Posted on May 21, 2008 by Teri Rasmussen

Using a "Family LLC" Safely

Mike Bonasera of the Ohio Trust & Estate Blog recently gave some helpful guidelines for safely using "family" LLCs for estate planning purposes to transfer assets to the next generation while minimizing adverse tax consequences.  His post, "Family LLCs Still Work... If You're Careful", explains that IRS "enforcement" has made this sort of business entity less popular, but offers several pointers on how it can still be a viable possibility, including:

  • State the reasons for the LLC in the Operating Agreement 
  • Leave enough assets outside the LLC to live on and pay taxes
  • Make sure the senior generation does not have the power to allocate profits and losses.
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