Free Advice – Don’t Die While a Member of an LLC

Free Advice – Don’t Die While a Member of an LLC

      LLC law provides for often surprising results upon a member’s death. Essentially, unless different rules are set forth in the operating agreement, the decedent’s rights as a member in the LLC evaporate, and the estate has only a limited rights against the LLC and the other members. Oftentimes the estate has no right to inspect the LLC’s books and records, and absent a contrary provision in the operating agreement the estate will be owed no fiduciary duties.

      In a recent decision out of New York, the court applying an operating agreement and Delaware law that are not dissimilar from the laws of Kentucky, it was confirmed that the estate of what had been the majority owner of a company operating a chain of luxury hotels was not entitled to inspect the LLC’s books and records and was not owed fiduciary duties. Estate of Calderwood v. ACE Group Intl. LLC, 2017 NY Slip Op 08750 (App. Div. 1^st Dept. Dec. 14, 2017).

      This decision has been reviewed in the New York Business Law Divorce; HERE IS A LINK to that review.