Operating Agreement

Every LLC has (or should have) an operating agreement. It is to an LLC what bylaws are to a corporation and what a partnership agreement is to a limited partnership. The document answers the questions that matter most when things get complicated: Who has authority to make decisions? How are distributions triggered? What happens if a member dies, divorces, or wants to sell their interest? Without clear answers in writing, families often find themselves governed by generic state defaults that were never designed with their situation in mind.

For a family LLC, the operating agreement carries particular weight because the members are relatives — people whose relationships, expectations, and circumstances will change over time. Well-drafted agreements typically address management structure (member-managed vs. manager-managed), voting thresholds for major decisions, restrictions on transferring interests to outsiders, and buy-sell provisions that define what a departing member can receive and when.

A hypothetical example: two siblings inherit a commercial property held inside a family LLC. Their operating agreement specifies that neither can sell their interest to anyone outside the family without first offering it to the other sibling at an appraised value. That single clause prevents a stranger from becoming a co-owner against one sibling's wishes. Operating agreements intersect directly with family office structure and purpose-setting conversations. Drafting and amending them requires qualified legal counsel.