Which statement about LLCs is true when it comes to inheritance?

When it comes to Limited Liability Companies (LLCs), the correct understanding is that they can be inherited according to the operating agreement. This means that the provisions outlined in the operating agreement dictate how ownership interest in the LLC can be transferred in the event of an owner’s passing.

LLCs are somewhat unique in that they provide flexibility in terms of management and ownership succession. This flexibility allows members to specify in the operating agreement how their ownership rights are to be handled upon their death. For instance, if the agreement allows for the transfer of membership interests to heirs, this can happen without necessitating a formal sale or the involvement of probate, depending on what has been stipulated.

In contrast, other options present limitations that are not applicable. For example, the statement that LLCs cannot be inherited is incorrect because they can, indeed, be passed down. Saying LLCs must be sold before the owner dies is also incorrect; ownership can be transferred without a sale. Additionally, the assertion that they must go through probate overlooks the capability for LLC ownership to be directly handed to heirs as specified in the operating agreement, which can sometimes avoid probate altogether.

Hence, the effective and accurate characterization of LLCs in terms of inheritance aligns with how their operating agreements can facilitate