It seems the majority of my clients these days have a solo business. However, the majority of them are unsure how to transfer ownership of the business after death. It is simple to start a business in Minnesota. You fill out the Articles of Incorporation with the most basic information, pay the small fee, and you are in business.
But, what happens to that business when you die? Does it survive you? Is there anyone with the legal right to handle the business upon your death?
If a sole member of an LLC in Minnesota passes away, the ownership of the company must be transferred to a new individual or entity.
Below I list the steps to follow in order to transfer ownership of an LLC in Minnesota:
Consult an Attorney: Transferring ownership of an LLC can be a complex process, especially if there is no Operating Agreement or will in place. It is advisable to consult with an attorney to ensure that the transfer of ownership is handled properly and in accordance with Minnesota state law.
Locate the LLC’s Operating Agreement: The first step is to locate the LLC’s Operating Agreement, which should specify what will happen to the ownership of the company upon the death of the sole member. If there is no Operating Agreement in place, Minnesota state law will govern the transfer of ownership. Unfortunately, many businesses do not have an Operating Agreement. If this is true for you, please contact me immediately to get on in place. This will save money and time later in appointing someone with the power to act without court oversight.
Determine the Heir or Beneficiary: In the absence of an Operating Agreement, estate laws will rule ownership. If you have a will, the individual or entity named as your heir or beneficiary in becomes the new owner of the LLC. If there is no will, the ownership will be transferred to the deceased member’s estate, and the process of transferring ownership will be governed by Minnesota probate laws.
Obtain a Death Certificate: A death certificate must be obtained to confirm the death of the sole member. This certificate will be required to transfer ownership of the LLC.
File a Certificate of Amendment: If the new owner is not specified in the Operating Agreement or the will, a Certificate of Amendment must be filed with the Minnesota Secretary of State to change the ownership of the LLC. This certificate must include the name and address of the new owner, as well as any changes to the LLC’s business information.
Update the Business Records: Once the ownership of the LLC has been transferred, the new owner must update all the business records, including tax records and bank accounts, to reflect the change in ownership.
In conclusion, transferring ownership of an LLC in Minnesota upon the death of the sole member requires careful planning and attention to detail. By following these steps and consulting with an attorney, you can ensure that the ownership of the LLC is transferred smoothly and efficiently.