A limited liability company (LLC) is a hybrid business structure that reunites the limited liability aspect of corporations with the flexibility of partnerships. At a glance, it is not hard to identify why it is the favorite business structure for small business owners in Florida.
LLCs are “pass-through” entities, which means that all the income or liabilities generated by the company pass directly through the company to its members’ (owners) personal tax returns.
Is it possible to form a family LLC for estate planning purposes in Florida? Keep reading to find out.
What is a Family LLC Estate Planning in Florida? – Understanding the Concept
Primarily, the difference between a standard LLC and a family-owned LLC is that the latter exclusively involves members who are related by blood or marriage. When it comes to the company’s business and tax aspects, a family LLC is operated in the same way as an average LLC.
Accordingly, the Internal Revenue Service (IRS) treats family LLCs with the same standard as it would treat other Florida LLCs – regardless of whether the company was formed specifically for estate planning purposes.
In this sense, forming a family LLC is useful to hold a business interest or any other assets while ensuring a seamless distribution of those assets in the event of death or incapacitation. Plus, a family LLC may help to reduce taxable estate and minimize taxation over assets in general.
Why Should One Form a Family LLC for Estate Planning in Florida? – Key Advantages
When used strategically, a family LLC is a valuable tool to solidify a well-structured estate plan. This type of business entity permits that the organizers (generally parents or older relatives who serve as a main figure in the family) structure an estate plan to protect their loved ones.
Optimized Asset Control
While the organizer is still alive, the assets held in the family LLC will be under his/her control. This is possible when the LLC’s operating agreement includes specific language to grant non-voting membership rights to the heirs and beneficiaries listed as members of the company.
Therefore, it is possible to transfer the title of assets to the LLC and preserve the organizer’s interest in the company. Upon the original owner’s death, the shares in the company and the assets titled in the company’s name will be distributed to their rightful new owners.
Reducing Taxable Estate and Avoiding Gift Taxes
Wealthier estates often require long and expensive execution proceeding upon the original owner’s death. In Florida, if the total value of a decedent’s estate subject to probate exceeds $75,000, the estate must go through formal administration.
Considered the traditional form of probate in Florida, formal administration may result in a time-consuming and costly experience for the deceased person’s heirs and beneficiaries – even more, if the process involves litigation or family disputes.
By structuring a family LLC, one can give away shares of interest in the company and transfer the title of assets held solely in his or her name to the company. Hence, it is possible to simultaneously reduce the organizer’s share in the company while exempting assets from probate.
Another advantage of family LLCs is avoiding gift taxes, which are the taxes due on gifts valued over $15,000 (annually). Such taxes do not apply to the transfer of ownership between family members done through a family LLC.
Do You Want to Set Up a Family LLC for Florida Estate Planning? – Immediately Contact an Expert Attorney at Jurado & Associates, P.A.
Waste no time with uncertainty – immediately contact a well-versed estate planning attorney from Jurado & Associates, P.A. by calling (305) 921-0976 or emailing Romy@juradolawfirm.com for an individual assessment.