in a will.
• Transfer restrictions and buy-sell clauses. Common clauses include rights of first refusal, mandatory buyouts at death, or a requirement that the remaining members consent before admitting anyone new. Those clauses can prevent your named beneficiary in a will from becoming a member automatically.
• Probate vs. transfer outside probate. A will controls assets that pass through probate. If the operating agreement creates restrictions or a contractual buyout upon death, the LLC transaction may occur outside probate even though the will covers the economic value.

How this plays out in typical situations (hypotheticals)

Below are examples to show how rules apply in common fact patterns.

Hypothetical A — Operating agreement is silent on death

If the operating agreement has no death or transfer rules, Virginia default rules and the terms of membership interests (often in the operating agreement or state law) will apply. Your will can pass your membership interest to your son, but he may receive only the economic right to distributions. The LLC’s members may still need to approve admitting him as a voting/member-manager.

Hypothetical B — Operating agreement contains a buy-sell at death

If the agreement requires that on a member’s death the company must buy the decedent’s interest (or grants existing members first refusal), the company or the other members will follow that contractual process. Your will cannot stop the buyout; instead, the estate typically receives payment under the buy-sell terms.

Hypothetical C — Transfer prohibited without member consent

If transfers that would make someone a member require unanimous or majority consent, your will may pass the decedent’s economic share to the heir, but the heir will lack membership rights until the operating agreement’s consent conditions are met.

Practical steps to take now

1. Locate the operating agreement and any buy-sell or membership certificates. Identify sections about death, transfer, right of first refusal, and admission of transferees.
2. Read the membership interest language. Determine whether the document distinguishes between assignment of economic rights and admission as a member.
3. Check whether transfers require member consent. Many agreements require consent or set valuation/buyout formulas on death.
4. Talk with the company’s manager or other members. They may prefer to admit your son, authorize a buyout, or negotiate terms.
5. Update your estate plan intentionally. If you want your son to own and manage the business, consider a succession plan, an inter vivos transfer, or an amendment to the operating agreement (if permitted) rather than relying solely on a will.
6. Engage a Virginia attorney. An attorney can interpret the operating agreement, advise how Virginia statute and case law apply, and draft documents (buy-sell agreements, member consents, or estate provisions) to carry out your wishes.

Common misunderstandings

• “My will says X, so the company must comply.” Not always. Contractual company documents commonly govern membership rights and transfers.
• “If my heir is named in the will, they automatically become a member.” Not if the operating agreement restricts admissions or requires member consent.
• “A beneficiary can never get any value.” No — even where admission is restricted, the estate typically gets the value (paid via buyout) or the economic interest.

What to ask a Virginia attorney

• Do the operating agreement and Virginia statute allow my will to pass my membership interest to my son?
• Does the agreement treat transfer to an heir as an “assignment” or as admission to membership?
• Is there a buy-sell or right-of-first-refusal clause that applies on death?
• Would an inter vivos transfer or an amendment to the operating agreement be a better way to accomplish my goals?
• What are the tax and probate implications of the transfer in Virginia?

Helpful hints

• Keep a copy of the operating agreement with your will and estate documents so your executor can find it quickly.
• Confirm whether the interest is a membership unit with voting rights or merely an economic interest; the difference matters greatly.
• If time permits, consider transferring your business interest while you are alive to avoid disputes and allow for training and transition.
• Ask for a written member consent or amendment if other members agree to your desired transfer — this avoids probate fights later.
• Update beneficiary designations and your operating agreement together to ensure they work in harmony.

Where to look in Virginia law

Start with the Virginia Code Title 13.1 (business entities) for LLC rules and Title 64.2 for wills and probate. The code can help you understand statutory defaults but remember that your operating agreement typically controls contractual relationships among members. Virginia Code Title 13.1: https://law.lis.virginia.gov/vacode/title13.1/; Virginia Code Title 64.2 (Wills, Trusts, and Estates): https://law.lis.virginia.gov/vacode/title64.2/.

Final takeaways

Your will can transfer the value of your LLC interest, but it usually cannot override an operating agreement’s transfer restrictions or force the LLC to admit a new member. To ensure your son becomes the owner you intend, review and, if necessary, amend the operating agreement or arrange an inter vivos transfer or buy-sell plan. For tailored advice and to avoid unintended tax or probate results, consult a Virginia attorney experienced in business succession and estate planning.

Disclaimer: This article is educational only and does not constitute legal advice. For advice about your specific situation, consult a licensed Virginia attorney.