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An LLC can help accomplish estate planning goals

Like other states, New Jersey allows residents to form limited liability companies, or LLCs. Usually, a person would form an LLC because he or she is interested in starting a business and wants the protection from creditors that the LLC offers.

However, some New Jersey residents may also want to consider using an LLC as an estate planning device. Using an LLC for the purpose of transferring assets can be a convenient way both to avoid some of the probate process and to save on taxes, including the federal gift tax.

Basically, the idea behind a so-called family LLC is to give the person, or couple, who wants to transfer their wealth the ability to manage the company and vote on important business. Effectively, this means that they retain control over their own property even though it is part of the LLC.

The couple can move cash accounts, real estate and other valuable property into the LLC by legally transferring it into the name of the LLC and then continue to legally manage it.

Once they do so, they can, on an appropriate timetable, begin gifting so-called non-voting shares to the next generation. Moreover, because the transfer is of a non-voting share, its value can be discounted for purposes of the gift tax. The upshot is that a person can transfer a lot of property while legally remaining well within the $15,000 annual exclusion.

Using an LLC for estate planning is not the right move in all cases. Moreover, it can be complicated. This option will involve creating a limited liability company and then transferring assets into it. It may also require a New Jersey resident to update his or her other estate planning documents, and there will be laws and regulations one must follow. The guidance of an experienced attorney may be important.

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