What Happens to an LLC When the Owner Dies in California

Most LLC owners assume the company dies with them, or that their spouse takes over. Neither is right. California’s LLC statute is the California Revised Uniform Limited Liability Company Act (Corp. Code § 17701.01). It has a specific answer for what happens to a member’s interest at death, and it splits that interest in two: the money side and the control side. Who ends up with each depends on the operating agreement, your trust, and any assignment you signed.

I’m an estate planning attorney in Port Hueneme, and a large share of the trusts I draft for business owners have an LLC inside them. This page walks through the statute section by section, then shows what the family’s experience looks like with a trust assignment and without one.

Does an LLC dissolve when the owner dies?

No. Death doesn’t dissolve a California LLC by itself. It dissociates the member, which means the person stops being a member, and the company keeps existing.

Corp. Code § 17706.02(f)(1) says a person who is an individual is dissociated as a member when the person dies. The LLC itself dissolves only on the events listed in Corp. Code § 17707.01: an event named in a written operating agreement or the articles, a vote of 50 percent or more of the voting interests, 90 consecutive days with no members, or a court decree.

That 90-day rule is where single-member LLCs get their reputation for dying with the owner. Read the rest of the sentence, though. Corp. Code § 17707.01(c) says that on the death of a sole member who is a natural person, the member’s status, including the membership interest, may pass to heirs, successors, and assigns by will or applicable law. The heir becomes a substituted member without the permission or consent of the heirs or of those administering the estate. Some older articles still say the heirs have to “elect” to continue within 90 days. The current text doesn’t read that way.

The catch is the phrase “subject to administration as provided by applicable law.” If the interest was in the owner’s own name, “applicable law” usually means probate. The heir is the member in principle, and the executor controls the interest until the court lets it go.

Does the estate inherit the vote or only the money?

The estate inherits the economic rights. Voting and management don’t come along automatically.

RULLCA separates a membership interest (the whole bundle: distributions, voting, information) from a transferable interest, which is only the right to receive distributions (Corp. Code § 17701.02(aa)). When a member dissociates, any transferable interest the member owned is then owned solely as a transferee, and the right to vote or participate in management ends (Corp. Code § 17706.03(a)).

A transferee has the right to receive the distributions the member would have received (Corp. Code § 17705.02(b)). A transferee can’t vote or take part in management (Corp. Code § 17705.02(a)(3)).

The executor gets a little more. Corp. Code § 17705.04 lets the deceased member’s personal representative exercise the rights of a transferee and, for the purposes of settling the estate, the rights of a current member to company information. Corp. Code § 17706.03(c) adds that the executor may exercise all of the member’s rights for the purpose of settling the estate, including any power the member had under the operating agreement to give a transferee the right to become a member.

In plain terms: the executor can see the books and collect the money, and can use whatever admission power the operating agreement gave the deceased owner. The executor doesn’t get to run the company unless the operating agreement or the other members say so.

What happens in a multi-member LLC?

The surviving members keep running the company. The family holds an economic interest and waits for distributions, unless the operating agreement says something different.

After formation, a person becomes a member as the operating agreement provides, through a merger, with the consent of all the members, or by designation within 90 days after an LLC is left with no members (Corp. Code § 17704.01(c)). So a surviving spouse or adult child doesn’t get a seat at the table unless the agreement admits them or every remaining member votes them in.

Operating agreements also commonly restrict transfers. A transfer that violates a restriction in the operating agreement is ineffective as to a person who had notice of the restriction (Corp. Code § 17705.02(f)). A well-drafted agreement pairs that restriction with a buyout at death, so the family receives cash at a known price instead of a passive stake in a company controlled by people they may not know. That’s the job of a buy-sell agreement, and it’s where most multi-member LLCs should start.

Situation at death	Who runs the LLC	What the family holds
Multi-member, no buyout clause, interest in owner’s name	Surviving members	Economic interest, through probate
Multi-member, buy-sell funded by insurance	Surviving members	Cash at the agreed price
Multi-member, interest assigned to living trust, trustee admitted as member	Surviving members, with the successor trustee voting the trust’s interest	Trust interest, no probate
Single-member, interest in owner’s name	Executor, once appointed by the court	Membership interest, through probate
Single-member, interest assigned to living trust	Successor trustee	Trust interest, no probate

What happens to a single-member LLC?

It survives, but someone has to be legally able to act for it. With no trust, that person is an executor, and an executor needs court appointment first.

