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972-248-8080 DALLAS
713-830-2207 HOUSTON
512-691-4100 AUSTIN
a blue and orange check mark with the letter w on it as the Wilson Whitaker Rynell Logo

Doubling Down On Membership Interests In LLCS

Chelsea Lankford • November 10, 2023

Shifting Shares: What You Need to Know About Changing Hands in Texas LLCs!

In Texas, when we talk about someone owning a part of an LLC, we call them a 'member.' What they own—their share of the profits and losses—is termed 'membership interest.' However, being a member means more than just having two of a kind; it gives you a seat at the table to help make important decisions, especially if the LLC is run by its members. This decision-making privilege is separate from the financial benefits, which are considered personal property and can be bought or sold.  In the context of Limited Liability Companies (LLCs), the transfer of a member's interest is a multifaceted process influenced by various scenarios, each with distinct legal and procedural nuances. Such transfers are not merely administrative actions; they often reflect deeper operational or interpersonal dynamics within the LLC.  However, when a member faces a legal judgment, their interest in the LLC can be transferred as a means to settle the judgment, akin to how creditor claims are addressed. This situation underscores the vulnerability of LLC interests to external legal actions and the potential impact on the member's stake in the company. Similarly, expulsion provisions in some LLC agreements, which allow for the removal of a member under specific conditions, highlight the importance of internal governance structures. These provisions can radically alter the membership landscape, especially in scenarios of internal conflict or non-compliance with the agreement terms.


Contractual agreements among members, like buy-sell agreements, often dictate the terms of interest transfer under specific scenarios such as retirement, illustrating the forward-planning aspect of LLC membership. These agreements serve as pre-emptive measures to ensure smooth transitions and continuity in LLC operations. In more complex situations, like the dissolution of the LLC, the transfer of members' interests forms a part of the broader asset liquidation and distribution process. This complexity highlights the intertwined nature of members' stakes with the overall health and existence of the LLC. Additionally, forced buyout clauses in operating agreements, triggered in situations like decision-making deadlocks, reflect mechanisms designed to resolve significant operational impasses.


These varied circumstances not only demonstrate the intricate nature of transferring membership interests in LLCs but also the critical importance of having a comprehensive operating agreement. Such an agreement must meticulously outline the rights and obligations of members, reflecting foresight and preparedness for a range of potential scenarios. This approach is essential to maintaining the stability and integrity of the LLC structure, ensuring that transitions in membership do not adversely affect the LLC's operations or the interests of other members. It also highlights the dynamic balance between individual member rights and the collective interests of the LLC, necessitating careful consideration and strategic planning in operating agreement formulation.

Buying & Selling Membership Interests

What's unique in Texas is that you can be a member who calls the shots without necessarily sharing in the financial pie, or you could have a financial stake without a say in the day-to-day. Regarding passing on these interests, Texas law gives us a starting point—default rules for handling these transactions. But the beauty of an LLC in Texas is flexibility. The Operating Agreement—think of it as the master recipe for running the LLC—lets owners stir the pot just the way they like it. They can decide on the best way to transfer ownership pieces to new owners, ensuring the process meshes well with the company's character and the long-term aspirations of those at the helm. This tailored approach in the company agreement makes transferring ownership in a Texas LLC a tailored fit, not a one-size-fits-all solution.

What Is An Operating Agreement?

An Operating Agreement is a contractual document that outlines the governance and operating procedures of a Limited Liability Company (LLC). It details the ownership distribution, management roles, profit sharing, and rules for changes in membership, providing a framework for the LLC's internal functioning and decision-making processes such as the following:


  • Ownership and Investment: Defines each member's share of the LLC, based not just on investment but also on other factors as agreed upon by the members.
  • Management Structure: Specifies whether the LLC is managed by its members or by appointed managers.
  • Voting Rights: Clarifies the voting process and how decisions are made within the LLC.
  • Roles and Duties: Details the roles, responsibilities, and powers of members and managers.
  • Membership Changes: Includes protocols for adding or removing members, as well as procedures in the event of a member's departure due to death or other reasons.
  • Dissolution Process: Outlines the conditions and required actions for dissolving the LLC.


