The LLC Survives. The Membership Interest Goes to Probate.
This distinction is the starting point for understanding what actually happens.
The LLC is a legal entity separate from its owner. When the owner dies, the LLC does not die with them. The entity continues to exist. Its contracts remain in force. Its bank accounts remain open. Its EIN and state registration remain valid.
What does not continue automatically is authorized management. The owner’s membership interest — the economic and voting rights attached to their ownership — is personal property. When the owner dies, that interest passes like any other personal property: through their estate and into probate, unless it was placed in a trust before death.
Within 72 hours of the owner’s death, business bank accounts in the deceased owner’s name are typically frozen by the financial institution pending estate administration. No one can access them, write checks against them, or transfer funds from them until the Probate Court issues Letters Testamentary and the executor presents them to the bank. That process takes a minimum of 6 to 12 weeks.
What the Probate Court Controls During the Proceeding
During probate, the Probate Court controls the disposition of the membership interest. The executor manages the estate, but the executor’s authority to manage the LLC itself depends on what the operating agreement says and what the court authorizes.
Three things the Probate Court controls that directly affect the business:
- Who receives the membership interest. The interest goes to the beneficiaries named in the will, or to the statutory heirs under Georgia intestacy law if there is no will. If the deceased owner wanted a specific person to inherit the business, a will is necessary — but a will still goes through probate.
- The timeline. Georgia probate takes 9 to 18 months on average for business estates. Complex estates with multiple entities, creditor claims, or heir disputes take longer. During that entire period, the business is operating with uncertainty about who its actual owner is.
- The business valuation. The membership interest must be valued as part of the probate inventory. This requires a formal business appraisal, which adds cost and time and captures the distressed value of the business during the uncertainty of the proceeding.
What Happens to a Single-Member LLC in Georgia
For a single-member LLC, the death of the owner creates a complete management gap. There are no co-owners to continue operations. The operating agreement typically names no successor manager. The executor has authority over the estate but may not have authority to manage the LLC unless the operating agreement grants it.
Georgia courts do not automatically grant the executor authority to operate a business. The executor must petition the Probate Court for authority to continue business operations, which is a separate proceeding that adds time and legal fees.
The practical result for most single-member LLCs: the business effectively shuts down or operates informally without legal authority for weeks to months while the estate works through the courts. Clients leave. Contracts lapse. Employees find other work. The business that existed at the time of the owner’s death is not the same business the heirs receive when probate closes.
What Happens to a Multi-Member LLC in Georgia
For a multi-member LLC, the surviving owners can continue to operate the business. But they now have a new co-owner they did not choose: the deceased owner’s estate.
Under O.C.G.A. Title 14, Chapter 11, a deceased member’s estate receives the economic rights attached to the membership interest — the right to receive distributions — but not necessarily the voting and management rights. The operating agreement controls whether and how voting rights transfer.
If the operating agreement is silent, the estate holds an economic interest without management rights. The surviving owners control the business, but the estate is entitled to its proportionate share of all distributions. This creates a relationship that is uncomfortable at best and litigated at worst: the estate’s beneficiaries want liquidity, the surviving owners want to reinvest, and no one agreed to this arrangement.
What the Operating Agreement Controls and Cannot Control
The operating agreement controls how the membership interest is managed during probate and who receives it after. But there are limits to what even a well-drafted operating agreement can do without the right estate plan in place.
A well-drafted operating agreement can: name a successor manager with authority to continue operations, define what happens to voting rights during the probate period, and include a buy-sell provision that gives surviving owners the right to purchase the estate’s interest at a formula price.
A well-drafted operating agreement cannot: bypass probate for the transfer of the membership interest, prevent the estate from holding an economic interest during probate, or give anyone authority to transfer the LLC interest without probate court approval — unless the interest was in a trust at the time of death.
The operating agreement is necessary but not sufficient. It must work in combination with a trust to actually avoid the probate problem. See LLC operating agreement succession problems in Georgia for the most common gaps in operating agreements that defeat this coordination.
How a Trust Transfers the LLC Interest Without Probate
When the LLC membership interest is held in a revocable living trust at the time of the owner’s death, the interest does not go through probate. The successor trustee has authority from day one — no court, no petition, no waiting period.
The trust transfer requires two coordinated actions: (1) the LLC membership interest must be formally assigned to the trust before the owner’s death, and (2) the operating agreement must be amended to recognize the trust as the member and the successor trustee as the authorized manager.
Without both steps, the trust does not fully work. An assignment without an operating agreement amendment leaves the successor trustee without recognized management authority. An operating agreement amendment without the actual assignment leaves the interest in the owner’s personal name where it will still go through probate.
The Complete Solution for a Georgia LLC Owner
The complete solution for a Georgia LLC owner who wants to protect their business from probate is four coordinated documents:
- Revocable living trust — holds the LLC membership interest and provides successor trustee authority from day one
- Operating agreement amendment — names the trust as the member, the successor trustee as the authorized manager, and includes a trust transfer carve-out to allow funding without triggering consent requirements
- Durable power of attorney — covers the owner’s personal financial matters during incapacity
- Buy-sell agreement — if there are co-owners, defines the purchase right and funding mechanism so the surviving owners can acquire the estate’s interest at a defined price
The succession plan costs $8,000 to $10,000 for a sole owner with one LLC. See the full pricing breakdown. For context on what probate costs by comparison, see what Georgia business probate costs in fees and lost revenue.