Picture the usual Ventura County case. A landlord in Camarillo owns a duplex through a single-member LLC. She dies with a will and no trust. Rent keeps coming in, the mortgage keeps coming due, a tenant calls about a broken water heater, and the LLC’s bank account has one authorized signer, who is gone. Her son is named executor in the will, but a will doesn’t give him authority until the court issues letters, and probate in California runs twelve to eighteen months in my practice from filing to final distribution. The bank won’t take instructions from him in the meantime.

Contrast that with an owner who operated as a sole proprietor. For an unincorporated business, Prob. Code § 9760 lets the personal representative continue the business for up to six months from when letters first issue, and longer only with a court order. The LLC avoids that particular cap, because the business belongs to the company. The membership interest is still stuck in the estate, though.

Does an LLC interest go through probate?

Yes, if it’s in your individual name and the estate is over the small estate limit. No, if it’s owned by your living trust.

An LLC interest is personal property. If you owned it in your own name, it’s part of your probate estate like a brokerage account. The one shortcut is the small estate affidavit: when the gross value of the decedent’s California property is at or below the limit in Prob. Code § 13100, currently $208,850 for deaths on or after April 1, 2025, the successor can collect the property after 40 days without letters. Most business owners are well over that figure once the house and the LLC are counted. The small estate guide covers what counts toward the limit.

Above the limit, the statute sets the attorney’s fee as a percentage of the estate’s appraised value: 4 percent on the first $100,000, 3 percent on the next $100,000, and 2 percent on the next $800,000 (Prob. Code § 10810). The executor’s statutory commission uses the same percentages (Prob. Code § 10800). Both are calculated without subtracting encumbrances or other obligations on estate property (Prob. Code § 10810(b)).

A worked example

Take the Camarillo landlord. Her LLC owns a duplex worth $1,400,000 with a $500,000 loan, so the probate referee appraises her membership interest at $900,000. The LLC’s own mortgage is reflected in that appraisal, because the estate owns the interest, not the building. Add her $1,100,000 house, and her probate estate is $2,000,000 gross.

Probate estate (gross)	Attorney fee (§ 10810)	Executor fee (§ 10800)	Total statutory fees
LLC interest alone, $900,000	$21,000	$21,000	$42,000
LLC interest plus house, $2,000,000	$33,000	$33,000	$66,000

A mortgage on the house wouldn’t reduce those numbers, since encumbrances on estate property are ignored. The probate calculator runs your own figures. A trust that owns both assets avoids those fees entirely. The assignment matters more than the trust document itself.

What changes when the LLC interest is in a living trust?

The trust is the member, so the owner’s death doesn’t dissociate anyone. The successor trustee takes over the trust’s role on the day of death, with no court appointment.

RULLCA treats a trust, and a trustee of a trust, as a “person” that can be a member (Corp. Code § 17701.02(v)). The death rule in § 17706.02(f) applies to an individual member. When the member is a trust, dissociation happens only when the trust’s entire transferable interest is distributed, and not solely because a successor trustee is substituted (Corp. Code § 17706.02(h)).

That is the whole mechanism. Your successor trustee signs a certification of trust, shows it to the bank with the death certificate, and signs checks for the LLC that week. The operating agreement still controls management, so the agreement should name a successor manager or say the trustee exercises the trust’s voting rights. The trustee also needs authority under the trust to keep the business running. Prob. Code § 16222(b) says a trustee may continue operating a business only as authorized by the trust instrument or by the court, so the trust should say so in plain words.

How do you assign an LLC interest to a living trust?

You sign a written assignment moving your membership interest to yourself as trustee, get whatever consent the operating agreement requires, and update the company’s records. It’s usually a two-page document and an amendment to the member schedule.

1. Read the operating agreement’s transfer section. Many agreements allow transfers to the member’s own revocable trust without consent. If yours doesn’t, the transfer can be ineffective against anyone who knew of the restriction (Corp. Code § 17705.02(f)).
2. Get the trustee admitted as a member. An assignment alone passes the economic interest. For the trustee to vote, the trustee has to become a member, and after formation a person becomes a member as provided in the operating agreement or with the consent of all the members (Corp. Code § 17704.01(c)).
3. Sign the assignment. It names you “as trustee of the [name] Living Trust dated [date],” describes the percentage or units, and states it transfers the full membership interest.
4. If the interest is certificated, reissue the certificate. A certificated interest may be transferred by transferring the certificate (Corp. Code § 17705.02(d)).
5. Give the LLC notice and update its records. The company need not recognize a transferee’s rights until it has notice of the transfer (Corp. Code § 17705.02(e)). Update the member schedule in the operating agreement and keep the signed assignment with the company records.
6. Check the side issues. If the LLC is taxed as an S corporation, confirm the trust is an eligible shareholder. See S corp owners with no succession plan. Tell the bank, and add the successor trustee as a future signer if the bank allows it.

