Forming an LLC is helpful for estate planning in certain situations. If you have assets you want to pass along to loved ones, a limited liability company can help you avoid estate taxes.
If you want to create an estate plan that benefits your family the most, see below for some of the ways an LLC can help. Always consult with a legal professional before you make any significant financial decisions.
When you put personal property into an LLC, it gains protection from liability such as lawsuits or debt that you might incur. Once you establish an LLC, you have a better chance of keeping your property within the family. It reduces the taxes you will pay, and you can also gift your assets to family members during your lifetime.
Gifting at a discount
Usually, the gift tax applies to assets worth more than $16,000. However, with an LLC, you can discount the value of your assets by as much as 40 percent. This means you can give your children more than $16,000 each year. This, in turn, reduces your net worth, meaning once they inherit your estate after you pass away, they pay a lower estate tax. LLC can help your heirs receive more of their inheritance.
Everything described in this article sounds nice, but you need experienced legal professionals to care for everything for you. Filing for an LLC is relatively easy, but things become more complex when you intend to use one in your estate plan. Consult with an attorney before deciding if an LLC is suitable for you.