[CO] [CO] How can I protect my LLC from partners’ spouses?

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You want to write that into the governing documents of the company?

And what state is the company formed in?

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In Colorado, it’s absolutely possible—and smart—to include specific terms in your multi-member LLC’s operating agreement to control what happens to a member’s ownership interest if they pass away or get divorced.

This can help prevent a member’s spouse from ever becoming an owner in the business, which is often a key concern in closely held companies.

Since your LLC is taxed as an S-Corp and already has an operating agreement in place, you’re off to a strong start. The operating agreement is the backbone of your company’s structure, and it can be customized to include protections around ownership transfers.

For example, if a member dies, the agreement can include a buy-sell provision. This would give the remaining members—or the LLC itself—the right or obligation to buy the deceased member’s interest.

The agreement would set the terms for how the interest is valued and paid for, so that the deceased member’s estate (which could include their spouse) receives the value of the share without ever actually becoming a part-owner of the company. This is a common and effective way to keep membership within the intended group.

You can also trigger a buyout clause in the event of divorce, ensuring the divorcing member is bought out and the spouse is compensated financially rather than gaining a stake in the business.

While it’s not required by law, having spouses sign a written acknowledgment of the agreement’s terms can further protect the business. Prenups and postnups can also help ensure LLC interests are treated as separate property.

There are a few key things to get right when putting these protections in place. You’ll want a clear, fair method to value a member’s interest, since disputes often come down to money. You’ll also need a plan for how to fund the buyout—whether that’s life insurance, installment payments, or company funds.

And while your agreement is strong, a Colorado divorce court can still factor the LLC interest into the broader division of assets. The good news is that the S-Corp status doesn’t interfere with these protections, though it’s wise to keep eligibility rules in mind as you plan.

Great! I hope the information I provided was helpful and addressed your question. If there's anything else you need, please don't hesitate to reach out—I’m always happy to assist. Wishing you a fantastic day ahead!