Passing a US LLC to the Next Generation

A US company does not pass to the next generation on its own. What happens when an owner dies is decided by a short list of things: the company's operating agreement, the owner's will or trust, the inheritance law of the country where the family lives, and the US estate tax on non-residents. Families who line these up while everyone is well hand over a company. Families who do not hand over a court process, sometimes in two countries.

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01What happens to my LLC interest when I die?

Under Delaware law, where many family holdings are formed, the personal representative of a member who dies may exercise the member's rights "for the purpose of settling the member's estate." That is authority to settle, not to run the business indefinitely. Whoever finally receives the interest is, by default, an assignee: entitled to the profits, distributions and tax allocations, but with no right to take part in management unless the operating agreement provides for it or every remaining member consents.

In practice, a child can inherit the money a company produces without inheriting a voice in it. In a single-member LLC there are no other members to give that consent, so the operating agreement is the only place the answer can come from.

02What should the operating agreement say?

Who succeeds, and with what powers. A succession-ready agreement for a family company usually covers:

• A named successor member, or a mechanism that admits heirs as full members without a separate vote
• A manager, or a sequence of managers, who can sign for the company the day after a death, so banks and tenants are not left waiting for a court
• Separate classes of interests, so voting control and economic value can pass at different times or to different people
• Transfer restrictions that keep interests inside the family, including on a divorce

Delaware lets an agreement create classes of members with different rights, which is what makes the last two possible. Our guide to the operating agreement covers the document itself.

03Why hold everything through one US holding company?

Because succession then happens once. A family with three operating companies, a property LLC and an investment account has five things to transfer and five sets of signatories to replace. Place a single holding LLC above them and the next generation inherits one interest, in one company, under one agreement, while the subsidiaries carry on without a change of owner. We explain the structure in what a holding company is and how to establish one in the US.

A holding also lets the handover be gradual. Parents can keep the management interest and pass economic interests to their children over years, which is how most families prefer to do it: income and ownership first, control later.

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04Can I give shares to my children while I am alive?

Often, and it is one of the few clear advantages a non-resident has. A nonresident who is not a US citizen generally pays no US gift tax on gifts of intangible property, and the IRS gives stock of US corporations as its example. Gifts of US real estate, or of tangible property located in the United States, remain taxable above an annual exclusion of $19,000 per recipient in 2026.

A lifetime gift of shares can therefore move value out of reach of the US estate tax, which for a non-resident applies above only $60,000 of US assets, as we set out in the $60,000 question. Two cautions. Whether an LLC interest is treated like stock under these rules is not settled, so the type of entity at the top matters. And a gift that is free of US tax may still be taxed, or have to be declared, at home.

05Does US law override inheritance law at home?

No, and this is where cross-border families are most often surprised. Spain and most Latin American countries reserve a fixed share of an estate for children, the legítima, and a US operating agreement or trust does not automatically displace the law of the country where the owner lives or dies. Some treaties soften the estate tax side, as we explain in does my country have a US estate tax treaty. None of them rewrites a family's inheritance law.

The practical rule is to design the US side and the home side together, with the family's advisor at home in the room, so the US documents carry out a plan that is also valid where the family lives.

06When should a family start?

While the founder is well and the children are adults, which is earlier than most families begin. Structures that are simple to build in a calm year are often impossible to build after a death or an incapacity, when the people with authority to sign are no longer the people who understand the business.

Prodezk forms and maintains holding structures for families across Latin America and Spain, and works alongside their estate and tax advisors on both sides of the border. If you would like your family's structure reviewed with succession in mind, begin here.