Flexible by nature, limited liability companies (LLCs) are the favorite business structure of small business owners in Florida (and nationwide, perhaps). However, while the business advantages of limited liability companies are well-known, the estate planning and asset protection aspects are often overlooked.
In this article, you will discover the essentials you need to know about limited liability companies (LLCs) in Florida estate planning.
Florida LLC and Estate Planning – Understanding the Basics
Depending on the case, a limited liability company (LLC) may provide cost-efficient solutions to enable estate planning strategies that would not be possible otherwise.
Think about LLCs applied to estate planning in a situation where the member (owner) of a share of interest in an LLC utilizes the company to transfer other assets to his/her heirs more efficiently.
Another example would be an LLC formed by a family specifically for an estate plan, serving as a legal tool within a well-crafted strategy to transfer wealth outside of probate and other similar proceedings.
In this context, it is essential to highlight that LLCs provide effective protection against creditors. Instead of using a trust (which is not ideal for creditor protection), it is possible to transfer the title of property to an LLC.
Therefore, no creditor’s judgments or liens against a member of an LLC may affect the company’s own property (and vice-versa). Ultimately, the limited liability protection enjoyed by LLCs may be used strategically as an estate planning tool in several situations.
Transferring Interest in a Florida LLC to Heirs and Beneficiaries
In Florida, small businesses (especially family-owned) LLCs often have Articles of Organization restricting the transfer of ownership interest(s) within the company. Similarly, many LLCs use operating agreements to restrict this type of transaction.
In multiple-member LLCs, the parties involved usually have a buy-and-sell agreement in place with buy-back provisions in the event of death, divorce, bankruptcy, or any similar situation involving one of the members.
It is crucial noting that, while these provisions are useful in terms of business succession and family protection, one should consult with an expert attorney to assess whether it is better to transfer the interest in the company or sell the interest back to the company upon death and convey the proceeds to heirs and beneficiaries.
Seamlessly Transferring Wealth
As it is plain to see, family-owned LLCs offer creative and resourceful manners to reduce tax liabilities while efficiently transferring assets held in the company to the next generation.
For example, instead of directly gifting property to adult children or grandchildren, one may form an LLC established specifically for the transfer of assets to the heirs or beneficiaries who are also members of the company.
In such cases, the operating agreement must include language that establishes non-voting membership interests in the LLC to the heirs or beneficiaries listed as members.
Therefore, while the listed members own a percentage of the company, the owner of the property titled in the name of the LLC will serve as the manager of the company and keep control of the LLC assets up until his/her passing.
Ultimately, this strategy will ensure a smooth distribution of the assets held in the LLC to its members and avoid probate altogether.
Florida LLC and Estate Planning – Immediately Contact an Expert Estate Planning Attorney at Jurado & Associates, P.A.
As long as you know how to use them properly, limited liability companies (LLCs) are valuable estate planning tools. Therefore, immediately contact an expert lawyer from Jurado & Associates, P.A. by calling (305) 921-0976 or emailing [email protected] for an individual assessment.