Property tax is usually not an issue for this step. A transfer by the trustor into a trust is excluded from change in ownership while the trust is revocable (Rev. & Tax. Code § 62(d)). Transfers among family members after death are a different question, covered on the family limited partnership page.

The membership interest assignment guide covers the document itself in more detail, and trust funding covers every other asset the trust needs to own.

What if I forgot to assign the LLC interest to my trust?

Fix it now if you’re alive. If the owner has died, the family may be able to use a court petition instead of full probate.

Prob. Code § 850 lets a trustee or interested person petition when the trustee has a claim to property that is titled in someone else’s name. California practitioners call this a Heggstad petition. It works best when the trust’s asset schedule lists the LLC interest or a general assignment covers it. It still means a court filing, a hearing, and months of waiting. An assignment signed now costs far less than any cleanup. The Heggstad page explains how these petitions play out.

Who runs the LLC while the owner is alive but incapacitated?

Your agent under a durable power of attorney, if the document reaches your LLC interest. Without one, the family may face a conservatorship, which is the court process good planning avoids.

Corp. Code § 17706.03(c) lets an attorney-in-fact administering a member’s interest under a valid power of attorney exercise all of the member’s rights for the purpose of administering the member’s property. That’s the key sentence for incapacity planning. In a member-managed LLC, a member is dissociated if a general conservator is appointed (Corp. Code § 17706.02(f)(2)(A)), so the planning goal is to keep the family out of court. The business power of attorney page covers how to write that authority so banks and co-owners will accept it.

A checklist for LLC owners

• Find your operating agreement. If you don’t have a signed one, you have default rules, not a plan. See the operating agreement guide.
• Confirm who the member of record is: you personally, or you as trustee.
• Name a successor manager, or say the trustee of a trust member exercises its voting rights.
• If you have co-owners, sign a funded buyout for death and disability.
• Make sure your trust gives the trustee express power to run or sell the business.
• Sign a durable power of attorney that covers business interests.
• Leave a one-page memo: bank, CPA, key contracts, passwords, and who to call. The business continuity guide has a template.

Frequently asked questions

Can my spouse take over my LLC when I die?

Not automatically. In a multi-member LLC, your spouse receives your economic interest and becomes a member only if the operating agreement allows it or all the other members consent. In a single-member LLC, your spouse can become the member as your heir, but if the interest is in your name, the probate court controls it first. Community property rules may give your spouse a share of the interest either way.

Does a single-member LLC dissolve after 90 days if no one acts?

The 90-day rule applies when an LLC has no members. For a sole member who dies, the statute lets the membership pass to heirs by will or law, and they become substituted members without needing anyone’s consent. In practice, the risk is less about dissolution and more about nobody having authority to sign while probate is pending.

Do I need to amend my operating agreement to put my LLC in my trust?

Often, yes. At minimum, the member schedule should show the trustee as the member. If the agreement restricts transfers or requires consent to admit new members, you need that consent in writing so the trustee holds voting rights as well as distributions.

Can the executor sell the deceased owner’s LLC interest?

The executor can sell the economic interest as part of the probate, subject to court rules on sales. The buyer gets only what the executor had, which is usually a transferee’s rights. Any restriction in the operating agreement, such as a right of first refusal for the other members, still applies.

What happens to the LLC’s bank account when the owner dies?

The account belongs to the LLC, so it isn’t frozen as the owner’s personal account. The problem is signing authority. If the only signer died, the bank needs a new authorized person, and that person has to trace authority from the operating agreement to the member, which means a successor trustee or a court-appointed executor.

Does an LLC protect my assets from probate?

No. The LLC holds the property, but you still own the LLC interest, and that interest goes through probate if it’s in your name. Only the trust assignment, or a buyout that converts the interest to cash for a named beneficiary, keeps it out of court.

What happens to an LLC taxed as an S corporation when the owner dies?

The same RULLCA rules apply to the membership interest, and federal S corporation shareholder rules apply on top. A trust that holds the interest after death may need a timely election to stay an eligible shareholder. Talk to your CPA about the election deadlines as soon as possible after the death.