Abstract:
Despite our founding father Benjamin Franklin’s observation about the certainty of death and taxes in this world, the Louisiana statutory scheme governing the limited liability company (LLC) has rendered death and taxes entirely uncertain. This uncertainty can paralyze business, stall successions, and negatively impact tax consequences. The cause of this uncertainty is specific state statutory provisions in Title 12, Chapter 22, Part IV of the Louisiana Revised Statutes, which are rooted in now-stale federal law and are due for reform by the Louisiana legislature.
This Article is divided into three parts. Section I explains the rights of heirs as assignees upon the death of a member of a Louisiana LLC and presents examples of inequities that can occur as a result of the current statutory framework. Section II traces the origins of treating heirs of an LLC member as assignees and explains how the original reasoning was based on prior, subsequently overruled, federal tax law. Finally, Section III proposes legislative changes to address the LLC in the modern era.
