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LLC Question 152

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Question: I am forming a single member LLC in the state of Texas. I want to be sure that in the event of my death the ownership of the company would be transfered to my husband, and the company would not be dissolved. Is there a way to do this without adding him a member?

Response: To my knowledge, a single person LLC in Texas is not automatically dissolved upon the death of the owner. See § 11.051 of the Texas Business Organization Code. You can bequeath your ownership of the LLC to your husband in your will as with any other asset.

Who runs the LLC while your interest in the LLC is probated after death? That's a tougher problem to plan for. One solution could be to name your husband as a non-compensated co-manager of the LLC with you. Managers do not have to be LLC members and can be dismissed by the members.

How to avoid probating your LLC interest? The question states that you do not wish to make your husband a co-owner of the LLC, thus, that option is out. To my knowledge, "transfer on death designation" is not an option for closely held LLC interests in Texas. Trusts may be LLC members. Option: create a revocable trust and name it the sole member of the LLC. In the trust, your husband is named as successor trustee and beneficiary.

Submitted: 12/11/2007; Erica, Texas
Response: 12/12/2007; JJR

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