Blechman v. Estate of Blechman
Bertram Blechman amended his revocable trust to leave his partner half the income from a family LLC. He had signed an operating agreement four years earlier saying his interest would vest in his children the moment he died. Florida's Fourth District held the contract got there first — and that the interest was never an estate asset at all.
Most estate fights are about what a document meant. This one is about which document got there first.
Laura Investments, LLC was formed in New Jersey in August 2009. Bertram Blechman and his sister each held a 50% membership interest — the rights to distributions, to allocations, to information, and to vote.
The operating agreement, executed that August and amended on April 30, 2010, was written to keep the company in the family. Section 6.3(a) restricted transfers, and then supplied a default. Unless a member disposed of his interest by one of three specified routes — a lifetime transfer under sections 6.1 or 6.2, a bequest by will to immediate family, or inheritance by immediate family — the membership interest of a deceased member “shall pass to and immediately vest in” that member's then-living children, and the issue of any deceased child, per stirpes.
Bertram Blechman had two adult children, Robert Blechman and Cathy Blechman Chermak. He also had a partner of eight years, Arlene Roogow.
A trust amendment, four months later
Blechman had a Revocable Living Trust dated December 12, 2000. As originally written it said nothing about the LLC.
On August 20, 2010 — a little under four months after the operating agreement was amended — he amended the trust. The amendment gave Arlene Roogow his residence and one half of the distributions from the LLC for her lifetime.
He died on February 25, 2011. His will was admitted to probate on April 7, 2011. The will itself contained no specific provision for the LLC interest; it poured into the trust, and the trust amendment carried the instruction about Roogow.
So there were two writings, both signed by the same man, both apparently valid, pointing at the same asset in different directions. The trial court resolved the conflict by treating the LLC interest as a probate estate asset that had passed under the will into the trust, where the amendment could reach it.
A will operates prospectively. A contract does not.
On April 1, 2015, the Fourth District Court of Appeal reversed.
Because Laura Investments was a New Jersey LLC, the court applied New Jersey law to the operating agreement — and found the governing principle to be an unremarkable one available in Florida too. A contractual provision that directs the transfer of property at death is neither testamentary nor subject to the Statute of Wills. It is evaluated under contract law.
That distinction does all the work. A will is ambulatory: it has no legal effect until death and can be revoked at any moment before then. A contract creates a present, enforceable, binding right the day it is signed. Blechman had already given away what would happen to his membership interest at his death. When the moment came, there was nothing left in his hands for the will or the trust to redirect.
The court walked through §6.3(a) and found that none of the three permitted routes had been used. He had not transferred the interest during his lifetime under 6.1 or 6.2. His will did not bequeath it to immediate family — it did not mention the LLC. And a trust amendment giving lifetime distributions to a person outside the family bloodline was not inheritance by immediate family; it was the very thing the agreement was drafted to prevent.
So the default clause fired. The interest passed to and immediately vested in Robert Blechman and Cathy Blechman Chermak at the instant of death. The Fourth District reversed and remanded with instructions that the membership interest not be classified as an asset of the probate estate.
Everything that beats a will
Blechman is the LLC case, but the principle is not about LLCs. Florida law is full of instruments that transfer property at death without ever entering probate, and every one of them outranks a will as to the asset it controls.
- Beneficiary designations. Life insurance, annuities, IRAs, and 401(k)s pass by contract to whoever is named on the form. The will is not consulted.
- Payable-on-death and transfer-on-death registrations. Bank accounts under §655.82 and securities under Florida's Uniform Transfer-on-Death Security Registration Act, Ch. 711.
- Joint tenancy with right of survivorship, and tenancy by the entireties. The survivor takes by operation of title, instantly.
- Enhanced life estate deeds — the Florida “lady bird” deed — which convey the remainder at death while leaving full control during life.
- Buy-sell agreements, shareholder agreements, and partnership agreements. The corporate cousins of §6.3(a), and just as binding.
The through-line: a will governs the property you still own when you die. Every instrument above changes what you still own at that moment. Rewriting the will does not amend any of them.
Timeline
- Dec 12, 2000Bertram Blechman creates his Revocable Living Trust. It says nothing about any LLC.
- Aug 2009Laura Investments, LLC is formed in New Jersey. Blechman and his sister each hold 50%.
- Apr 30, 2010The operating agreement is amended. Section 6.3(a) provides that on a member's death the interest shall pass to and immediately vest in his then-living children, unless disposed of by one of three permitted routes.
- Aug 20, 2010Blechman amends his trust, giving Arlene Roogow his residence and one half of the LLC distributions for her lifetime.
- Feb 25, 2011Blechman dies.
