843-718-0232

North Charleston Estate Planning Attorney

 

– North Charleston

Reasons for Creating Family LLCs

n a large number of cases, Family LLCs are created to protect a family business. In such cases, the Family LLC enables family members to separate their personal accounts from their business accounts. Especially important, it allows families to pass business assets to the chosen family members without those assets ever becoming part of their personal estates. In the majority of circumstances it is unwise to include one’s personal residence in an LLC (a trust is usually a better option). Family LLCs, however work very well to protect assets such as:

Planning for Retirement and Inheritance of Retirement Funds

Among the many important tasks undertaken by Wiles Law is assisting individuals and families in preparing both for retirement and for their beneficiaries inheritance of any remaining retirement funds. Although IRAs and 401(k)s are very popular retirement accounts, they both require that, once you inherit them, you pay income tax whenever you make withdrawals. When you come in to consult with our estate planning and retirement trust attorneys, we will answer all of your questions regarding these two types of retirement accounts and tell you about options that may be better suited to your needs

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Family business (or a portion of it)

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Brokerage accounts

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Investments (e.g. mutual funds, stocks, and bonds)

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Rental properties

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Real estate holdings

How Family LLCs Work

The family LLC is frequently put in place to protect family assets against claims by creditors, divide income among generations and provide opportunities to engage in other types of estate planning. LLC stands for “limited liability company.” In the case of Family LLCs, the limited liability company is comprised of family members, typically related by blood or marriage, and is designed to ensure that a family enterprise can continue even after some family members have passed away. Family LLCs protect family assets and divide income among several generations. 

In most cases, the founding member of the Family LLC becomes the managing member, privy to almost all management rights. Because the other members lack control of the LLC, they are permitted to hold substantial assets at a discounted rate.

Family LLCs Are Flexible

A strong advantage to having a Family LLC is that the managing member has great leeway in creating an operating agreement that suits his or her particular family. In most cases restrictions are placed on transferring membership and ownership since these restrictions protect the accumulated assets from creditors.

At Wiles Law Firm our attorneys are well-prepared to clarify the options of Family LLCs. The managing member, for example, can decide to stipulate in the operating agreement that members must be relatives (by blood or marriage) and even state that any transfer of membership invalidates membership rights altogether. It is even possible to arrange the operating agreement to exclude in-laws, passing LLC rights to children or grandchildren but not their spouses. Because of all the financial and emotional complications that can arise when establishing a Family LLC, it is essential that you do so with the guidance of a sharp, well-informed Family LLC attorney.

Asset Protection During Your Lifetime

When a Family LLC is created, a new business entity is formed and that business entity is legally separate from its owners. Generally, if the LLC falls into arrears, personally owned assets of members cannot be taken to pay the creditors. This means that while creditors can go after the LLC’s assets, the family members personal property, bank accounts, and other assets remain protected. By the same token, if one of the members of the LLC goes into serious personal debt, their creditors cannot touch the LLC’s assets unless they obtain a charging order, a form of monetary judgment that must go through the courts.

Requirements for Family  LLCs

While Family LLCs are beneficial in many respects, they do require, as corporations do, that records are kept and filing is done. Although these requirements are not terribly difficult to meet, they may involve complexities you don’t want to deal with, including:

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Annual meetings

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Filing with the Secretary of State on a regular basis

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Obtaining business licenses

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Having a service of process agent

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Keeping accounts and records

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Meeting special tax requirements, including obtaining an Employer ID Number (EIN)

If you do decide to go the route of establishing a Family LLC, it is important to team up with an organized, adept law practice like Wiles Law Firm. We will make sure you meet all necessary requirements in a timely manner with minimal stress.

North Charleston Estate Planning Services

If, having considered the pros and cons, you and your family decide that you want to establish a Family LLC in North Charleston, there is no better law practice to go to for sound legal guidance than Wiles Law Firm. Our highly capable estate planning attorneys know all the ins and outs of the process and will make sure that your wishes are respected and your particular needs are met.

 

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