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A family limited liability corporation (LLC) is one in which you and your relatives, by blood or marriage, may manage its operations and own its units of value (i.e., shares). While the Internal Revenue Service (IRS) may treat a family LLC like a standard LLC for income tax purposes, the former may come with a unique set of benefits for estate planning purposes. Continue reading to learn the advantages of using a family LLC for your estate plan and how an experienced New York City estate planning attorney at Zimmet Law Group, P.C. can help you with this strategy.

What are the advantages of creating a family LLC?

As the organizer of a family LLC, you may reap its many benefits throughout your lifetime. It is said that a family LLC combines the desirable benefits of a corporation and a partnership. That is, much like a corporation, it may protect your personal assets from creditors owed money by your company. However, a family LLC may be more appealing when it comes to offering the option to choose how your business will be taxed and managed. And much like a partnership, it may provide flexibility in management and structure. However, a family LLC may do a better job at prioritizing asset protection.

What are the advantages of using a family LLC for my estate plan?

The family connection within a family LLC becomes relevant when you give away your interests in the company to your desired heirs upon your unfortunate passing. In other words, this is one strategy for ensuring that your company stays within the family and that your heirs still have financial support at a time when you are no longer around. Without further ado, by using your family LLC as an estate planning tool, you may reap the following advantages:

  • You may receive significant discounts in the valuation of your company and thereby have you reach the estate tax threshold at a much slower rate.
  • You may reduce your interests in the company and thereby reduce the size of your estate subject to federal and/or state taxation.
  • You may gift your interests in the company and thereby qualify for the federal gift tax exemption.
  • You may restrict your interests from being transferred outside of your family and thereby protect your legacy.

It is worth mentioning that family LLCs may own businesses, real properties, rental properties, brokerage companies, or otherwise any assets that are not personal residences. To experience additional benefits, you must carefully consider this tidbit when using your company for your estate plan. This is all to say that, before you move further in your plan, you must consult a skilled New York City estate planning attorney. So please reach out to Zimmet Law Group, P.C. today.