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    3 Replies Latest reply on Feb 17, 2009 1:13 PM by Numbers.Gal

    Can a partner in an LLC give his shares away

    20twenty Newbie

      An LLC with 4 partners 25% equity each, 2 brothers, a friend, and an investor. Can 1 of the owners give his shares to another owner(brother) or does he have to sell them? if he has to sell them and wants to sell them strictly to his brother can he or if the other owners want to pay more for his shares does he have to sell the shares to them? Would love to get some feedback.
        • Re: Can a partner in an LLC give his shares away
          dublincpa Scout

          Usually this is expressed in the operating agreement. If the operating agreement is silent on a subject, what I have been told is that in most states the LLC member can do what s/he wants.

          I really hope that it is covered in the agreement. Otherwise, there is potential for some ugly arguments.
          • Re: Can a partner in an LLC give his shares away
            Lighthouse24 Ranger

            I concur with the post above, and will add that if you used a "boilerplate" agreement or off-the-shelf template, it most likely spells out the following procedure: First, the three withdrawing members would have to agree on a purchase price for buying out the fourth member. Then, they would all have the first option to buy a one-third share of the withdrawing member's interest at that price. If the other two members refused that option (i.e., chose not to buy their portion of the withdrawing member's interest), then you could buy it all. If you don't set a selling price, however (or if you set a very low one), then the other members will naturally want to claim/buy their shares.

            As already noted, the answer will be in your operating agreement -- or if not covered there, guided by your state's laws. Good luck.
            • Re: Can a partner in an LLC give his shares away
              Numbers.Gal Newbie
              You can also consider making a gift of shares to your brother. You would still need to agree on a valuation of your shares. If the value is greater than $11,000, consider gifting a portion of the shares valued at $11,000 over a number of years. $11,000 is the maximum amount you can gift each year without triggering the Federal gift tax.