When it comes to navigating the complex field of estate law to optimize your plan for the future, it’s important to consider a wide range of strategies to find the best result. In many cases, individuals will put their assets in living trusts, bonds, and more to plan for a secure retirement and a beneficial outcome for your family members. If you’re hoping to benefit from the guidance of an estate lawyer in Maryland, be sure to reach out to our legal team of estate planning attorneys in Bethesda. JDKatz is here to provide comprehensive assistance through all aspects of estate law, from structuring advice to litigation services and more. We rely on a diverse team of experts to provide a complete approach for your unique needs.
For some estates, starting a family LLC may prove to be a beneficial strategy. Today, we’ll continue our look into what family LLCs are and how they can be useful for reducing your tax obligations both now and for your lifetime. If unsure how to further enhance your estate plan, be sure to reach out to our attorneys for help!
Reducing Gift Tax Concerns
To start, we need to mention that estate taxes can play a big part in your estate plan, but only if you qualify under the new law. In 2001, the estate tax went up to $650,000. Last year, that amount was increased to $549,000,000. This means that estates valued less than $5.49 million for individuals and $11 million for spouses will not face the steep 40 percent tax penalty. While this is a relief for many families, it’s important to know that gift taxes are still in place.
In 2017, the highest amount before facing gift taxes was increased to $15,000. It is vital for many family LLCs to closely abide by this amount, as exceeding it can begin to reduce your lifetime exclusion amount, which reflects in the $5.49 million dollar tax exemption on your estate. Once this lifetime limit is surpassed, all gifts given to beneficiaries will be taxed 40 percent. If you are concerned about your tax liabilities against your estate upon death, it can prove very helpful to create a family LLC!
You can place certain assets into your LLC, allowing your children and grandchildren to benefit from them if you so choose. The most common assets placed into a family LLC include:
- Cash. As always, money can be used without as many restrictions as other forms of wealth. Bank accounts are a commonly used asset for transferring cash into an LLC.
- Personal property. Similarly to a will, you can gift personal possessions to your family members. Vehicles, artwork, stocks, or anything of value can be placed into your LLC.
- Real property. If you possess land and structures, the titles can be transferred into the LLC. This process may require additional steps, so be sure to work with your estate lawyer!
Family LLC Tips
An LLC may sound like the most beneficial option, but keep in mind that there are several things you need to do to create an ideal outcome. When creating your limited liability company, be sure to establish the legitimate business reasons for doing so, instead of focusing on the tax benefits you will receive. These reasons can include benefits for the family such as protecting and increasing wealth. It is also important to take steps to ensure that your LLC is accurate and in accordance with IRS regulations. Obtaining professional valuations for your assets placed in the LLC will help to provide accurate documentation, protecting your family in case a challenge is brought forth against the tax benefits you have claimed. It can also prove hazardous to invest all of your assets into the LLC. There are also many additional considerations when working with gift taxes and exemption limits over a long period of time.
Every situation is different, making it important to seek professional help before making any major decisions.
Certain families may find that an LLC for their estate plan can prove to be a valuable and beneficial strategy for everyone involved. You can retain full control over your company while listing your children and grandchildren to afford them quality tax relief. It’s important to remember that every estate and individual is unique, and our blog does not represent official advice. As such, you’ll need to work with experienced estate planning attorneys to decide on the best approach to meet your goals and financial plans.
JDKatz is here to serve as your go-to estate lawyers in Maryland and DC, providing comprehensive assistance for estates of all sizes. Our legal experts can work with you to customize a plan that makes the most of the assets you have. We also specialize in other fields as well, including tax law, elder law, family law, and more. Contact us now for further assistance!