Does an LLC Go Through Probate? What Florida Business Owners Need to Know

As a business owner in Florida, you’ve worked hard to build your company. But have you considered what will happen to your business when you’re no longer here? Many entrepreneurs are surprised to learn that without proper planning, their LLC might have to go through the probate process, creating delays, expenses, and headaches for their loved ones.

At Vollrath Law, we regularly help Florida business owners protect their companies from unnecessary probate complications.

Here’s what you need to know about LLCs and the probate process in Florida.

Does an LLC Go Through Probate in Florida?

It depends on how you’ve structured your business and estate plan.

An LLC itself doesn’t technically go through probate since it’s a separate legal entity that continues to exist even after an owner dies. However, your membership interest in the LLC—your ownership stake—can absolutely be subject to probate unless you’ve taken specific steps to prevent it.

Here’s the key distinction: While the LLC business entity continues operating, what happens to your ownership share when you die is determined by several factors:

• Your LLC’s operating agreement
• Whether you’ve included the membership interest in a trust
• What estate planning tools you’ve utilized

Without proper planning, your membership interest becomes part of your probate estate, subject to court proceedings, potential delays, and additional costs.

Why You Should Avoid Having Your LLC Membership Interest Go Through Probate

If your LLC membership interest ends up in probate, your business could face several significant challenges:

1. Operational Disruptions

During probate, your heirs might not have immediate authority to make business decisions or access company accounts. This limbo period can disrupt daily operations and damage the business you worked so hard to build.

2. Public Proceedings

Probate is a public process. Do you want details about your business ownership, value, and transfer becoming part of the public record? Most business owners prefer to keep these matters private.

3. Time Delays

Probate in Florida typically takes 6-9 months for even straightforward cases. During this time, your business interest remains in legal limbo, which can create uncertainty for employees, clients, and business partners.

4. Added Costs

Probate involves court fees, personal representative fees, and attorney costs. These expenses can significantly reduce the value of what you pass on to your heirs.

5. Creditor Exposure

During probate, creditors have an opportunity to make claims against your estate, potentially putting your business interests at risk.

Two Proven Ways to Keep Your LLC Out of Probate in Florida

Fortunately, Florida law offers business owners effective options to prevent their LLC interests from going through probate.

1. Transfer Your LLC Interest to a Revocable Living Trust

The most comprehensive approach is to transfer your membership interest in the LLC to a revocable living trust.

Here’s how it works:

• You create a revocable living trust
• You transfer your LLC membership interest to the trust
• You maintain complete control as the trustee during your lifetime
• Upon your death, your successor trustee immediately assumes control
• The trust distributes according to your wishes without court involvement

This strategy works because assets in a properly established trust avoid probate entirely. Since you maintain control of the trust during your lifetime, you don’t sacrifice any control over your business while you’re alive.

2. Update Your LLC’s Operating Agreement with Transfer-on-Death Provisions

Since the groundbreaking Blechman v. Estate of Blechman case in 2015, Florida law now recognizes that a properly drafted LLC operating agreement can include provisions for the automatic transfer of membership interests upon a member’s death.

Your operating agreement can specifically state:

• Who receives your membership interest
• How voting rights will be handled
• Whether the recipient becomes a full member or just receives economic benefits
• Any buy-sell provisions that might apply

This approach costs less initially than creating a trust, making it particularly attractive for small business owners who might not otherwise need a trust.

Which Strategy Is Right for Your Florida LLC?

The best approach depends on your specific circumstances:

Consider a trust-based solution if:

• You have substantial assets beyond your business
• You value maximum privacy and control
• You want comprehensive estate planning benefits
• You have complex family dynamics or business succession needs

Consider updating your operating agreement if:

• Your LLC is your primary asset
• You have a straightforward succession plan
• You don’t currently need a trust for other reasons
• You’re looking for a cost-effective solution

Many of our clients at Vollrath Law opt for the belt-and-suspenders approach—using both strategies to ensure maximum protection and flexibility.

What Happens If You Don’t Plan: A Case Study

Let’s look at what happens without proper planning:

John owned a successful construction LLC in Oviedo. He assumed his wife would simply take over when he died, but he never formalized this arrangement. When he passed unexpectedly, his LLC membership interest had to go through probate.

For nearly eight months, the business operated in limbo. His widow lacked legal authority to make major decisions or sign contracts. The company lost several key projects during this time. Moreover, probate costs consumed over $15,000 of the business value.

With proper planning, John could have ensured a seamless transition with no court involvement, saving both money and significant business disruption.

Beyond Probate: Additional Considerations for LLC Owners

While keeping your LLC out of probate is important, comprehensive business succession planning should address several other considerations:

Buy-Sell Agreements

If you have co-owners, a well-crafted buy-sell agreement can address what happens to a deceased member’s interest, potentially funding the purchase through life insurance.

Tax Planning

The transfer of business interests can trigger tax consequences. Proper planning can minimize these impacts for your heirs.

Family Business Dynamics

If some family members are active in the business while others are not, you’ll need to address how to treat everyone fairly while ensuring the business continues to thrive.

Take Action Now to Protect Your Florida LLC

Don’t leave your business vulnerable to probate complications. At Vollrath Law, we help Florida business owners create customized plans to protect their companies and provide for their loved ones.

Whether you need to update your LLC’s operating agreement, establish a trust, or create a comprehensive business succession plan, we can help you navigate these important decisions.

Contact Vollrath Law today to schedule a consultation and ensure your business legacy is protected the way you want.

This blog provides general information about Florida law. Every situation is unique, so please consult with an attorney for advice specific to your circumstances.