A limited liability company, or LLC, is a type of business organization that many Georgia residents find useful for business organization purposes.
When used for business formation, an LLC serves several useful purposes. For instance, the LLC offers some protection from liability to business owners so they take on less risk when starting a business.
Moreover, LLCs also get taxes on a pass through basis, meaning that the organization itself does not pay income tax; its individual members do according to their tax brackets.
A family interested in estate planning may want to use an LLC to accomplish their goals.
Ultimately, each family’s individual situation will determine whether an LLC is the best estate planning tool, so families in the greater Atlanta area should explore this and other options with the help of an experienced legal professional.
In general, though, a family LLC is useful when a family wants to do planned gifting to their loved ones in the next generation. Gifts over a certain amount, about $15,000 a year per person, will be subject to gift taxes, but an LLC can help minimize these.
On the other hand, without planned gifting, some families may have to pay federal estate taxes. Planned gifting may also serve other useful purposes.
Finally, like a trust, LLCs offer a family the opportunity to transfer assets outside of the probate process.
When used for estate planning purposes, and specifically for planned gifting, an individual or couple doing the planning will often assign themselves all the voting shares of an LLC, meaning that they continue to make decisions even if they transfer so-called non-voting shares of the LLC to their children.
As with a trust, they will then transfer assets into the LLC’s ownership.
The arrangement allows the couple to keep a handle on the family’s financial affairs. At the same time, the couple can start the process of transferring wealth by passing down non-voting shares in their LLC to their children. Because they are non-voting shares, these transfers can often be legally reported for less than full market value.