Your family limited liability company (LLC) is a legal entity that may serve as a powerful tool in your estate plan. That is, it may allow your family members (i.e., beneficiaries) to reap the maximum amount of benefits when inheriting your assets upon your unfortunate passing. Read on to discover how you might use a family LLC to benefit your estate plan and how one of the seasoned Butler County estate planning & probate attorneys at Heritage Elder Law & Estate Planning, LLC can help you incorporate this.
Is my business considered a family LLC?
First of all, you must confirm that your small business falls under the category of a family LLC. This applies if you, and possibly even your spouse, maintain the management over your LLC. Further, you and your spouse may have the authority to buy, sell, trade, or distribute the company’s assets as you see fit.
In the meantime, your children, grandchildren, and other family members may hold shares in the LLC’s assets without necessarily having management or voting rights. This may make your children and grandchildren restricted to selling their shares, withdrawing from the company, or transferring their membership within the company. Overall, this may allow all other parties involved in the company to be protected from financial decisions made by the younger generation.
How can I use a family LLC to benefit my estate plan?
You must confirm that you have established a family LLC per Pennsylvania state law. From here, you may transfer your assets to the company. The assets that you are allowed to transfer include cash, property, and personal possessions. Regardless, this requires you to translate the market value of your assets into units of value within your company (i.e., shares). Ultimately, you may assign ownership over these units of value to your children, grandchildren, and other beneficiaries. Without further ado, following through on this process may benefit your estate plan in the following ways:
- You may reduce the overall value of your estate.
- You may give your beneficiaries their inheritances in advance.
- You may lower the estate tax that your beneficiaries would have had to handle upon your unfortunate passing.
- You may lower the tax burden that your beneficiaries would have had to handle in their personal income taxes.
- You may gift your beneficiaries a greater amount of assets before having to pay a gift tax (i.e., the value of units within your company may be discounted up to 40 percent of their market value).
This is all to say that, before you move any further in your planning, you must consult one of the competent Butler County estate planning attorneys. So please reach out to Heritage Elder Law & Estate Planning, LLC today.