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USES OF FAMILY LIMITED LIABILITY ENTITIES IN

USES OF FAMILY LIMITED LIABILITY ENTITIES IN 2025

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The document discusses the uses of Family Limited Liability Entities (FLPs, LLCs, and LLLPs) in estate, financial, tax, and asset protection planning. It explains the structure and benefits of these entities, including maintaining control over assets while leveraging tax advantages through discounts on partnership interests. The document also addresses recent IRS developments affecting FLP strategies, potential risks associated with retaining control, and various asset protection techniques. Additionally, it highlights the importance of careful drafting of partnership agreements to mitigate tax implications and ensure compliance with legal requirements.

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Click ‘Get Form’ to open it in the editor.
Begin by entering the name of the entity in the designated field. Ensure that it follows the format required, such as 'AFLP' or 'LLC'.
Provide the principal place of business address. This can be a general partner's or managing member's home address.
Fill in the name and address of the registered agent for service of process, typically your attorney.
Review and complete any additional sections regarding governance arrangements and partnership agreements, ensuring all members' roles and responsibilities are clearly defined.
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Why would a family have an LLC?

In addition to its use for business purposes, family LLCs are widely used in estate planning. A family LLC can help you control and protect assets during your lifetime, keep assets in the family, and reduce taxes owed by you or family members during your lifetime or after your death.

What is a family limited liability entity?

A family LLC is a limited liability company thats established by members of the same family. Participants in a family LLC must be related to one another by blood, marriage or through adoption. Typically, one family member manages the LLC.

Is a family LLC better than a trust?

Choosing between a Family LLC and a trust depends on individual goals. If the primary aim is to manage family business assets and limit liability, a Family LLC may be more suitable. However, if the goal is to avoid probate and control how assets are distributed after death, a trust could be the better choice.

Who typically uses an FLP?

A family limited partnership (FLP) is usually created by parents. It has several purposes. An FLP can save estate taxes and permit transfers to family members. While it is uncertain what the future exemptions and estate tax rates will be, large estates are nearly certain to face major taxes in the future.

Why would someone set up an LLC?

Forming your business as a limited liability company helps to protect you against lawsuits, docHubly cuts down on paperwork compared to corporations and other legal entity types, prevents your company from being taxed twice, and helps to present your business as more credible.

What is the downside of a family LLC?

Theyre generally not viewed as a suitable vehicle for passing assets on to minors. Commingling personal and business assets could become problematic. The IRS tends to scrutinize the formation and activity of family LLCs to ensure that theyre not created simply for the purpose of evading taxes.

USES OF FAMILY LIMITED LIABILITY ENTITIES IN 2025

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