Arizona Governor Signed Into Law A Change That Should Make Owning LLCs More Similar To Other Types Of Assets
SB1233 amends the Arizona Limited Liability Company Act by adding a new provision: allowing interest in an LLC to be held by two or more people as joint tenants with right of survivorship or by a married couple as community property with right of survivorship. This can be prohibited or restricted in an operating agreement. See the text of the bill here.
This change should be carefully considered when planning your business entity. Normally, if one owner dies, his or her heirs will inherit the ownership interest. With JTWROS, nothing will go to their heirs; the entire interest will be vested in the other owner. In married couples, this may be intention of the parties but with a typical partnership, where to unmarried people enter business together, passing your ownership to your heirs may be an important part of your LLC plan.