If you have a lot of assets or many relatives to worry about, you might be looking at ways to avoid tax breaks when estate planning. Some people use an LLC for all of their estate planning. A limited liability company would help you avoid taxes when planning your estate or managing your assets, but there are a few things to keep in mind with this form of estate planning.
What are the plus sides of using an LLC?
You can use an LLC to transfer assets to your children, grandchildren or other family members to protect your assets and maintain control over your estate while you’re alive. Using an LLC can help avoid estate taxes that would be passed on to your beneficiaries.
When using an LLC as an estate planning tool, you would create a family LLC. All of your heirs or beneficiaries would become shareholders while you keep managing control over the entity. Almost any asset can be put into an LLC, and shares transferred to heirs can be discounted up to 40%.
You can still distribute inheritance to your children and maintain control over your assets while you’re living. You can also establish who will take over managing control over the LLC when you’ve passed, making it a powerful estate planning tool for not only you but your family as well.
What are the downsides of using an LLC?
There are annual costs in maintaining an LLC, but there are also regular costs with estate planning. There’s also an upfront cost for establishing the LLC to begin with.
Creating an LLC can be tricky depending on your state laws. Reach out to a lawyer before applying to create an LLC.