Protect Yourself With Buy-Sell Agreements

To navigate sensitive transitions, LLC members may craft a buy-sell agreement, a kind of business prenup. It outlines what happens if a member’s life changes due to death, divorce, or a simple wish to move on. Such agreements often allow the remaining members to buy out the departing member’s interest, maintaining the balance and continuity of the business. These agreements, along with the operating agreement, can set the stage for how interests are transferred, ensuring the company's heartbeat continues uninterrupted amid life's inevitable changes.


In the heart of Texas, where community and individuality are deeply valued, the division of assets during life's upheavals such as divorce or death takes on a distinctive character, especially when it involves an LLC. Here, a member's interest in an LLC is seen as personal property, and in the event of a divorce, it may be considered part of the marital assets. While an owner's economic rights may be handed over to a former spouse, this doesn't grant them a seat at the decision-making table. They become what's known as an assignee, holding a stake in the profits but not in the governance, unless the other members agree to roll out the welcome mat and admit them into the fold.


Similarly, if a member passes away, their economic interest can be inherited, but the mantle of membership doesn't automatically pass along with it. The heir, much like an assignee in a divorce, steps into a position of financial benefit without the voting power or management rights, unless there's a mutual nod from the remaining members.


Buy-Sell agreements can assist in minimizing the impact of any event which can and may occur during the existence of the LLC.

Different Types Of LLC Transfers

Transferring interests in an LLC can be approached in several different ways, and the type of transfer often depends on the provisions set forth in the LLC's operating agreement or company agreement, as well as the laws of the state where the LLC is organized. Here are the most common types of transfers:


  • Full Transfer: When an LLC member transfers their entire membership interest to another individual, they pass on all associated ownership rights, including financial gains and decision-making powers. The recipient fully assumes the transferor's former role and duties within the LLC.


Jane, a member of an LLC, decides to retire, she might sell her complete interest to John. In doing so, John would acquire Jane's share of the LLC's profits and also her vote in business decisions, effectively replacing her in the company's structure.


  • Partial Transfer: In a partial transfer, a member sells or otherwise transfers only a portion of their interest in the LLC. This might occur when a member wants to divest some but not all of their stake in the company.


Jane, who owns a 40% membership interest in an LLC that operates a chain of cafes. Sarah decides she wants to reduce her involvement and liquidate some of her assets for personal reasons. She opts for a partial transfer, selling half of her interest—20% of the total LLC membership—to another individual, John. Post-transaction, Jane remains an owner with a 20% stake, while John steps in as a new owner with his newly acquired 20%, allowing Sarah to retain some of her financial and managerial involvement in the business.


  • Assignment of Economic Rights: A member may choose to assign only their economic rights to another party. This means the assignee would receive the financial benefits of the LLC, such as profit distributions, but would not acquire any rights to participate in the management or operations of the LLC.


Jane, holding a 40% stake in a tech startup LLC, opts to transfer her management rights to John, giving him control over business operations and decisions. She keeps her economic interest, still collecting 40% of the company's profits, thus allowing John to steer the company's course while she benefits financially as a passive investor.


  • Change in Management Rights: Sometimes, a transfer can involve the change of management rights without changing the economic stake. For instance, when a managing member steps down and assigns their managerial role to another, existing or new, member while retaining their financial interest.


Jane, who owns a 40% stake in ABC LLC, decides to retain her management rights to stay involved in running the business and making decisions. However, she transfers her 40% economic interest to John, meaning he will now receive the profits associated with her share. In this scenario, Jane continues to shape the company's path actively, while John enjoys the financial rewards without participating in management.

What To Do After The LLC Interests Are Transferred?

