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Estate Planning With LLCs: Navigating Tax Challenges, Reporting Requirements, and Planning Strategies for Counsel

Key Provisions for Operating Agreements, Using LLCs to Invest in Real Estate, Gifting Through LLC Distributions, Tax Planning

Recording of a 90-minute CLE/CPE video webinar with Q&A

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Conducted on Friday, December 29, 2023

Recorded event now available

or call 1-800-926-7926

This CLE/CPE webinar will provide estate planners with a practical guide to utilizing limited liability companies (LLCs) in estate planning under current tax law. The panel will discuss the income tax and asset protection benefits of LLCs and address the use of limited liability companies to shift income. The panel will provide insight into using LLCs for gifting and other effective tactics for utilizing LLCs in estate planning. The panel will also discuss the Pass-Through Entity election for LLCs and application of the Corporate Transparency Act to LLCs.

Description

The use of an LLC in estate planning can shelter assets, reduce overall gift and estate taxes, and avoid probate. Although the increased estate exemption amount lessens the need to take aggressive valuation discounts on assets transferred into an LLC, the structures retain significant asset protection and income tax savings features.

LLCs provide flexibility in allocating rights to profits and capital and can be used to shift income and property appreciation. The general structure of an LLC involves transferring assets to the company while also retaining ownership and control over the transferred assets. Shares in the LLC are then granted to family members or other potential heirs/beneficiaries. By granting income shares to family members who may be in a lower income tax bracket, the managing member can reduce overall income taxes.

However, under current tax law, there are some complex tax implications, particularly under the capital ownership rules of IRC 704(e). Estate planners must grasp a complete understanding of applicable tax rules and regulations when funding LLCs through nontaxable transfers and sales, using distributions to shift income tax burdens and their interplay with other planning tools.

Finally, the application of the Pass Through Entity Election for LLCs must be considered, and compliance with the Corporate Transparency Act will be required.

Listen as our experienced panel discusses structuring and operating LLCs for estate planning purposes, details how to withstand IRS scrutiny of transfers and operations, explores gifting through LLC distributions, and reviews other effective tactics for utilizing LLCs in estate planning.

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Outline

  1. Using LLCs for asset protection and business continuation/succession planning
  2. Income tax planning opportunities with LLCs
  3. Key provisions for operating agreements
  4. Using LLCs with trusts and other wealth transfer vehicles
  5. Pass Through Entity Election
  6. Corporate Transparency Act

Benefits

The panel will review these and other relevant topics:

  • What are the income tax and asset protection benefits of LLCs?
  • Tax planning through lifetime gift of LLC interests
  • Key considerations when drafting the operating agreement
  • Utilizing trusts and key trust agreement provisions
  • Using partnership allocation rules and profits interests to shift the income tax burden to LLC members with lower marginal income tax rates

Faculty

Gadarian, Gregory
Gregory V. Gadarian
Partner
Gadarian & Cacy

Mr. Gadarian's practice focuses on tax strategy, estate planning and asset protection law. Previously, he was a...  |  Read More

Raatz, Les
Les Raatz
Member
Dickinson Wright

Mr. Raatz practices primarily in the areas of estate planning, probate and trust administration, divorce tax and asset...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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