What Should You Know About Family Limited Liability Companies?
Should you set up a family limited liability company (LLC)? Establishing an LLC is a smart way to protect the assets of your family business.
A limited liability company is a business structure that shields the company’s owners from any personal responsibility for the company’s debts and liabilities. LLCs merge some of the advantages of corporations with some of the advantages of a partnership or sole proprietorship.
A family LLC can be set up in Florida by family members to protect family business assets against any claims made by creditors. If your family owns a business in central Florida, a family LLC may be the most practical way to protect your assets from creditors and liability claims.
A family LLC is also a useful estate planning tool for dividing and transferring family business assets. A limited liability company is a closed corporation.
How Does a Family LLC Work?
A family LLC requires one member of the family to serve as the LLC’s managing member. A family LLC’s operating agreement should specify and restrict the rights of ownership, designate the responsibility for decision-making, and spell out exactly how assets will be transferred.
How do limited liability companies differ from sole proprietorships and partnerships? A limited liability company separates the company’s assets entirely from the owners’ personal assets. It legally shields the owners from the company’s debts and liabilities.
If an LLC is sued by a creditor or goes bankrupt, the owners’ personal assets cannot be pursued. Family LLCs may be set up for business purposes, such as brokerage account management or real estate management, but family LLCs may not be used to manage personal residences.
What Does a Family LLC Require?
Effective asset protection needs to be in place before a claim or liability occurs. When a claim or liability happens, it will almost certainly be impossible to obtain asset protection after the fact.
In central Florida, setting up a family LLC requires the advice and services of an Orlando real estate planning attorney who has experience working with family businesses.
In addition to asset protection, a family LLC lets you control the assets throughout your lifetime, keeps the assets within the family, and may help to reduce the taxes that may be owed by you or by your family members while you are alive or after you’ve passed away.
Do You Need a Comprehensive Estate Plan?
For a variety of reasons, it may be smart to consider establishing a family LLC. Moreover, a family LLC may only be one part of the complete estate plan your family may need.
Speak with our law firm about establishing a family LLC or a comprehensive estate plan that will protect your assets and give your family financial security – after your death or even if you become disabled or incapacitated.
To set up a family LLC or a comprehensive estate plan, or simply to learn more, you can schedule a consultation with us by calling our Orlando law offices at 407-426-7222.
