Legal Question in Wills and Trusts in New Jersey

Re: Status of LLC if president dies

The daughter's rights are to continue to serve as Treasurer.

LLCs should have operating agreements that state what happens when the president dies. The surviving spouse would inherit her deceased husband's interests in the LLC.

Re: Status of LLC if president dies

None. LLC don't actually have presidents or treasurers, but some companies use titles similar to corporation titles. Even so, a management job in an LLC does not grant or imply an ownership interest.

If your father started a single member LLC and intended to create a multi-member LLC in which he transferred an ownership interest to you, the appropriate vehicle would have been an operating agreement signed by both of you. That agreement would have, among other things, spelled out your ownership interests.

If you could prove to a judge that you had divided the earnings of the LLC (after payment of salaries) over a period of time as if there was an intent to create an ownership interest, a court might be inclined to find one. You would know of such divided earnings because you would have to be accounting for your share of the LLC earnings on your federal tax return. The same could be said if an amendment had been made to the papers filed with the State. Lacking evidence like that, the court would probably hold that you were a management employee of the LLC without any ownership interest. In that case, your father's complete interest would pass as part of his estate whatever that might mean.

If you think that your father intended for you to have an ownership interest in the LLC, then it would be appropriate for you to propose that the company's documents be amended to show that fact. A written Operating Agreement would be appropriate. It also sounds as if you should have a buyout agreement unless the idea of doing business with your deceased father's wife appeals to you.

My practice if very focused on assistance to small businesses. If you need help with any of the above, please call. If you remind me that the contact is through Lawguru, there will be no fee for the first consultation.

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