Montana LLC governance: an older uniform act, and a default that probably splits evenly

Montana runs its LLCs on an older version of the uniform act, the one built in the mid-1990s that still speaks of distributional interests and dissociates a member who becomes insolvent. That vintage shapes the defaults, and one of them catches unequal partners the same way it does across most of the country.

If two people fund a Montana LLC unequally and never write down how distributions split, Montana most likely pays them the same.

Montana’s likely default splits distributions equally per member, which is almost never what an unequal partnership intends.

The older uniform framework

Montana’s LLC act, MCA Title 35, Chapter 8, is a 1996-model uniform act, recognizable from its distributional-interest language and its dissociation triggers. Terms carried over from the newer Revised Uniform LLC Act in states that adopted it do not describe Montana cleanly.

Two features of the older model carry the most weight. The distribution default splits per member rather than by capital, and a member who goes insolvent is dissociated.

Distributions probably split evenly

The reason this default matters is the same everywhere it appears. A member who funds ninety percent of a Montana LLC and a member who funds ten percent collect the same distribution under an equal-shares default, unless the operating agreement ties distributions to ownership. That single clause is the most consequential line in a multi-member Montana agreement, and it is worth writing deliberately rather than discovering later.

Insolvency dissociates a member

The governance side of a provision the protection page covers as a creditor issue belongs here too.

A Montana member who goes bankrupt or assigns for creditors is dissociated and drops to a bare economic interest.

MCA § 35-8-803 dissociates a member on insolvency, and in a multi-member company that means the remaining members continue while the affected member’s interest becomes purely economic. An operating agreement should anticipate this rather than leave the company to discover it during a member’s financial crisis, and it should address what happens to voting, management, and buyout rights when a member is dissociated this way.

Duties and drafting freedom

Montana’s act supplies default duties of care and loyalty and gives members room to tailor the rest.

Montana lets you vary the default duties within limits it does not let you cross.

The act provides default fiduciary duties and, like the uniform model generally, allows the operating agreement to modify many defaults while reserving a non-waivable core, including a floor on the duty of loyalty and on member information rights. The exact contents of the non-waivable list are worth confirming against the current statute before drafting anything aggressive. The freedom of contract and default rules pages explain how much of an LLC act is written in pencil and how that reads from the minority-investor seat.

The practical Montana drafting list

Short and specific. Tie distributions to ownership percentages, because the likely default is equal shares and equal shares is rarely the intent. Address dissociation on insolvency, because the statute triggers it and silence leaves the consequences to inference. State the management structure. Restrict transfers and build an exit. And draft to the older Montana act rather than adapting a form written for a newer or a contractarian statute.

The bottom line

Montana runs on an older 1996-model uniform LLC act, recognizable from its distributional-interest and dissociation language.

The distribution default most likely splits evenly per member, which this page does not assert without reading the enacted section.

Tie distributions to ownership in writing, because an equal-shares default almost never matches an unequal partnership.

MCA § 35-8-803 dissociates a member who becomes insolvent, and the agreement should address the consequences.

Montana supplies default duties of care and loyalty and reserves a non-waivable core worth confirming before drafting.

Draft to the Montana act rather than adapting a form written for Delaware or the newer uniform act.

What this page does not cover

This page is about what Montana law lets your operating agreement do. How creditors reach you, including the foreclosable charging order and the insolvency dissociation, is on the protection page. The no-sales-tax advantage, the vehicle use case, and series treatment are on the structure and cost page. The $35 formation fee and the waived annual report are on the filing page.

Last verified July 2026.