After the transfer of a membership interest in an LLC, there is a series of actions that need to be taken to formalize and recognize the change both legally and within the company’s operations:


  • Documentation: The transfer must be properly documented through an Assignment of Interest Agreement, which both the seller and buyer need to sign. This formalizes the transfer of economic and potentially management rights.
  • Operating Agreement Update: It’s critical to amend the LLC’s operating agreement. This document reflects the current structure of ownership and management and, as such, needs to include the new member's details and their respective stake in the LLC.
  • Internal Record Adjustments: The LLC's internal records—like the members' ledger and capital accounts—should be updated to reflect the new distribution of interests.

In terms of compliance and external communication:


  • State Notification: Depending on the state’s requirements, the change may need to be filed with the Secretary of State. In Texas, this is typically necessary for member-managed LLCs but not for manager-managed LLCs.
  • Tax Authorities: The IRS should be notified about the change in ownership, especially if it affects the LLC’s tax situation. This could involve updating the EIN information.
  • Banking Changes: Banks and financial institutions with which the LLC has a relationship must be informed about the ownership change to update signatory authority and access to accounts.
  • Contract Revisions: Existing contracts may need a review and updates to reflect the change in ownership or management authority.
  • Stakeholder Communication: Finally, it’s good practice to inform stakeholders such as clients, suppliers, and service providers about the changes to maintain clear communication and trust.


Accomplishing these steps ensures that the LLC remains in good standing with regulatory bodies, maintains accurate records, and sustains operational integrity. Engaging with legal and financial advisors is recommended to navigate the complexities of the transition smoothly.


