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In-Depth Incorporation FAQ

What is the difference between an At-Will LLC and a Perpetual-Existence LLC?

In most states, an LLC can either be a term company or an at-will company. A term company has a specified number of years designated for its "term," or lifespan. For example, a term LLC can state in its articles that the term (lifespan) is to be "25 years from the date of filing of the Articles of Organization," or the Articles can designate a specific future date, such as January 8, 2050. A term company that continues to do business past its term will become an at-will company.

An at-will company does not specify a term. Instead, the company will operate indefinitely. In an at-will company, the dissociation of a Member (owner) of the LLC will dissolve the LLC unless a specified percentage of the remaining members agree to continue the business of the company. The specified percentage of members required to approve the continuation of the business should be indicated in the operating agreement of the LLC.

Although a term company has a designated length of existence (which, as indicated above, does not in itself end the company), the term company's existence will not be affected by the withdrawal or disassociation of one of the Members.