One of the best ways to shield your investment assets form creditors and leave more of your assets to your children is to form a New York family LLC or a New York Family limited partnership (LLP). Creditors can only collect against your limited partnership interest. However, by transferring a portion of your interest to a trust for the benefit of your children, you can shield your assets further and take advantage of the discount for marketability strategy.
You can use gift a portion of your partnership interest in the family limited partnership to your children every year. An appraiser can be hired to give you an opinion of value of your partnership interest by discounting the value of your partnership interest for lack of marketability and control. This means that you reduce your lifetime gift tax exemption, and you avoid paying taxes on the gift.
Federal Gift Tax Exemption
The federal lifetime per person gift tax exemption is $1,000,000. Under the federal gift tax laws, a person can gift $13,000 per year without running into the exemption, or $26,000 for a married couple. This means you can gift each of your children $26,000 tax free every year without wasting your $1,000,000 lifetime per person gift tax. Because of the marketability discount, the $13,000 per year gift will carry more value then discount-free gift.
Making a decision about the best way to gift your assets to your children should be discussed with a New York probate and estate planning attorney. An attorney can review your financial situation and help you with your estate planning strategies.
If you wish to speak to a New York estate attorney, call the Law Offices of Albert Gurevich at (212) 233-1233.