A person is holding a cell phone in front of a book titled artificial intelligence
By John Wilson February 19, 2025
Copyright and Translated Content: Who Owns the Creative Rights? Understanding Copyright Law and Translation Copyright law protects creative work and bestows sole authority over the work upon the creators. For example, the owner of the work of a novel has the right over the work under the concept of the right under the copyright. Courts have found that “the degree of protection afforded by the copyright is measured by what is actually copyrightable in the publication and not by the entire publication.” See, e.g., Dorsey v. Old Sur. Life Ins. Co., 98 F.2d 872, 873 (10th Cir. 1938) (emphasis added). For translations, the situation is not very clear. Translations involve creative judgments over word translation and not the translation of mere words. Hence the knowledge about the applicability of the concept of the right over the work is essential for establishing the right over the work. For example, a Court in the Northern District of California stated that: “ the determinative question is whether Plaintiff holds a valid copyright. ” Signo Trading Intern. Ltd. v. Gordon, 535 F. Supp. 362, 363 (N.D. Cal. 1981). The Signo Trading Court dismissed Plaintiff’s infringement claims because plaintiff did not have a valid copyright as a matter of law in the translations and transliterations at issue because they lacked the “requisite originality.” Id. at 365. Can Translation Be Considered a Creative Process? The Practice of Translating Translation goes beyond the replacement of one word by the equivalent word from the source text. Translating literary work, poetry, and fiction with deeper meanings beyond the surface text is a complex, artistic process. Translating books like The Iliad, for instance, requires the practice of artistic translation to translate the emotions, thoughts, and the culture correctly. Technical Translations and Legal Translations Conversely, technical writing and texts for the law need less creativity and instead value correctness over all else. These writing forms require strict adherence to the original sense, leaving very little room for artistic interpretation. Translations for these writing forms thus typically involve less creative contribution and less potential for the work being protected by copyright. Why Is Creativity Important for Translations for Copyright? Originality when translating For a work to be subject to copyright, some creativity, however slight, is essential. Even when the translation is taken from the work, the translation also includes some creative work by the translator. This creativity can make the translation subject to copyright. A derivative work must “recast, transform[], or adapt[]” a preexisting work and “consist[] of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship.” Id. In other words, it must change or alter the pre-existing work’s content and must itself be an original work of authorship. The Supreme Court stated that “ [t]he sine qua non of copyright is originality ” and that “ [t]o qualify for copyright protection, a work must be original to the author. ” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991) at 345. “Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.” Id. (citing 1 M. Nimmer & D. Nimmer, Copyright §§ 2.01[A], [B] (1990)). In granting a Rule 12 motion to dismiss, the Signo Trading Court held that: " It is inconceivable that anyone could copyright a single word or a commonly used short phrase, in any language. It is also inconceivable that a valid copyright could be obtained for a phonetic spelling, using standard Roman letters, of such words or phrases. Although lists of words and translations of larger works may be copyrightable, Plaintiff cannot claim credit for any of the elements which make those things copyrightable. For these reasons, Plaintiff does not hold a valid copyright on the translations or transliterations ... " Signo Trading, 535 F. Supp. at 365. The Problem of the Derivative Work However, translations are generally "derivative works" - derived from the work of another. Because of this, the owner or author of the work is generally required to agree to the translation. Translations made illegally can be held under the classification of copyright violations, even when the translator has added creative elements. Who Has the Right over the Translated Work? Employer-Commissioned Translations Ownership of the copyright for the translation work varies. If the translation is commissioned by the owner of the original work, the owner will retain the right. Even when the translator adds creativity by passing over the original emotions and thoughts, the owner will not necessarily lose the right over the translation work. In some circumstances, the translation work can be accredited by the translator without them holding the right over the work. Independent Translations If a translation is performed independently by the translator, the translator can even be identified as the co-author of the translation. Nevertheless, the author typically has the underlying copyright, restricting the translator’s right over the work. Creative Translations from the Public Domain In certain cases, a translation may be creative enough to warrant its own copyright. For example, a translator adapting a classic work or a book in the public domain into modern language may introduce enough originality to qualify for copyright protection. However, direct, word-for-word translations are typically not considered original enough to receive new copyright protection. What About Machine Translations? The Human Creativity Copyright Requirement Machine-generated translations, including those produced by platforms like OpenAI , operate through advanced algorithms that replicate language patterns rather than capture the human touch. Unlike translations crafted by human translators who often infuse cultural insight and genuine emotion into the work, OpenAI's output is rooted in statistical patterns and data. Consequently, while these translations are impressively efficient and accurate, they typically fall short of the originality required for copyright protection. This