Llc Question
hubby and I own real estate and would like to start transferring assets to our children, both RE and cash. Is there an amount as to how much cash can be transferred in a yr - we have hear 11k for each of us (22k total per child per yr). And what about the RE? For asset protection, should we form LLC to hold property and cash until it is transferred? Does LLC protect against all creditors, even fed govt? I want everything to be completely legal, but always worry that any changes in my tax filings would trigger audit....please advise....thanks.
One has to ask why? If you are transferring assets as part of your estate planning, then there are better ways to do it that will make the transfer as tax friendly as possible for your children. Consult a licensed estate planning professional for specific details. Your estate plan may include a combination of LLC and trust.
You are allowed to gift a total of $12K to an individual during the year tax free. Your spouse can also gift another $12K to the same individual, tax free. Your gift may be cash, property, or a combination of both. As long as the total value of all gifts to a single individual during the year is $12K or less, there is no tax consequence.
Hi,
You needed to post this in the Law and Legal Forum. The LLC will protect your personal assets but will leave the property subject to liens and encumbrances. I use a land trust to protect the property and to afford privacy and security and take title in the LLC. Best of luck to you.
Wiz (not a lawyer)
[addsig]
Consider forming a Family Limited Partnership where the children own 95% as limited partners and you and your hubby will own 5% as the general partners. You retain 100% control with 5% ownership. Excellent estate and planning tool.
see
www.instantinc.us - Types of Business Entities[ Edited by ctsee11 on Date 11/01/2006 ]
I have encountered similar problems and the estate planning lawyers knew less than I do.
I spoke to one about setting up landtrusts and he spent most of the consultation time trying to talk me out of real estate investing and into - guess what? - Insurance. Big waste of money.
Decided to just look for a sample land trust doc instead
Gift and Estate Tax
If your estate is large enough to be subject to the estate tax, the rates are higher than the income tax rates. The top estate tax rate is 46 percent.
It makes sense to minimize any estate tax and ensure that the largest possible amount ends up with your heirs and not with the federal or state government.
The federal annual exclusion for gifts is $12,000 to any individual. If you are married and your spouse consents, the effective annual exclusion can be $24,000. This provides a good opportunity to transfer income-producing assets to heirs who may also be in a lower income tax bracket.
In addition to the annual exclusion per person, up to $1 million may be transferred without additional tax.
If you are making gifts to limit or reduce future estate tax and you have reached the annual exclusion, be aware that payments of tuition and medical expense for an individual are not subject to gift tax. There is an unlimited exclusion of amounts paid directly to educational organizations for tuition (not books, fees, etc.) and healthcare providers for medical expenses.