Legal Question in Wills and Trusts in North Carolina

I don't understand how you can inherit an LLC. You can inherit an interest in the LLC but that does not give you the right to run the business.

First, what does the operating agreement say about the LLC and what happens in the event that one of the managers dies? What kind of an LLC is this? By that I mean, what is the business being run? Do you and your brothers both want to be involved in the business operation? What is the value of the LLC?

Is there a personal representative of the estate? Is there an estate attorney?

If there is no operating agreement and this was simply a one-man LLC owned by your father and you both are interested in continuing the work, then you can be a member but this has to be done formally in compliance with the statutes below.

I am not a business law attorney but if there is an attorney for the estate he/she can assist with this process if you are the personal representative of your father's estate.

You had best get familiar with the NC Limited Liability Company provisions codified in Chapter 57 D of the NC General Statutes.

� 57D-3-02. Cessation of membership.

(a) A person ceases to be a member upon the occurrence of any of the following events:

(1) The person does any of the following:

a. Becomes a debtor in bankruptcy.

b. Executes an assignment for the benefit of creditors, including the execution of a deed of trust or deed of assignment for the benefit of creditors causing all debts of the person to become due and payable under G.S. 23-1.

c. Petitions for, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the person or all or substantially all of the person's property.

(2) In the case of an individual, the person's death or being adjudicated by a court of competent jurisdiction as incompetent to manage his or her person or property.

(3) In the case of a member with an economic interest, the transfer or abandonment of the person's entire economic interest, excluding the liquidation of a member's economic interest in connection with the dissolution and winding up of the LLC under G.S. 57D-6-08(2), regardless of whether the transferee is or becomes a member.

(4) The person abandoning all of the rights of his ownership interest except his economic interest, or any portion thereof.

(b) Upon the occurrence of any of the events described in subdivisions (1) and (2) of subsection (a) of this section with respect to a member, that person or that person's estate, as applicable, will automatically become an economic interest owner entitled only to the economic interest attributable to the person's ownership interest, but that person or that person's estate, as applicable, and any other person who ceases to be a member shall remain liable to the LLC for any obligation the person may have under G.S. 57D-4-02, 57D-4-06, and 57D-6-12(a)(2).

� 57D-3-01. Admission of members; economic interest owners.

(a) A person becomes a member through the following:

(1) In the case of a person executing the articles of organization in the capacity of a member as provided in G.S. 57D-2-21(a)(2), or otherwise being named in the articles of organization as a member, at the time the articles of organization become effective under G.S. 55D-13.

(2) In the case of a person acquiring an ownership interest from the LLC, (i) upon being identified as a member by the organizers as provided in G.S. 57D-2-20(c) or (ii) upon the unanimous approval of the members as provided in G.S. 57D-3-03(2).

(3) In the case of an economic interest owner, in the manner provided in G.S. 57D-5-04(a) or G.S. 57D-6-01(3).

(4) In the case of an eligible entity converting or merging into the LLC, as provided in the plan of conversion or plan of merger upon such plan becoming effective as provided in G.S. 57D-9-23(a)(5) or G.S. 57D-9-43(a)(6).

(b) A person becomes an economic interest owner through the following:

(1) In the case of a person acquiring an economic interest from the LLC, upon the unanimous approval of the members.

(2) In the case of a person acquiring an economic interest or portion thereof from an interest owner, as provided in G.S. 57D-5-02.

(3) In the case of an eligible entity converting or merging into the LLC, as provided in the plan of conversion or plan of merger upon such plan becoming effective as provided in G.S. 57D-9-23(a)(5) or G.S. 57D-9-43(a)(6).

(c) To be a member a person need not make or have the obligation to make any contributions to the LLC or share in any profits or losses of, or distributions from, the LLC or otherwise own an economic interest in the LLC.

� 57D-3-03. Approval of members.

The approval of all members is required to do any of the following:

(1) Adopt or amend an operating agreement.

(2) Admit any person as a member.

(3) Other than in the ordinary course of business, transfer in one transaction or a series of related transactions all or substantially all of the assets of the LLC prior to the dissolution of the LLC.

(4) Dissolve the LLC under circumstances other than those for which the LLC may be dissolved under Article 6 of this Chapter.

(5) Convert the LLC into a different eligible entity under Article 9 of this Chapter.

(6) Merge the LLC with or into another eligible entity under Article 9 of this Chapter.