Limited liability partnerships and limited liability companies are entities which can hold property such as marketable securities, closely held business interests or investment real estate. If a taxpayer establishes such an entity and gives away partial interests in the entity to family members, the value of the transferred interests may qualify for a discount when reported on the taxpayer’s gift tax return. A fractional interest in property may be worth less than its percentage value when the owner of the interest has no veto power over decision-making and can only sell the interest in a restricted market.

If you already own an interest in an LLC or partnership, you probably have special estate planning issues. Shatz, Schwartz and Fentin has helped hundreds of closely held businesses solve these and other potential problems:

• Planning for younger family members to gradually take control of the business while providing retirement income for the owner;
• Avoiding a “fire sale” of the business upon the death or disability of the principal through cross-purchase of life insurance and buy-sell agreements;
• Revision of LLC and partnership agreements to prevent tax problems;
• Protection for the spouse of the business owner in the event of business problems;
• Minimization of estate and gift taxes in passing valuable business interests to children or employees;
• Valuation discounts for lack of marketability, lack of control, and built in capital gains;
• Entity transitions from partnership or corporation to an LLC.

If you own all or a portion of a company and are unsure how to pass it along to your children, please call us for an assessment of your options.