raymond912002[at]yahoo.com (Raymond) wrote:
- quote -

It may depend on the law of the state you're in. I've never
heard that an LLC has to have a business purpose when used
for estate planning purposes.

A Family LLC or Limited Partnership is used for estate
planning to transfer interests in appreciating property,
generally real estate, to children gradually, while keeping
effective management and control with the parents even when
the kids own most of the property. I've never heard of
anyone having a problem doing this.

The family LLC or LP is not for everyone, though. Don't
consider it unless you have very substantial assets (I'd say
several million dollars worth at least).

Why? One of the things you have to do is to have your
property formally ppraised each and every year. Then you
need to have documents created to transfer precise
percentages of the property to your children. If you don't
do that you are not getting the benefit you probably paid a
lot of money for. If you do it, you will probably pay out
an additional two or three thousand dollars (or more) each
year to get your benefits.

Stu

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raymond912002[at]yahoo.com (Raymond) wrote:

- quote -

Let me restate my question : I have been cautioned about
including non-business property in an LLC, specifically
vacation homes and vacant residential lots. In reality
they are passive family investments.

Could I have an LLC with only passive investment property ?
If I checked the box as a disregarded entity, how would I
handle the expenses (there is no income) ?

I am trying to do estate planning using discount gifting.

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At a conference on " Choice of Entity", the lecturer listed
the advantages for holding real estate in LLC's, but
cautioned that the LLCs must have a business purpose. He
warned against putting residential land (vacant, not rented)
and vacation homes in LLCs.

If a client came to you and said he wanted to do estate
planning with discount gifting of the two aforementioned
property types, what would you recommend?

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