For many business owners, estate planning feels like a separate conversation from running the company. You draft a will, maybe set up a trust, name some beneficiaries — and consider the job done. But for those who own an LLC, especially a family-run business or professional practice, one document quietly holds enormous weight in determining what happens after you’re gone: The Operating Agreement.

This isn’t just a business governance tool. It’s one of the most overlooked, underappreciated, and underutilized estate planning documents in your entire portfolio.

From Startup to Succession: A Document Frozen in Time

Most operating agreements are drafted at the very beginning of a business — often from a template — and focused entirely on formation. They help get the tax ID number, open a bank account, and decide who signs the checks.

But here’s the problem: These documents were built for the start of the business, not the end.

They rarely account for the day a founder retires, gifts units to children, or passes away. There’s no clause for how ownership is transferred, who takes over voting rights, or what happens when someone tries to sell to an outside party. In other words, they’re legally silent when your family needs answers the most.

Three Clauses That Should Be in Every Operating Agreement

As estate planners and legal advisors, we frequently encounter operating agreements that lack core provisions needed for continuity and protection. The three most common missing elements?

• Transfer Restrictions: These provisions define who is allowed to receive or buy ownership interests. Can your adult children hold voting units? Are your heirs forced to sell? Can they participate in management?
• Gifting Language: If you intend to transfer LLC units to a trust, is that explicitly permitted in your OA? Without it, you may face valuation disputes or unintended tax consequences.
• Successor Manager Provisions: In the event of your incapacity or death, does the OA clearly name who takes over management? Without this, business operations could be stalled in court, or worse — fall into the wrong hands.

Where Legal Strategy and Estate Planning Intersect

Here’s the bigger picture: Your operating agreement isn’t just a business document — it’s a legal bridge between your estate plan and your legacy.

Let’s say your trust is designed to hold LLC units for your heirs. Great. But if the operating agreement doesn’t permit trusts to hold voting interests, or if it requires member consent to transfer those units, your trust could be rendered powerless. Even worse, probate courts may intervene to “interpret” your wishes.

A Real-World Contrast

One family we worked with had an outdated OA that lacked any provision for death or incapacity. When the founding partner passed away, his ownership became an asset of the estate — forcing the family through 18 months of probate just to unlock business control.

By contrast, another client integrated their OA with their estate plan. It had clear language permitting trusts as owners, defined the valuation process for gifting units, and named a successor manager. When they passed, the transition was seamless — private, protected, and predictable.

Don’t Let a Missing Paragraph Cost Your Family Everything

Operating agreements are living documents. They must evolve as your business — and your life — evolves.

At BrookHaven, our legal and estate planning teams work together to ensure every line in your documents reflects your long-term intentions. Whether you’re planning to gift ownership, step back from operations, or prepare your legacy for future generations, your operating agreement should lead that conversation — not lag behind it.

Have your Operating Agreement reviewed by a legal team that understands both business law and estate planning. Because when the time comes, your family won’t be reading your will.
They’ll be reading your OA.