{"id":1806,"date":"2010-10-15T12:22:33","date_gmt":"2010-10-15T19:22:33","guid":{"rendered":"http:\/\/www.keytlaw.com\/azllclaw\/?page_id=1806"},"modified":"2023-11-01T10:28:50","modified_gmt":"2023-11-01T17:28:50","slug":"inherit-your-llc","status":"publish","type":"page","link":"https:\/\/www.keytlaw.com\/azllclaw\/operating-llcs\/inherit-your-llc\/","title":{"rendered":"Who Will Inherit Your Membership Interest in Your Arizona LLC When You Die?"},"content":{"rendered":"

by Richard Keyt<\/a>, Arizona LLC and estate planning lawyer<\/p>\n

If you own an interest in an Arizona limited liability company in your name (rather than through a trust), you owe it to your family and loved ones to prepare now for your death.\u00a0 If you do not, then in addition to leaving them your Arizona LLC, you may also be leaving them an expensive, lengthy and public probate to legally transfer the company from your estate to your heir(s).\u00a0 Please plan now and save your loved ones the costs and headaches of a probate.<\/p>\n

You must understand what will happen to your membership interest in your LLC you die so you cannot minimize the consequences of your death on your loved ones. Ask yourself these very important questions:<\/p>\n

1. Do you care who inherits your interest in the Company when you die? If the answer is no, skip the rest of this article.<\/p>\n

2. Who will inherit your membership interest in the company when you die?\u00a0 Will you pick who inherits your LLCs or will it be the state of your residence?\u00a0 Each state has laws called the law of intestate succession.\u00a0 These laws are the rules for determining who inherits property when the owner of the property fails to make the selection.\u00a0 The way you determine who inherits your property when you die (rather than the state making the determination) is by adopting one of the following methods while you are alive:<\/p>\n

a.\u00a0 Own property jointly with rights of survivorship with one or more joint owners<\/strong>.\u00a0 If you hold title to property this way, then when one joint owner dies, the ownership interest of the deceased owner goes automatically by operation of law to the surviving joint owners.\u00a0 The last joint owner alive will own the entire property.\u00a0 However, if the last survivor does not plan for the transfer of the property on the survivor’s death, a probate will be necessary (unless it is a small estate) and the law of intestate succession will determine who inherits the property.<\/p>\n

b. Prepare and sign a valid Last Will & Testament<\/strong>.\u00a0 Property left by a Will will have to go through probate unless your estate qualifies as a small estate.<\/p>\n

c.\u00a0 Prepare and sign a Trust and transfer the Membership Interest to the Trust<\/strong>. This avoids probate, but is the most expensive option.<\/p>\n

These options are discussed in more detail below.<\/p>\n

3.\u00a0 You must know the answer to question 2 above because if you do not, your membership interest in your LLC may not be inherited by your desired heir(s) or it may go to your desired heir(s) only after an expensive and public probate court proceeding.<\/p>\n

4. If you are married and your spouse will inherit your membership interest in the Company, who will inherit your spouse\u2019s membership interest in the company when your spouse dies? If your spouse will inherit your membership interest on your death, you must know the answer to this question because if you do not, your membership interest inherited by your spouse may not go to your desired heir(s) after your spouse\u2019s death or it may go to your desired heir(s) only after an expensive and public probate.<\/p>\n

You Must Have a Death Plan<\/strong><\/p>\n

Do you have a plan in place by which you pick who inherits your interest in the company or will the State of Arizona decide who inherits your membership interest in your Arizona LLC? If you have a plan that picks your heir(s) does it avoid probate or does the transfer on death happen automatically, which is what occurs when your membership interest is owned by a Trust?<\/p>\n

What You Must Do to Ensure that When You Die Your Membership Interest Will be Inherited by the Person(s) You Chose as Quickly and Inexpensively as Possible<\/strong><\/p>\n

If you own a membership interest in one or more Arizona LLCs and want to protect your loved ones from the major problems caused by the failure to plan for your death, do your loved ones a favor and adopt one of the following death plans:<\/p>\n

    \n
  1. Create a valid Will that specifies who inherits all of your property when you die. Pros<\/span><\/strong>: A Will can dispose of all of your assets, not just a membership interest in an Arizona limited liability company. Limitations<\/strong><\/span>: A Will is only effective at your death. A Will does not avoid probate.\u00a0 It does require an expensive and public probate unless your estate qualifies for the small estate exemption to probate.<\/li>\n<\/ol>\n

    2. Create a Trust that holds all of your assets, including all membership interests in LLCs. Pros<\/span><\/strong>: Not only does a Trust avoid probate and provide for the disposition of all of your assets, it can provide for the management of your assets if you are alive but unable to manage your affairs. A well-drafted Trust can also provide lifetime asset protection for your loved ones who inherit your property. Limitations<\/strong><\/span>: You must name one or more people or institutions to act as successor trustee if you become incapacitated or die. A Trust is the best solution to passing your assets to your loved ones with the least hassle and expense, but of these three solutions, it is the most expensive.<\/p>\n

    For more information about Wills, Trusts, and what is included in an estate plan and the costs, read “Arizona Estate Plan Contents<\/a>.”<\/p>\n

    To learn more\u00a0 about estate planning, I recommend you read my article called \u201cWhy You Need an Estate Plan to Protect Your Family and the High Cost of Procrastination and Neglect<\/a>.\u201d Another informative article of mine is called \u201cArizona Estate Planning FAQ<\/a>.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

    by Richard Keyt, Arizona LLC and estate planning lawyer If you own an interest in an Arizona limited liability company in your name (rather than through a trust), you owe it to your family and loved ones to prepare now for your death.\u00a0 If you do not, then in addition to leaving them your Arizona LLC, you may also be leaving them an expensive, lengthy and public probate to legally transfer the company from your estate to your heir(s).\u00a0 Please plan now and save your loved ones the costs and headaches of a probate. You must understand what will happen to your membership interest in your LLC you die so you cannot minimize the consequences of your death on your loved ones. Ask yourself these very important questions: 1. Do you care who inherits your interest in the Company when you die? If the answer is no, skip the rest of this article. 2. Who will inherit your membership interest in the company when you die?\u00a0 Will you pick who inherits your LLCs or will it be the state of your residence?\u00a0 Each state has laws called the law of intestate succession.\u00a0 These laws are the rules for determining who inherits property when the owner of the property fails to make the selection.\u00a0 The way you determine who inherits your property when you die (rather than the state making the determination) is by adopting one of the following methods while you are alive: a.\u00a0 Own property jointly with rights of survivorship with one or more joint owners.\u00a0 If you hold title to property this way, then when one joint owner dies, the ownership interest of the deceased owner goes automatically by operation of law to […]<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":9,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","meta":{"om_disable_all_campaigns":false,"footnotes":""},"class_list":["post-1806","page","type-page","status-publish","hentry"],"yoast_head":"\nWho Will Inherit Your Membership Interest in Your Arizona LLC When You Die?<\/title>\n<meta name=\"description\" content=\"An explanation of what happens to the ownership of an Arizona limited liability company if a member dies without a Will or a trust and who inherits the LLC.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.keytlaw.com\/azllclaw\/operating-llcs\/inherit-your-llc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Who Will Inherit Your Membership Interest in Your 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