Though many people only associate LLCs with small businesses, you may be surprised to learn that this is something that can benefit your estate plan. If you have an extensive estate with complex assets, creating a family LLC can help reduce the risks associated with traditional estate planning options. However, many are unfamiliar with how this works and what to do to create one. If you’re interested in establishing a family LLC for estate planning purposes, you’ll want to keep reading. You’ll learn how this option works and the steps you must take with the help of Pennsylvania estate planning attorneys to create an LLC to protect your assets and beneficiaries.
What is a family LLC?
A Limited Liability Company (LLC) is a company with at least two members. A family LLC is owned and operated by family members, including parents, siblings, cousins, and even non-relatives, as there are no restrictions on members. However, it’s called a family LLC because it refers to who will inherit a business after the owners pass.
For example, if a couple owns a small business, they may create an LLC to ensure their children receive the company later down the line after their passing.
The purpose of an LLC is to protect the members from personal liability from lawsuits or debt collections. As such, their personal assets, like a family home, personal savings account, and vehicles, are protected if your LLC is sued, as only assets invested in the business are at risk.
How can I use this to benefit my estate plan?
When you have an asset like a business held in an LLC as opposed to a traditional estate planning tool like a will, it can help reduce the inheritance tax your children may be required to pay when they assume ownership of the company. Additionally, it allows you to maintain greater control of your assets while protecting them from incurring gift or estate taxes.
To form a family LLC, you should enlist the help of an experienced estate planning attorney, as this can be a complex process for many.
It should also be noted that once you create an LLC, you may want to place it in your living trust to help protect it from probate upon your passing. This can ease the transition of the business to your children, as they will not have to undergo this lengthy process first.
When you need assistance with a family LLC, it’s in your best interest to connect with a lawyer from Friedman Schuman. We understand how important your assets are to you, which is why we are dedicated to helping you explore all your estate planning options to ensure your beneficiaries are protected. If you’re ready to begin this process, contact us today.