Forming a New York Family LLC, in addition to being of great help in consolidating the management of family assets and businesses, provides two considerable estate tax advantages:
Advantage #1: up to 28% discount on the valuation of your assets. An LLC will not completely remove assets from your estate. However, if you form the LLC with sufficient restrictions, you can get a discount of up to 28% in the valuation of the LLC’s assets in your estate. But forming the LLC with too much restriction could invalidate it. That is why an experienced New York estate planning attorney is needed to form a Family LLC that is consistent with the latest caselaw and will not be successfully challenged by the IRS.
Advantage #2: ability to gift shares of your assets each year gift and estate tax exempt. You and your spouse could gift up to $13,000 each or a total of $26,000 of fair market value of your family LLC to each your children each year. This strategy helps reduce your interest in the LLC and the value of your gross estate at the time of your death. Title to real estate that is transferred in the name of the LLC also helps protect your assets from creditors as well. A New York probate and estate attorney can draft the LLC operating agreement to make sure that you are maximizing all your estate tax benefits and assist you with other estate planning matters.
Forming a family LLC is a great estate planning technique for families that own a family business, investment real estate and/or rental properties and even stocks, and want to leave those assets to their children and save federal estate taxes. By forming a New York LLC for your business or real estate investment business, you and your spouse can make yourselves managers and members holding the majority interest in the assets owned by the LCC and gift percentages of the LLC to your children each year under the federal gift tax exemptions.
A Family LLC is an advanced estate planning technique that should be approached with professional legal advice. If you wish to speak to a New York estate attorney, call the Law Offices of Albert Goodwin at (212) 233-1233.