Law Office of DeAnne E. Parker
Redding Probate, Trusts, Estate Planning And Business Attorney

How can an LLC help me with estate planning?

As readers of our blog probably recognize, there are lots of ways, beyond a simple will or even a trust, that Californians can use to help them with the estate planning process.

For instance, some residents of Redding and other parts of Northern California may want to consider forming an LLC for estate planning purposes.

Typically, a limited liability corporation, or LLC, is used by businesspeople as a way of organizing their businesses and avoiding both personal liability for any business-related losses and the double taxation that shareholders in a traditional C-Corporation face.

However, families can also use an LLC much like a trust in that they can transfer assets into the LLC. Parents can then transfer shares of the LLC to their children. However, the charter documents of the LLC can put limits on the ability of younger family members to sell their shares or, alternatively, take over important management decisions.

One benefit to this approach is that it can be used to reduce estate taxes and, perhaps more importantly, federal gift taxes. For instance, certain discounts may apply when transferring non-voting shares of the LLC to loved ones, and these discounts can reduce the overall tax burden while still allowing people to transfer wealth during their lifetimes.

An LLC is not the right estate planning vehicle for every situation. However, it is important legal option for California families to keep in mind as they set about the process of figuring out how to pass along their legacy to the next generation. Having the help of an experienced legal professional may prove invaluable for those who to know more about or, ultimately, pursue this option.

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