How to Enable Your LLC to Avoid Probate in Virginia

If you own membership interest in a Virginia LLC, and die without addressing it in a will, trust, or otherwise, it must be transferred to your heirs through probate. Probate in Virginia can be time-consuming and expensive for both your estate and your heirs and should, therefore, be avoided wherever possible.

Here are some ways to bypass probate and transfer ownership interest in a Virginia LLC to an heir or beneficiary automatically upon your death:

Address The Situation In Your Operating Agreement

While Virginia does not require an LLC to have an operating agreement, you should consider drafting one anyway, if only for the sake of providing for the distribution of your membership interest when you pass away. A simple clause in your operating agreement that specifies to whom your interests in the LLC should pass when you die will, in most cases, be enough to enable it to avoid probate and pass on directly to a named beneficiary.

Joints Tenants With Rights Of Survivorship

In this case, a membership interest in the LLC is owned by two or more people as joint tenants with rights of survivorship. Owning membership interest in an LLC as joint tenants is not created in the LLCs articles of organization, it must typically be created by either:

1. Having the necessary joint tenancy language in the LLC operating agreement, that must also be signed by every party that will enjoy joint ownership of the membership interest; or
2. Having the required language in a membership interest certificate that is signed by all parties that will jointly own the membership interest.

If yours is a single-member LLC, this can offer you two huge advantages:

1. It will enable your membership interest in the LLC to avoid probate and pass on directly to the other joint tenant after you pass away; and
2. Your LLC will enjoy greater asset protection since it is no longer a single-member LLC and is, therefore, less likely to have its corporate veil pierced by its creditors.

Separate Management and Ownership

You can also use joint tenancy to separate the management of your LLC from its ownership. This will also require you to create an operating agreement for your LLC.

Then you can set your LLC up as a manager-managed LLC, with you as the only manager. Your ownership/membership in the LLC will then be shared with another member as joint tenants with rights of survivorship.

This way, you have complete control over the LLC, but when you die, your membership interest in the LLC will bypass probate and pass directly to the surviving member.

A Revocable Living Trust

If you don’t already have a revocable living trust, the cost to create one may be worth it if you want your LLC to avoid probate. Once you transfer ownership of your interest in the LLC to the name of a trust that you have created, the trust document will dictate what happens to your membership interest after you die.

But again, you will want to set your LLC up as a manager-managed LLC, with you as the manager. This way, you will retain management control over the LLC, even though you have transferred your membership interest to the trust.

For more information on how your LLC can avoid probate in Virginia, contact an experienced Virginia probate and estate planning attorney. Call us today at (703) 553-2577 or use the contact form on our website to arrange a consultation.

The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.