When thinking about an estate plan, one of the most pressing concerns for many is the orderly transfer of assets to children, grandchildren or other family members and avoiding adverse tax consequences when their assets are distributed. One tool to consider is a limited liability company (LLC) that can not only keep assets in the family, allow for business succession planning, and provide potential tax savings but also help you protect and control those assets during your lifetime.
What is a limited liability company?
LLCs are hybrid legal entities that lie between a corporation and a partnership. Like a corporation, LLCs offer members personal liability protections from lawsuits, creditor or other claims, thereby shielding personal property, such as a home, investments, bank accounts and automobiles from LLC liabilities. They differ from corporations in that they allow members to manage the LLC, with simpler tax reporting requirements than a corporation.
LLCs are powerful estate planning tools
You have worked hard to accumulate your wealth and, in all likelihood, want as much of it as possible to stay in your family when you are no longer here. LLCs can help accomplish that because:
- They are a legal structure allowing you to transfer assets to loved ones while minimizing or avoiding gift and estate taxes
- LLCs can allow your heirs to become membership owners who can benefit from assets while you still manage them
LLCs give you control
Parents generally maintain control of a LLC while children and grandchildren are members with limited abilities to sell LLC units or transfer their memberships. This allows parents to control their assets and protect themselves from financial decisions made by younger family members. Creating a plan for distributing your wealth to future generations can be a complicated process.
Contact one of our experienced estate planning attorneys at Quinlivan & Hughes, P.A. to learn more about how an LLC might fit into your estate plan.