Assignment of LLC Interest

An Assignment of LLC Interest is a document through which an LLC member can transfer their ownership rights.

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If an LLC member wishes to transfer their ownership rights to a different entity for any reason, they'll need to submit an Assignment of LLC Interest. This document will be a way for the member to communicate this intention to other LLC members.

What Is an Assignment of LLC Interest?

You can use an Assignment of LLC Interest in situations where an LLC member wishes to secure a loan, settle a debt, or leave their LLC. 

In such cases, this document will serve to transfer the member's interest – which can be done wholly or partially – according to state laws and the governing documents of the LLC in question.

Other Names for Assignment of LLC Interest

Since the document's content takes precedence over the title, an Assignment of LLC Interest doesn't necessarily have to bear that name. It's also called:

  • Assignment Agreement
  • Transfer Agreement
  • Interest Transfer Agreement

Who Needs an Assignment of LLC Interest?

LLC members may decide to assign their interest for several reasons. One of the more common reasons for assignment is providing collateral for a loan.

Another reason might be if the member needs to settle a debt, in which case the assignment remains effective while the debt is present.

Finally, a member can assign interest to their legal heirs. In this case, the assignment becomes valid upon the member's death.

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How to Create an Assignment of LLC Interest With 360 Legal Forms

An Assignment of LLC Interest should clearly outline the rights and limitations as they apply both to the assignor, i.e., the LLC member transferring interest, and the assignee, i.e., the party receiving interest. For this reason, the document should be detailed and carefully crafted. State laws can potentially restrict assignments, and documents contrary to those laws can be subject to invalidation.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you need to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Assignment of LLC Interest?

To create your document, please provide:

  • Assignor Information: Details on the LLC member transferring interest 
  • Assignee Information: Details on the entity receiving interest
  • Assignment Type: Description of whether the assignment is partial or full 
  • Type of Partial Assignment (If Applicable): Determining whether the assignor will transfer a portion of ownership or specific rights and responsibilities
  • Signatures: All involved parties need to sign the document to make it legally binding 

Assignment of LLC Interest Terms

  • Assignor: The LLC member assigning their rights, responsibilities, and interest
  • Assignee: The individual or other entity receiving the rights, obligations, and interest from the Assignor
  • Authority: A confirmation that the agreement is following regulations affecting all parties (Assignor and Assignee)
  • Severability: If you can't execute any individual part of the agreement, the rest of the agreement will remain valid

Assignment of LLC Interest Signing Requirements

An Assignment of LLC Interest is a legally binding document, which means all parties should ensure they understand and agree to all terms within it before signing. 

Once the Assignor and Assignee confirm that all information in the document is correct, both parties will need to sign the document to make it valid.

What to Do With Your Assignment of LLC Interest?

An Assignment of LLC Interest defines the scope of interest an LLC member will transfer to another party for other members of the LLC. 

After signing the document, you will execute the interest transfer. Both parties should keep their copies of this document for the record.

Frequently Asked Questions

LLC members often have two roles within the LLC: as interest owners and managers. When a member decides to assign interest to another party, the transfer won't affect that member's management role. 

Should an LLC member wish to leave the LLC management, they'll need to resign from that role in an action separate from the interest transfer. At that point, they’ll determine their replacement in the management following the LLC operating agreement and the state laws.

An LLC member can transfer their interest fully or partially. Full transfer means that the Assignee receives interest identical to that previously held by the Assignor.

In the case of a partial transfer, an LLC member will assign either a portion of their interest or only certain rights to the Assignee. 

In most states, the Assignee won't have the right to participate in the operations of the LLC in question. The Assignee is also protected from the Assignor's liabilities, but this may vary according to the state. For example, the Assignee receives the liability in Florida and California.

If the Assignee is introduced into the LLC as a member following the transfer, the Assignee's limitations and rights will be the same as the Assignor's. 

Most states will not prohibit any LLC members from assigning interest. Likewise, in most states, interest transfer won't mean that the Assignor relinquishes their right to vote or continue their involvement in LLC management. 

Texas is an exception since that state's law mandates that the Assignor must forfeit their LLC membership upon transfer.

Notifying all LLC members of an assignment is mandatory, and in some states, you can only enforce the document upon approval by all LLC members. 

LLC members can decide whether the Assignee will become a member if the Assignor wishes to resign their position. The interest transfer doesn't guarantee that the Assignee will automatically become an LLC member.

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Applicable to all 50 states
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