Question on LLC's

[borumrm]

I was wondering when forming an LLC if you choose a single member entity what happens to the LLC if you die? How does it pass thru the estate? Any one have any experience in this area? I am thinking of using the single member entity but was wondering how it would pass to my wife in the event I die..she has no interest in running the business and would likely just put it up for sale. Look forward to hearing your replies / thoughts.

 

[Bubbles Galore]

Make sure you have a good will. Some have living trusts etc...I would talk to an estate lawyer.

 

[Earl Weiss]

First, Check with an accountant. An LLC may not be the way to go. It is usualy use to own real estate instead of an S corp which will not get the expense pass thru. The ownership / membership . Whether it be owned via a corp or LLC the stock or membership interest will pass via you will or if it is set up in a trust, that way.

 

[Indiana Wash]

I had an S corp set up for my car wash. I ended up going with an LLC so that the losses (depreciation) carry through to my taxes as ordinary income. This is important. I consulted a qualified accountant.

Typically, in the event of death, an LLC would pass to your heirs. That is, your ownership in the LLC would pass to your heirs. Since you own the LLC, your heirs would inherit that ownership interest. Similarly, if you own stock in an S corp or for that matter, any stock you own at your death would transfer to your heirs.

 

[Earl Weiss]

I had an S corp set up for my car wash. I ended up going with an LLC so that the losses (depreciation) carry through to my taxes as ordinary income. This is important. I consulted a qualified accountant.

Typically, in the event of death, an LLC would pass to your heirs. That is, your ownership in the LLC would pass to your heirs. Since you own the LLC, your heirs would inherit that ownership interest. Similarly, if you own stock in an S corp or for that matter, any stock you own at your death would transfer to your heirs.

Indiana-- Does the same entity own the real estate and the business? If so, this would be a proper format from a tax standpoint, as viewed by an accountant. BUT, accountants only look at tax issues and not liability issues.

I always suggest that for asset protection the ownership of the real estate and the ownership / operation of the business be in seperate entities. The business leases from the owner on a triple net lease assuming all respomnsibility for operation, management and control. If their is a liability claim from say a bad accident, the liability would most likely be for the business only. If the potential liability exceeds insurance coverage, it is easier to then restructure the business and not put the real estate at risk.

 

[Indiana Wash]

Indiana-- Does the same entity own the real estate and the business? If so, this would be a proper format from a tax standpoint, as viewed by an accountant. BUT, accountants only look at tax issues and not liability issues.

I always suggest that for asset protection the ownership of the real estate and the ownership / operation of the business be in seperate entities. The business leases from the owner on a triple net lease assuming all respomnsibility for operation, management and control. If their is a liability claim from say a bad accident, the liability would most likely be for the business only. If the potential liability exceeds insurance coverage, it is easier to then restructure the business and not put the real estate at risk.

That is good advice. When I set up other people's business, that is how I set them up.