- Apr 7, 2011His will is admitted to probate. It contains no specific provision for the LLC interest.
- 2013The trial court rules the membership interest is a probate estate asset that passed through the will into the trust.
- Apr 1, 2015The Fourth District reverses. The interest vested in the children at death by contract and was never an estate asset.
What actually went wrong
- The business document and the estate document were never read together. The operating agreement was amended in April 2010. The trust was amended in August 2010. Four months apart, and apparently by people who did not compare them.
- A default clause is still a clause. Section 6.3(a) was not the headline term anyone negotiated — it was the fallback for when nothing else applied. Fallbacks are where estate plans die, because nobody rereads them.
- The permitted route was available and unused. The agreement expressly allowed a bequest by will to immediate family. A will that named the LLC interest and directed it to the children would have satisfied §6.3 on its own terms — and left the drafter free to fund the partner's provision from something else.
- A partner outside the bloodline, against an agreement written around bloodlines. The trust amendment tried to route lifetime LLC income to someone the operating agreement had specifically excluded. There was no version of that instruction the contract would have honored.
- Out-of-state entity, Florida estate. Laura Investments was a New Jersey LLC. The court applied New Jersey law to the agreement in a Florida probate. Anyone holding interests in entities formed elsewhere is planning under more than one state's law whether they know it or not.
Would it have gone that way in Florida?
This IS the Florida rule. Same result, and Florida's LLC act makes the trap a little sharper.
Blechman v. Estate of Blechman, 160 So. 3d 152 (Fla. 4th DCA 2015), is Florida appellate authority and is cited here for exactly what it held: a provision in an LLC operating agreement that vests a deceased member's interest in named persons at death is a contract, not a testamentary disposition, and the asset never enters the probate estate. A later will or trust cannot redirect what the decedent no longer owns.
Florida's Revised Limited Liability Company Act, Chapter 605, points the same way. §605.0105 makes the operating agreement the governing instrument for relations among members and their rights and duties, with the statute filling gaps only where the agreement is silent. The section lists what an operating agreement may not do — it may not eliminate the duty of loyalty beyond stated limits, may not unreasonably restrict inspection rights, may not indemnify for bad-faith misconduct. Controlling what happens to a member's interest at death is not on the forbidden list. Members may write that rule, and courts will enforce it.
Florida adds a second edge the New Jersey analysis did not need to reach. §605.0502 separates the transferable interest — the right to receive distributions — from membership itself. A transferee is entitled to distributions in accordance with the transfer, but does not thereby become a member, may not participate in management, and has no right to company records unless the operating agreement or the other members grant it. In Florida, an heir who inherits a membership interest without a clause admitting them can end up with the economics of the company and none of the control.
The honest caveat: none of this is automatic, and none of it is a trap that springs on its own. It all depends on what the operating agreement actually says. An agreement that is silent on death, or that says the interest passes “as provided in the member's will,” produces the opposite outcome — the interest goes through probate and the will controls. Read the agreement before assuming either result. And note the related principle in §732.701: an agreement to make a will, or not to revoke one, is unenforceable in Florida unless it is in a written instrument signed with the formalities of a will. Contracts about property at death and contracts about wills themselves are governed by different rules.
The practical instruction is a filing exercise, not a legal one. Put your operating agreements, shareholder agreements, partnership agreements, and buy-sells in the same folder as your will and trust, and have one person read all of them in one sitting. Then list every entity interest you hold and write down what its governing document says happens when you die. If the answer is “I would have to go look,” that is the answer this case was written about.
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Further reading
Third-party sites. Not ours, not endorsed, not kept current by us — just the places worth going next.
Sources
- Blechman v. Estate of Blechman, 160 So. 3d 152 (Fla. 4th DCA 2015), No. 4D13-4801 — FindLaw Caselaw, Apr 2015
- Blechman v. Estate of Blechman, 160 So. 3d 152 (Fla. App. 2015) — vLex United States
- 4th DCA: contracts vs. wills — which document controls? — Florida Probate & Trust Litigation Blog, 2015
- Does an LLC go through probate in Florida? Avoiding probate of LLC membership interests — Alper Law
- Will substitutes in Florida — Adrian Philip Thomas, P.A., Jan 2016
- Fla. Stat. §605.0105 — Operating agreement; scope, function, and limitations — The Florida Senate
- Fla. Stat. §605.0502 — Transfer of transferable interest — The Florida Senate
- Fla. Stat. §732.701 — Agreements concerning succession — The Florida Senate
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Nearly every case in this archive turned on something ordinary — an unwitnessed page, a stale beneficiary line, a document nobody could find. Those are cheap to fix while you're alive and expensive to fix afterward.