A recent Florida appellate ruling recognized the use of provisions in a LLC operating agreement to specify the Membership Interests beneficiaries and avoid probate. The operating agreement for an LLC included restrictions on whom membership interest could be transferred to, and directed that upon the death of a member, the interests would “immediately vest in the deceased Member’s then living children and issue of any deceased child per stirpes,” unless the interests was otherwise directed to an allowed recipient through the decedent’s will. After the death of one member, his “pour over” will directed his assets into a trust, which directed that some LLC income go to his girlfriend.
In Blechman v. Estate of Blechman, a Florida appeals court, applying New Jersey law, held that the contractual operating agreement acted to direct the inheritance of the decedent’s interest in the LLC completely outside of probate, and since the decedent’s testamentary gift to the girlfriend was not allowed under the operating agreement, the agreement directed the LLC Membership Interests to go to his children.
See Jeffrey Skatoff, Membership Interest in LLC Passes Outside of Probate Estate, Clark Skatoff, Jan. 7, 2014.
