Who Runs Your LLC the Day After You Die?

Most business owners I meet have thought about who gets the LLC when they die.

Almost none have thought about who runs it the next morning.

Those are two different questions. Utah law answers them differently.

Ownership and control split apart

When you die, you stop being a member of your LLC. Under Utah's LLC Act, that happens automatically.

What's left is your interest in the company. Your estate can hold it, and it carries the right to receive distributions. That's the money side.

The control side doesn't come along for free. Someone holding only the economic interest doesn't get to vote, manage, or sign for the company unless the operating agreement or the other members let them in.

So your family can own the value of the business without the power to make a single decision about it.

The solo owner problem

If you have partners, they can usually keep the lights on. I wrote about that side in If Your Business Partner Dies, Who Owns Their Half?

If you're the only member, it's harder. The day you die, the company has no members at all.

Utah law gives your personal representative some room. They can step into the money side and get the company information they need to settle your estate. But someone has to appoint them first. If the interest is in your name alone, that usually means probate.

And there's a clock. If an LLC goes 90 days in a row with no members, it dissolves unless the people holding the interest agree to admit a new member inside that window.

Meanwhile, payroll is due. Vendors want answers. The bank wants to know who can sign.

Two documents that have to agree

Your will or trust says who should end up with the company. Your operating agreement says who's allowed to become a member and who manages. If those two documents never met, your family gets stuck in the gap.

Here's what I look for when they have to work together:

• Who becomes a member when you die, and whether that happens without a vote
• Who manages in the meantime, by name or by role
• Whether a trust can hold your interest, so a successor trustee can act without waiting on a court
• What happens if you're alive but can't make decisions

That last one catches people. In a member-managed LLC, Utah's LLC Act also ends your membership if a court appoints a guardian or general conservator for you.

The trust piece has its own trap. A trust can only hold your LLC if the operating agreement allows it. I walked through that in Your Trust Can't Own the LLC If the Operating Agreement Says No.

One thing to check this week

Pull out your operating agreement and search for the word "death." Then pull out your estate plan and ask whether both point to the same person.

If they don't, or you can't find an operating agreement at all, that's the gap. The fix is getting both documents to say the same thing while you're here to sign them.

I do both estate planning and business law, so I like to read these side by side. If you want a second set of eyes, you can schedule a time to talk.

This is general education, not legal advice for your situation. I'm licensed in Utah, Arizona, and Texas.