What Can We Learn from a Hermès Heir? Understanding Succession Planning and LLCs

What Can We Learn from a Hermès Heir?

Nicolas Puech, an 80-year-old Frenchman and the primary shareholder of Hermès is estimated to be worth 9 to 10 billion Swiss francs. Puech is single and childless and recently announced that he will be re-writing his last will to include his “former gardener and handyman.” In fact, the descendant of Hermès’ founder intends on ADOPTING the 51-year-old domestic worker to ensure that he is a beneficiary. Yes, adults can be adopted.

Does anyone want to adopt me? I digress….

The Legal Wrinkle

There is one wrinkle in Puech’s plan. In 2011 he signed a succession pact, apparently more binding than a will, making a non-profit foundation a beneficiary of his estate. As you can imagine, the foundation is not too keen on this unilateral decision to cancel the succession pact and the parties may end up in Court.

Lessons for Succession Planning

So, what can we learn from this French leather heir?

• We can talk all about agreements as to a future inheritance. While Florida does not have an official “succession pact” on the books, we do have case law stating that an operating agreement may direct who inherits a deceased member’s interest in a limited liability company (LLC).

Implications for LLCs

• It’s important to note that while an LLC Operating Agreement could be used to ensure who will inherit a membership interest on the death of a member, it may not suffice to clear title to a property should the beneficiaries want to sell, and a probate still may be necessary if the LLC holds real property for the sake of clearing title.
• An underwriter or title company may (most likely) still require a probate of the property to ensure clear title for their buyer. However, if the LLC is running a business (not owning real property) an operating agreement may be a tool to avoid probate.

Conclusion

So, there you have it. We learn that an LLC operating agreement will trump a last will bequest of that LLC interest and that I’m up for adoption (just putting it out there…LOL)