For successful professionals and business owners, protecting what you’ve built means more than managing growth, it means minimizing exposure to the legal disputes that can derail everything. One issue that’s often overlooked, but frequently lands in litigation, is what happens when a member of a limited liability company (“LLC”) dies.

At our litigation firm, we don’t draft operating agreements or create estate plans, but we regularly step in when those documents are missing, unclear, or poorly executed to resolve problems and disputes. We represent businesses, professionals, and families caught in disputes over control, equity, and inherited interests. If you're a business owner or hold equity in an LLC, understanding the risks around member death is important, not just for peace of mind, but to prevent expensive and disruptive litigation.

How Death Can Trigger Disputes in LLCs

1. Multi-member LLCs: Heirs locked out; lawsuits locked in.

Under most state laws, when an LLC member dies, the default rule is that only their economic rights (i.e., the right to receive distributions) transfer to their estate, not their management or voting rights. The remaining members retain full control of the business.

What does that mean in real terms? It means the deceased member’s heirs may have a financial stake in the business but no say in how it's run—or even when, if ever, be paid a distribution or see a return. That often leads to litigation, with heirs trying to enforce rights they never legally received, or remaining members defending against claims that could have been avoided with a properly structured operating agreement and plan.

2. Single-member LLCs: Silent dissolution; sudden disputes.

The risks are even greater for a single-member LLC (“SMLLC”). When the sole member dies and there’s no designated successor or estate plan, the company often enters a statutory limbo. Within a short period, sometimes just 90 days, the LLC may be required by law to dissolve automatically.

During that time, no one may have clear authority to act: to manage employees, fulfill contracts, or access bank accounts. If third parties, including vendors, creditors, or family members, try to step in, the result is usually a legal mess. We've seen these scenarios end up in court with stakeholders battling over who controls what and whether the business can or should survive.

Why These Issues Lead to Litigation and How to Prevent It

Many of the LLC disputes we litigate involve a common thread: the original members didn’t anticipate or properly address what would happen upon death or dissolution. Whether due to lack of legal guidance or an unwillingness to confront succession issues, failure to act invites conflict.

At our firm, we advise clients—often after disputes have already started—on how to clarify and enforce rights, unwind deadlocked companies, or recover improperly withheld economic interests. But litigation can often be avoided with simple but proactive measures, such as:

Ensuring the operating agreement clearly addresses death and succession
Designating a successor member or interim manager in advance
Structuring ownership to avoid automatic dissolution of SMLLCs
Understanding the legal differences between economic and management rights

These decisions don’t just prevent future confusion, they protect against costly and disruptive litigation that can drain business value and destroy relationships.

When You Need a Litigator, Not a Planner

We aren’t transactional attorneys. We don’t write operating agreements or set up trusts. What we do is step in when the plan fails, or when there was no plan at all.

If you're in a dispute over LLC ownership, management rights, distributions, or business succession, we’re here to help. We litigate across New York State high-stakes business matters and trust and estate matters, which often involve business equity, income streams, and significant personal assets. We also advise business owners and professionals on litigation-avoidance strategies because the best lawsuit is the one that never happens.

If your business or family is involved in an LLC or other business entity, and a member has passed away, or if you see a potential dispute on the horizon, contact us. Early action often makes the difference between resolving a matter privately and ending up in court. You may learn more about us and how we operate by visiting these pages: About Us and What Sets Us Apart.

And here are a few more related blog posts that may help you understand your situation better:

This blog post is for informational purposes only and does not constitute legal advice. For specific legal counsel, please contact our office directly.