How can I add verbiage to an operating agreement stating that if one person dies, the other manager gets 100%?

Lexi, Chatbot

I understand you're working on an operating agreement. Have you already included any provisions for what happens in the event of a member's death?

Lexi, Chatbot

Are you looking to specify that if one manager dies, the other manager will receive a 100% ownership stake in the business?

Lexi, Chatbot

Is there anything else the Expert should know before I connect you? Rest assured that they’ll be able to help you with your situation.

Gurney P

Ok, sorry about that confusion, but I'm here for you! My name is Gurney, and I'm the attorney who will be assisting with your question.

Gurney P

Since this is a family-run business between you and your daughter, it makes perfect sense to want things to stay simple and clear in case something happens. You can absolutely add language to your operating agreement that states if one manager (or member) passes away, the remaining manager automatically receives 100% ownership. This clause helps avoid confusion, court involvement, or disagreements later on—and it ensures that your shared intentions are honored.

How to Add the Right Language
You’ll want to include a clear section under something like “Transfer of Interest Upon Death” or “Survivorship Rights.” Here's a simple way to phrase it:

Survivorship Provision: In the event that either Member dies, the deceased Member’s entire ownership interest in the Company shall immediately transfer to the surviving Member, who shall thereafter own 100% of the Company. This transfer shall occur without the need for probate, and the surviving Member shall have full authority to manage and operate the Company without limitation.

You can place this clause near other membership or management sections in the agreement. Just make sure both of you sign and date it when finalized, so it’s legally binding.

Why It Matters
Including this kind of clause now avoids delays or legal complications in the future. It’s especially important in a close family business.

And I’ll be here if more questions come up along the way! Does that help?

Gurney P

Good morning, this is Eddie. Thank you so much for reaching out regarding your operating agreement. I'm typing my answer now. Please be sure to respond on this thread so I know you're here and can help answer follow-up questions.

Gurney P

To ensure that the surviving manager—either you or your father—receives full ownership of the company upon the other’s passing, you can include a specific clause in the operating agreement. This provision can outline the automatic transfer of the deceased member’s ownership interest to the surviving member. Here’s an example of how it might be structured:

Survivorship Clause: In the event of the death of a Member, the deceased Member’s entire ownership interest in the Company shall automatically transfer to the surviving Member. Upon such event, the surviving Member shall assume 100% ownership of the Company, and the estate of the deceased Member shall have no further claim to ownership or management rights in the Company, except as otherwise provided by applicable law or agreed upon in writing by the Members prior to such event. This provision is intended to ensure the continuity of the Company’s operations and ownership within the family.

This language can be adjusted to fit the specific terms of your operating agreement and the legal requirements of your jurisdiction. Can I help answer any other questions for you this morning? I'm happy to help.

Gurney P

Yes, in addition to the ownership transfer clause, consider adding provisions for:

• Valuation of the deceased member’s interest

• Timing of the transfer

• Amendments to management roles post-transfer

Gurney P

Yes, no problem at all. I'm typing some sample verbiage to you now:

Valuation of the Deceased Member’s Interest:
"Upon the death of a Member, the value of the deceased Member’s ownership interest shall be determined by [insert method, e.g., the Company’s fair market value as appraised by an independent third party within 60 days of death, or a fixed amount agreed upon annually by the Members]. The surviving Member may opt to buy out the deceased Member’s interest at this valuation, payable to the estate within [specify time, e.g., 90 days], if required by law."

Timing of the Transfer:
"The transfer of the deceased Member’s ownership interest to the surviving Member shall take effect [choose one: immediately upon the Member’s death / upon completion of probate proceedings], subject to any legal requirements or estate consent as applicable under governing law."

Amendments to Management Roles Post-Transfer:
"Upon the death of a Member and the subsequent transfer of full ownership to the surviving Member, the surviving Member shall assume all management responsibilities previously held by the deceased Member. The Company’s management structure shall be amended accordingly, with the surviving Member serving as the sole manager unless otherwise determined by written agreement."

Gurney P

You're welcome. Here are revised samples:

Valuation of the Deceased Member’s Interest:
No valuation or buyout shall apply; the deceased Member’s ownership interest shall transfer fully and immediately to the surviving Member upon death.

Timing of the Transfer:
The transfer of the deceased Member’s ownership interest to the surviving Member shall take effect immediately upon the Member’s death, subject to any legally required estate consent.

Amendments to Management Roles Post-Transfer:
Upon the death of a Member and the immediate transfer of full ownership, the surviving Member shall assume all management responsibilities previously held by the deceased Member, becoming the sole manager of the Company.

Is there anything else I can help answer for you or assist you with today?

Gurney P

You are most welcome, it was my pleasure to help. If you would like to ask me any other questions, I would be happy to help if you open a new chat thread.