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Using the LLC as an estate planning tool

This blog has previously discussed how residents of the Fresno area might consider creating a limited liability company, or LLC, when forming a new business. The LLC offers attractive incentives to new entrepreneurs, including some tax benefits and, perhaps more importantly, legal protection of one's personal assets from claims in the event the business fails.

What some Californians might not know is that, when properly used and in the right circumstances, an LLC is a great estate planning tool that can help a Fresno resident pass on his or her wealth to his or her loved ones without paying hefty taxes.

Basically, a person can elect to legally create an LLC and then put his or her assets in the new company. The person can also create shares of the LLC and distribute those shares to his or her children or other loved ones, all the while making sure that he or she retains control of the new LLC and thus his or her own wealth.

While doing so still will may constitute a taxable gift, the person who transfers the shares may be able to do so at a discounted value for tax purposes. The reason is that the shares are, legally speaking, worth less since the people receiving them do not have a controlling share of the company.

Of course, this post is just an overview of a complicated estate planning technique which may or may not be part of a winning strategy for estate planning. Whether this technique is feasible or advisable for a given person's situation depends heavily on that person's circumstances which may be discussed in detail with a qualified estate planning attorney who also has knowledge of business law.

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Law Office of Jeffrey B. Pape, P.C.
642 Pollasky Avenue
Suite 100
Clovis, CA 93612

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