distinction underscores the human creativity requirement needed to secure a valid copyright . Ultimately, although machine-generated translations serve as powerful tools, they do not offer the same legal and creative protections as those provided by human translators. The Bottom Line: Navigating Copyright in Translations Translations occupy the middle ground under the law of the copyright. Albeit the right of the original author generally has the right under the copyright, the right under the copyright can also be claimed by the translator provided the translation is creative enough. Central considerations here include the creativity the translator has added, the nature of the work being translated, and whether the work is under the public domain. These considerations establish the right of the owner under the copyright for the translation. Why Wilson Whitaker Rynell for Your Copyright Work? At Wilson Whitaker Rynell, our professional lawyers specialize in the practice of copyright law and copyright litigation , including the complex subject matter of translation work. We can provide you with advice about the ownership of your work under the provisions of the copyright, and protect your creative property. If you are the author, the publisher, or the translator, you can rely upon the advice from our firm. Copyright Translation FAQS
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Female Divorce Attorneys in the Dallas-Fort Worth Area In many instances, divorce cases are challenging and emotionally taxing experiences. For this reason, it’s common for people to prefer working with an attorney of the same gender because they feel as though the attorney can empathize and understand their situation more. At the end of the day, the gender of your attorney may not affect the outcome of your case, but it’s important to feel as comfortable as possible while navigating through the process. At Wilson Whitaker Rynell, our experienced female divorce attorneys offer compassionate and empathetic approaches while they develop a comprehensive legal strategy to represent you. Why Should You Choose a Female Divorce Lawyer? There are many reasons why hiring a female divorce attorney can help you throughout your divorce. For one, they often have experience working on issues that disproportionately affect women in divorce such as spousal support (alimony), child custody disputes, and asset division. Additionally, female divorce lawyers offer a unique level of empathy, understanding, and communication. As a result, many clients feel that they are more approachable and compassionate, which is beneficial when dealing with the emotional turmoil of the process. More importantly, female divorce attorneys are more familiar with how the court treats women in divorce cases and use this knowledge to strategically protect their clients’ interests, whether male or female. Why Our Female Divorce Attorneys May be Right for You At Wilson Whitaker Rynell, our female divorce attorneys are skilled, knowledgeable professionals, they also have many years of experience in handling complex divorce cases. Whether it’s issues surrounding custody of children, alimony, or asset division, our female divorce lawyers ensure each client receives high-quality legal advice. Our firm’s female divorce attorneys provide the highest level of personal attention, ensuring that each client’s unique needs and concerns are addressed through every step. Unique Challenges Women Face in Family Law Disputes in Texas Family law disputes can be emotionally charged and legally complex, especially for women navigating the process in Texas. Women often encounter unique challenges due to their roles in the marriage and family dynamic, particularly when it comes to child custody, child support, and the division of marital assets. Child Custody Challenges In many marriages, women take on the primary caregiving role for their children. However, when it comes to custody decisions, courts in Texas prioritize the best interests of the child over parental gender. While this often works in favor of mothers, women may still face hurdles in proving they are better suited to provide the stable environment the child needs, especially if their ex-spouse disputes custody. Factors such as work schedules, living arrangements, and financial stability can come under scrutiny. Child Support Issues While Texas law allows women to seek child support, collecting these payments can sometimes prove difficult. Women awarded child support may find themselves dealing with ex-spouses who delay payments, make partial payments, or refuse to pay altogether. Enforcing child support orders often requires legal intervention, which can add to the emotional and financial strain. Division of Marital Assets In Texas, a community property state, marital assets are typically divided equitably during divorce. Women who are awarded assets such as the family home may face challenges related to maintaining the property, refinancing a mortgage, or covering associated expenses. Additionally, women who sacrificed their careers to support their spouses or raise children may feel disadvantaged during the division of assets if their earning potential is limited compared to their ex-spouse. How Your Divorce Attorney Will Support You Each divorce case is unique, and having an experienced attorney standing by you is vital. Whether you’re dividing assets, negotiating child custody, or managing other complex legal issues, the female divorce attorneys at Wilson Whitaker Rynell are here to protect the interests of you and your family. Our attorneys will take the time to understand your unique circumstances and empower you to make informed decisions that support your career, family and future. When you choose a female divorce attorney from Wilson Whitaker Rynell, you can trust that they will: Prioritize your family’s best interests. Negotiate with integrity, ensuring fairness and transparency. Clearly explain all your options and their potential outcomes. Help you create the future you want by offering trusted legal advice. Use efficient methods to minimize unnecessary costs and keep the process manageable. Navigating family law disputes requires a thorough understanding of Texas family law and strong advocacy. Women facing divorce or other family law issues are encouraged to seek an experienced family law attorney who can provide personalized guidance. A skilled lawyer can help craft a strategy that protects their rights and ensures a fair resolution. This includes representing their interests in court, negotiating settlements, and helping enforce orders such as child support or spousal maintenance.
