How Can I Use a Family LLC to Benefit My Estate Plan?

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As a small business owner, you may already be strategizing how to create an advantageous business estate plan to complement your already-standing, beneficial personal estate plan. But if you are especially family-oriented, then you may want to consider turning your small business into a family limited liability company (LLC). Read on to discover how you can use your family LLC to benefit your estate plan and how a seasoned Putnam County estate planning attorney at the Law Office of Andres D. Gil, PLLC can help you take full advantage of this opportunity.

What assets can I transfer into my family LLC?

Before all else, you must understand the purpose and function of a family LLC. Essentially, it may allow you and a business partner, who is a relative by blood or marriage, to manage your business operations. With this, you may buy, sell, distribute, and most importantly trade the following assets into your family LLC:

  • Cash: money from your personal bank accounts.
  • Personal possessions: your automobiles, stocks, artwork, and other high-value belongings.
  • Property:  real properties, rental properties, and any other properties that are not your personal residences.

In turn, it may allow your other family members to hold shares in the business. These family members may have the ability to sell their shares, withdraw from the business, or transfer their membership within the business. But the overall idea of a family LLC is that you may protect your personal assets from creditors owed money by your company; you may maintain flexibility in your business’s structure; and you may keep all these business affairs within your family ties.

How can my family LLC be used to benefit my estate plan?

A family LLC comes with many estate planning benefits that your family members can put to good use. For example, the units of value used within your company (i.e., shares) may be significantly discounted. Therefore, you may reach the estate tax threshold (i.e., $6.94 million in New York State and $13.61 million federally) at a much slower rate than if you were to just transfer your assets directly to your heirs. At the same time, transferring your shares to your heirs may reduce the size of your estate subject to federal and/or state taxation.

In addition, by gifting your shares, you may qualify for the federal gift tax exemption (i.e., $17,000 per year). All the while, using your family LLC as a channel for your estate plan may ensure that your legacy is maintained. For example, you may restrict your shares from being transferred outside of your family.

This is all to say that, before you move further in your plan, you must consult a competent Putnam County estate planning attorney. So please reach out to the Law Office of Andres D. Gil, PLLC today.

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