Look around and you’ll likely notice LLC after LLC in your community. Why? Because the limited liability company (LLC) is a popular entity in the estate planning and business worlds.
In the estate planning world, LLCs are commonly used in high net worth families to:
- Pass family business assets to the next generation at a discounted value, thus reducing transfer taxes, while maintaining management control in the parental generation.
- Provide organization and consolidation of assets.
- Provide management and control succession in case of disability or retirement.
- Prevent family assets from being lost in divorce.
- Isolate liability stemming from the business so personal assets can’t be seized – and vice versa – isolate liability stemming from a personal matter from affecting business assets.
The limited liability company is also commonly used in the business world to create asset protection. For example, a real estate investor would own an apartment building in an LLC, not her individual name. This keeps any liability arising from within the LLC such as a tenant claim from affecting personal assets – and vice versa.