Why your LLC is not an estate plan (and what to do about it)

An LLC protects your business while you’re alive, but only an estate plan keeps it running when you’re gone. Here’s how to make sure your family and your company don’t end up in probate limbo.

If you’re like most business owners in the United States, your estate plan is either out of date or simply doesn’t exist; Forbes found that 85% of successful business owners have outdated estate plans.

You’ve likely taken some steps to legitimize your business and protect yourself. You probably formed an LLC and filed your paperwork with the state, but here’s the catch: While an LLC can protect you from lawsuits, it doesn’t protect your family (or your business) if something happens to you.

In Georgia, if your LLC’s operating agreement isn’t customized to alter the default rules, your ownership interest can get stuck in probate. During that time, your employees, partners, and vendors can’t access accounts, sign contracts, or move money. Your family is left in limbo, waiting for a probate court to decide on ownership, while your business just sits.

In this article, I’ll share how Georgia business owners can avoid probate purgatory and protect their assets no matter what happens next.

The destructive myth: “My LLC already covers me”

This is one of the most common assumptions I hear from small business owners in Georgia, but it’s only partly true. 

An LLC does protect you from personal liability while you’re alive. But after you’re gone—or even if you’re temporarily incapacitated—that layer of protection disappears:

• Your ownership in the LLC is treated like any other asset.
• If you haven’t made a legal plan for who inherits or controls it, your ownership shares go through Georgia’s probate court.
• Until the court appoints an executor, which can take months, no one can make business decisions or unfreeze funds.

So while the LLC protects your personal assets from lawsuits, there’s a big gap. 

An LLC does not protect your business from probate.

The problem with relying on an LLC for asset protection

As we’ve discussed, creating an LLC only does half of the job that small business owners are typically looking for. Without a custom operating agreement, your business defaults to Georgia’s standard LLC rules. 

That may sound harmless, but those rules mean your business shares will go through probate if you pass away. No one—not even your spouse or your business partner—can vote on or manage your side of the business until the court approves it, which can put a freeze on business accounts.

If you’re a single-member LLC, this will completely freeze operations, with no recourse until the court appoints an executor. If you’re in a partnership, this can trigger confusion or conflict among the surviving members.

How to fix it: Include your LLC in your estate plan

Fortunately, this problem has a simple solution. Creating a customized operating agreement as part of your estate planning process is key to keeping your business running if you’re not able to do it yourself.

A custom operating agreement should:

• Name who takes control immediately if you become incapacitated or pass away
• Define how ownership transfers to heirs or partners
• Authorize interim management

Single-member LLCs will benefit, too, because your business won’t get tangled in red tape (with assets your family can’t touch) if the worst should happen.

How an estate plan keeps your business safe

While an LLC protects you, an estate plan protects your loved ones. Combining the two creates a plan that keeps your business running smoothly, no matter what happens.

Here are the three core elements I recommend for most small business owners:

#1: Revocable living trust

Transferring ownership of the LLC into a revocable trust keeps it out of probate entirely, while still letting you manage and operate it day-to-day. 

#2: Power of attorney

A POA lets you assign someone you trust to handle your business decisions if you’re temporarily unable to sign documents, attend closings, or approve payments.

#3: Updated will

A will acts as a safety net for any assets not yet assigned to the trust. 

Together, these three elements secure your business (and the income it provides) for your family and protect your surviving partners.

Where small business owners get estate planning wrong

After helping hundreds of small business owners in Georgia, I’ve seen the following mistakes come up time and time again:

• Assuming a single-member LLC avoids probate. It doesn’t; ownership still has to be legally transferred through the court, unless you plan ahead.
• Forgetting to transfer the LLC into your trust. If your trust doesn’t formally own your membership interest, your LLC will still end up in probate, so make sure you hire an attorney who will ensure the trust is properly funded.
• Failing to update the plan after major life events. When you add partners, expand, or start a new venture, you should update your operating agreement (and estate plan) to match.

Frequently asked questions

Does an LLC avoid probate in Georgia?

No. Your LLC protects you from personal liability, not from probate. Unless you transfer ownership to a trust or specify successors in your operating agreement, your membership interest will go through probate when you pass away.

What happens to my LLC if I die without a will or trust?

The court will decide who inherits your share of ownership if you die without a trust. (A will won’t keep your business out of probate court.) Until then, your business likely will not be able to operate normally.

Can I name my spouse or child to take over my LLC?

Yes, but it must be legally documented in your operating agreement or estate plan. Verbal agreements won’t hold up in court.

Should I put my LLC into a trust?

It depends on your circumstances, but I generally recommend transferring your LLC ownership into a revocable living trust. This keeps your business out of probate while allowing you to retain control during your lifetime.

Do I need an attorney to update my LLC operating agreement?

Yes, I highly recommend hiring a qualified estate planning attorney. Your operating agreement should align with both your estate plan and Georgia’s LLC laws to ensure a smooth transition.

Ready to prevent months of court delays? Start by downloading our free guide, How to Protect Your Family and Your Business.