Provides for powers of the estate of a deceased or incompetent member of a limited liability company. (8/1/16)
Impact
The enactment of SB 220 will have a direct effect on how the estates of deceased or incompetent members of LLCs are managed within the state. The bill clarifies the conditions under which membership ceases and defines the legal representations necessary for individual and corporate members. This streamlining of processes may enhance operational continuity within LLCs, particularly in circumstances where management transitions occur due to a member's death or incapacity. Such changes could provide greater legal certainty and operational clarity for LLC managers and members alike.
Summary
Senate Bill 220, presented by Senator Peacock, focuses on the powers granted to the estate of a deceased or incompetent member of a limited liability company (LLC). The bill includes amendments to existing statutes, outlining the rights and responsibilities of an executor, administrator, guardian, or conservator regarding the membership interests in the LLC. Provisions specify that these representatives will be treated as assigners of the member's interests in the LLC, which carries implications for both the management of the LLC and the distribution of the member's interests following death or adjudication of incompetence.
Sentiment
The general sentiment surrounding SB 220 has been cautiously supportive, with stakeholders acknowledging the need for clearer guidelines on how membership interests are handled upon the death or incapacity of members. Legislators have noted that the bill helps mitigate uncertainties that can arise in LLC management and succession planning. However, there could be reserved sentiments relating to potential implications for existing LLC agreements that may not align with the bill's provisions.
Contention
Despite the overall support for SB 220, some contention could arise regarding the applicability of the bill to existing operating agreements and the autonomy of LLCs to dictate terms within their own articles of organization. Critics may argue that the bill imposes a standardized approach that might conflict with the bespoke arrangements that LLCs have established among their members. As LLCs often have diverse membership structures and operational characteristics, there's potential for debate over how to balance state-mandated statutory controls with members' rights to self-govern.
Prohibits an assignee of a membership interest in a limited liability company from actions causing dissolution of the limited liability company. (8/1/12)