Spouse rights of Member in Multi-member LLC

[sprague]

Jurisdiction

Oklahoma

Can someone help explain to me what rights a members spouse has in an LLC? The member in question was a 1/3 partner in the LLC prior to knowing or marrying the spouse. The spouse thinks that she has a say in the company because she is married to a member. What happens if they divorce, will she gain half of his interest in the company if it was formed before the marriage or will she not be entitled to anything from the LLC directly? If he were to sell his shares to the other two members and then be hired on as a manager, could he do so without that being an issue in divorce? I attached a blank copy of the operating agreement if that helps.

Thank you.

 

[adjusterjack]

Can someone help explain to me what rights a members spouse has in an LLC?

None, if the spouse is not named in the LLC.

The member in question was a 1/3 partner in the LLC prior to knowing or marrying the spouse. The spouse thinks that she has a say in the company because she is married to a member.

That's a different story. Her "say" depends on just how PW'd her husband is.

What happens if they divorce, will she gain half of his interest in the company if it was formed before the marriage or will she not be entitled to anything from the LLC directly?

You have to understand the difference between ownership and marital interest. Your member owns his interest and will always own it. Unfortunately, she could be entitled to be compensated for her marital interest in his asset which means he will have to give her the equivalent in money and if he doesn't have the money will have to sell his interest to pay her.

If he were to sell his shares to the other two members and then be hired on as a manager, could he do so without that being an issue in divorce?

No.

It would be a big issue in the divorce and he would pay dearly for doing it.

I attached a blank copy of the operating agreement if that helps.

Doesn't matter.

You are free to tell the spouse to pound sand with regard to the operation of the business. But in the event of death or divorce of the member a married person has rights to the value of the spouse's assets that have accumulated during marriage.

 

[sprague]

Thank you for your help, I love they way you so eloquently worded your responses! I would say he is very PW'd. So that brings me to one last question. If he can't keep his personal life from interfering with the business, it is my understanding from section 10 and 11 of the operating agreement that the other two members can expel him as a member and purchase his interest, would that be correct?

 

[army judge]

If he can't keep his personal life from interfering with the business, it is my understanding from section 10 and 11 of the operating agreement that the other two members can expel him as a member and purchase his interest, would that be correct?

Even if the agreement says it can be done, that doesn't mean it can be done quickly and cheaply.

The other side of that coin is that no spouse can control the actions of the other spouse.

That is to say, if one spouse likes to shoot from the mouth, the other spouse isn't liable for what is shot out of that mouth.

It would be prudent to seek REAL legal advice from an attorney licensed to practice law in your jurisdiction before either of the other owners imitates or replicates the antics of a "shoot from the mouth" spouse.

 

[adjusterjack]

If he can't keep his personal life from interfering with the business, it is my understanding from section 10 and 11 of the operating agreement that the other two members can expel him as a member and purchase his interest, would that be correct?

No, it wouldn't be correct. That's not what section 10 and 11 are all about. Nor should they be taken out of context of the entire agreement.

Given your misinterpretation of those sections I also recommend you consult an attorney regarding the issue of the PW'd member's spouse who wants a hand in the business.