Limited liability companies (LLCs) offer Florida residents exceptional flexibility. This unique business structure combines the efficiency and simplicity of sole proprietorships with the liability protection of corporate businesses.
Florida Limited Liability Company (LLC) – An Introduction
The primary advantage is the limited liability aspect. While forming and running an LLC requires less paperwork and fees than a formal corporate business, this business structure offers superior asset protection enjoyed by corporations.
In an LLC, the owners (also referred to as “members”) are considered different legal entities from their companies. Hence, the members are not personally liable for the company’s debts or business liabilities.
Limited liability companies have the option to choose whether to be taxed as C-corporations or partnerships. LLCs are entitled to pass-through taxation, in which the business’s profits and losses “pass through” to each member’s personal returns.
This taxation mechanism simplifies the process and reduces the total amount of taxes paid to the state by avoiding double taxation.
Limited Liability Company vs. Estate Planning in Florida – Understanding the Concept
There are several aspects of LLCs that may benefit estate planning strategies, especially in terms of asset protection.
With strategic legal guidance, it is possible to structure an LLC tailored to protect family assets and ensure a smooth succession process for the next generation. Please note that an LLC does not necessarily need to operate as a business to function as an estate planning tool.
The membership shares of interest in an LLC can be assets of the estate of an individual or a family, permitting a seamless transfer process to the heirs. For example, different members of a family can create an LLC specifically designed for transferring wealth to heirs.
The most sought-after advantage in LLCs is the asset protection aspect. While many people believe trusts are the best legal tools to shield assets from creditors, LLCs offer superior asset protection for estate planning purposes.
As the LLC and its members are not considered the same legal entity, the member’s assets enjoy protection against the company’s creditors and the company’s assets are not subject to the member’s personal liabilities.
Once the member of an LLC transfer assets to the business structure, it is no longer considered part of the member’s estate. The business structure owns the assets, and each member of the LLC has an ownership share of the entity.
Depending on how the company’s articles of organization or operating agreement are drafted, it is possible to restrict transfers of ownership interests. Buy-back clauses and other similar provisions can help a family to maintain the assets titled to the LLC within the family circle after one of the members die.
Structuring an LLC as part of a solid estate plan in Florida requires proper legal knowledge. Consult with an experienced attorney to identify your needs accurately and set up an LLC to provide efficient solutions.