Updating Your Operating Agreement
By Alisha Bennett
Although Punxsutawney Phil the Groundhog called for six more weeks of winter, spring truly is just around the corner. Spring is a time for renewal, cleaning out the back closet and ticking off all those forgotten items on your “to-do” list, including updating your Operating Agreement for your IRA-LLC.
Each year I hear from clients who need to make address or Successor Manager changes to their Operating Agreement but are unsure of how to proceed.
Fortunately, the updates are easily done and don’t require any special forms or an attorney. If you need to make address changes (for the LLC or any of the Managers), or changes to the Registered Agent, you simply need to create an Addendum to the Operating Agreement (also called a Manager Resolution). Changes to the Manager (such as a change to the Successor Manager) required a Formal Record of Action (also called a Member Resolution).
The Addendum/Manager Resolution should state that the Manager resolves that the following change and/or changes are being made; for example, the LLC’s address shall be changed to ……… or and that these changes are made to the Operating Agreement of the LLC.
Make sure there is a signature and date for the Manager. After you’ve signed and dated, send a copy to your Custodian as well as to your banker.
FORMAL RECORD OF ACTION/MEMBER
The Formal Record of Action/Member Resolution should state that the Member (IRA) resolves that the following change and/or changes are being made; for example, the Successor Manager named shall be ……… and that these changes are made to the Operating Agreement of the LLC.
Make sure there is a signature and date for the Manager as well as the Custodian. A Formal Record of Action/Member Resolution must be signed and dated by the Manager and also sent to the Custodian for review and signing. After you’ve received the fully signed and dated Agreement back from your Custodian, send a copy to your banker.
So, the main differences between an Addendum/Manager Resolution (used for Address Changes and Registered Agent changes) and the Formal Record of Action/Member Resolution (used for Manager changes) are that the Formal Record of Action/Member Resolution must also be signed by the Custodian.
After the Manager or Member Resolution has been executed, make sure that you also inform the State of any changes to the address of managers, the LLC or Registered Agent. You can use this link at LeapLaw Blawg to make sure that the State has all of your pertinent information.