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Understanding Writs of Execution in Texas: A Layperson’s Guide If a court determines that someone owes money to another party, the debtor—referred to as the "judgment debtor"—typically has 30 days to pay off the debt. If the debt remains unpaid after this time, the creditor, or "judgment creditor," can take legal action to enforce the payment through a Writ of Execution . This legal process, governed by Texas law, enables creditors to collect what they are owed by seizing and selling the debtor’s non-exempt assets. What Is a Writ of Execution? Under Texas Rules of Civil Procedure 629 , a Writ of Execution is a court order that authorizes a sheriff or constable to seize the debtor’s property to satisfy the debt. This writ is an essential tool for creditors when voluntary repayment has not occurred. Once the writ is issued, it is handed over to a county constable or sheriff, who is required to act “without delay” in collecting the debtor’s real and personal property. The seized property is then sold, and the proceeds are used to pay off the debt. If multiple writs are filed against the same debtor, the assets are distributed in the order the writs were received. What Property Can Be Seized Under a Writ of Execution? Texas law is very specific about which types of property can and cannot be seized to satisfy a judgment. Exempt Property Certain assets are protected from seizure under Texas Property Code § 41.001. These include: The debtor’s homestead (primary residence) Wages earned from employment Professionally prescribed health aids Workers’ compensation benefits College savings plans Some insurance benefits Personal property valued up to $50,000 for individuals and $100,000 for families Unique to Texas, the law also protects items like family Bibles, two firearms, pets, and for rural residents, livestock (e.g., 12 head of cattle and 120 fowl). This extensive list reflects Texas's cultural heritage and values. Non-Exempt Property Assets that are generally not exempt include: Vacation homes Timeshares Pleasure boats Airplanes Jewelry exceeding certain value thresholds The specific procedures for seizing different types of property are detailed in Texas Rules of Civil Procedure 639 . Can a Writ of Execution Be Avoided? Judgment debtors have a few options to avoid the execution of a writ: Filing a Supersedeas Bond A supersedeas bond can temporarily halt enforcement of the writ. This bond, filed with the county clerk or justice of the peace, preserves the status quo while the debtor seeks further legal remedies. This option is governed by Texas Rules of Civil Procedure 634 . Challenging the Execution Debtors can file a claim for wrongful execution in situations such as: The debt has already been paid Exempt property is being seized The levy is excessive Additionally, courts take extra care to protect property classified as a homestead under Texas Property Code § 41.002(c) . When only one spouse is responsible for the debt, Texas Family Code § 3.202(a) and related provisions provide guidance on levying against community or separate property. The Role of County Officials in Executing the Writ Once the writ is issued, its enforcement falls on county officials, typically a sheriff or constable. These officials must act in accordance with Civ. Prac. & Rem. Code § 34.072 , which requires them to execute the writ and report back to the court. They must: Give proper notice of the sale of seized property Ensure the proceeds are appropriately delivered to the creditor Avoid overstepping legal boundaries, such as seizing exempt property Failing to execute the writ properly can result in serious consequences, where a sheriff’s refusal to levy on a property initially listed as exempt (but later deemed abandoned) led to court action and damages awarded to the creditor. Preventing Fraudulent Transfers One challenge creditors face is when debtors attempt to hide or transfer assets to avoid collection. To address this, Texas follows the Uniform Fraudulent Transfer Act under Tex. Bus. & Comm. Code § 24.001 et seq .. This act provides legal remedies to creditors when a debtor’s transfer of assets is deemed fraudulent. Effect of a Defendant's Death on Writs of Execution Under Civ. Prac. & Rem. Code § 34.072 , the death of a defendant after a writ of execution is issued halts execution proceedings. However, any lien acquired from the writ's levy is still enforceable by the county court when paying off the deceased's debts. Why Proper Execution Of The Writ Is Crucial The rules for filing and serving a Writ of Execution are strict and detailed. Missteps, such as filing the writ in the wrong county, failing to serve the proper parties, or missing key deadlines, can lead to delays or even render the writ ineffective. Both creditors and debtors must ensure compliance with these rules to avoid unnecessary complications. For creditors, failure to properly enforce the writ could mean losing the opportunity to collect on a judgment. For debtors, not responding appropriately to a writ could result in the loss of valuable assets, even those that might have been exempt.
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The Wilson Legal Group are Dallas attorneys that specializes in Patents, Trademarks, Copyrights, Trade Secrets, Complex Litigation, Business/Corporate Law, Family Law and Real Estate Law. At the Wilson Legal Group, our clients are our focus. Our philosophy is simple and straight-forward: Understand our clients' needs, hopes, and interests in order to help them flourish. Our staff strives to build strong relationships with our clients in order to appreciate their best interests and help them achieve their goals.

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