Somewhere between a corporation and a partnership lies the limited liability company (LLC). This hybrid legal entity is beneficial for small-busine✱ss owners and a powerful tool for estate🅷 planning.

For those who want to transfer assets to children, grandchildren, or other family members and are concꦉerned about gift taxes or the burden of estate taxes your beneficiaries will owe, an LLC can help. Individuals can control and protect assets during their lifetime, keep assets in the family, and reduce taxes.

What Is an LLC?

An LLC is a legal entity recognized in all 50 states, although each state has 澳洲幸运5官方开奖结果体彩网:regulations governing the formatᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚion, administration, and taxation of LLCs. Like a corporation, LLC owners are protected from personal liability in case of debt, lawsuit, or other claims, protecting personal property such as a home, automobile, personal bank account, or investment.

Unlike a corporation, LLC members can manage the LLC however they like and are subject to fewer state regulations and formalities. As a partnership, members of an LLC report the business's profits and losses on their tax returns, instead of the LLC being taxed as a business entity.

Estate Planning With an LLC

Parents who establish a family LLC with their children maintain control over assets, reduce the 澳洲幸运5官方开奖结果体彩网:estate taxes children pay on their inheritance, and distribute that inheritance to children during a parent's lifetime, without being hit as hard by gift taxes. The federal lifetime gift and estate tax exemption is $13.99 million per person and $27.98 million per married couple in 2025.

A gift tax applies after $19,000 in 2025 if the giver is unmarried. Married couples can jointly give $38,000. This total resets annually, and the giver pays the taxes rather than the receiver. This limit applies per recipient, so giving $19,000 to each child and various grandchildren would not incur gift taxes.

Family LLCs

In a family LLC, parents maintain management of the LLC, with children or grandchildren holding shares in the LLC’s assets, yet not having management or 澳洲幸运5官方开奖结果体彩网:voting rights. This allows the parents to buy, sell, trade, or distribute the LLC’s assets. Other members are restricted in their ability to sell their LLC shares, withdraw from the company, or transfer their membership in the company.

Parents maintain control over the assets and can protect e⛎veryone from financial decisions made by ღyounger members. Gifts of shares to younger members will incur gift tax, but with significant tax benefits that allow parents to give more and lower the value of their estate.

Once a family LLC is established according to the state’s legal process, parents can begin transferring assets. They decide how to translate the 澳洲幸运5官方开奖结果体彩网:market value of those assets into LLC units of value, similar to🍸 st🦂ock in a corporation. Parents can then transfer ownership of LLC units to children or grandchildren.

Tax Benefits

The discount on the value of units transferred to non-managing members of an LLC is based on the fact that LLC units without management rights are less marketable. For those who manage the LLC, with children as non-managing members, the units transferred to them can be discounted steeply, often up to 40% of their market value.

Offspring can receive an advance on their inheritance, but at a lower tax burden than they otherwise would have had to pay on their income taxes, and the overall value of a parent's estate is reduced, resulting in an eventual lower estate tax when they pass away. The ability to discount the value of units transferred to children also allows parents to give them gifts of discounted LLC units, thus going beyond the gift limit without gift tax.

For example, to gift one child non-management shares🎃 of LLC units valued at $1,000 each, parents can apply a 40% discount to the value (down to $600). Instea𒆙d of transferring 16 shares before paying a gift tax, parents can transfer 26 shares. Parents can give significant gifts without gift taxes while reducing the value of their estate and lowering the eventual estate tax their heirs face.

Assets Allowed in an LLC

• Cash: Parents can transfer money from their personal bank accounts into the LLC and distribute it among the members.
• Property: 澳洲幸运5官方开奖结果体彩网:Parents can transfer the title to land and structures built on that land into their LLC after first checking with any applicable mortgage holders.
• Personal possessions: Parents can transfer ownership of automobiles, stocks, precious metals, artwork, or other significant belongings into their LLC.

The Bottom Line

A family-owned LLC is a powerful tool for managing assets and passing them to children. Parents can maintain control ove꧅r their estate by assigning themselves as the manager of the LLC while providing significant tax benefits to both themselves and their children.

澳洲幸运♐5官方开奖🐎结果体彩网:Because estate planning is very complex, and the regulations governing LLCs vary from state to state, individuals sho🌳uld check with a financial advisor before formalizing their LLC plan.