Q: Does the MARYLAND UNIFORM TRANSFER-ON-DEATH (TOD) SECURITY REGISTRATION ACT include LLC businesses?
Owner of LLC business in Maryland passed. Does the LLC business go to heir, next of kin or does it go to the Probate Court?
A: The Maryland Uniform Transfer on Death Security Registration Act only applies to securities that have been registered with a beneficiary form that specifies a TOD beneficiary. While it may be possible to register a TOD beneficiary for an ownership interest in an LLC, it is not automatic. Most owners of an LLC do not issue ownership certificates and then execute TOD beneficary designations and register those beneficiary forms. In the vast majority of cases, the LLC simply becomes an asset of the deceased owner's estate in the case of a solely owned LLC. When a sole or last living member of an LLC dies, there is a 90 day window following the death of the last member, after which the LLC is dissolved and its affairs and assets sold, unless the PR of the estate of the deceased member takes action within 90 days of the death of the member to continue the LLC business, either by the PR becoming a member, or by admitting a new member and transferring the LLC to that member. See Section 4A-902 of the Corporations and Associations Code of Maryland. The terms of any operating agreement of the LLC must be followed as well and may address this issue. Hire an experienced estate counsel familiar with this section of the Code to protect the interests of the LLC and the heirs, if continuation of the LLC is desired. Time is not on your side in this situation.
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