Protecting Assets with a Limited Liability Company
Most entrepreneurs, business owners and people of wealth understand the importance of protecting their personal assets by establishing separate entities such as limited liability companies to hold title to assets. However, far fewer realize the importance of coordinating business entities with their estate plans — and in particular with trusts.
At Morris, Hall & Kinghorn, P.L.L.C., our lawyers have been protecting the assets of business owners and high-net-worth individuals for more than three decades. We will take the time to evaluate your personal financial needs and determine which entity affords you the greatest protection. Once we set up your business entity, we will coordinate it with your estate plan to provide you and your beneficiaries the fullest possible protection.
Choosing the Right Business Entity
In most situations, limited liability companies (LLCs), and family limited liability limited partnerships (FLLLPs) afford the greatest protection against taxes and creditor claims.
A corporation does not protect you completely from creditor claims. While a creditor who has a personal judgment against the owner of the corporation cannot take the assets of the corporation, the creditor could acquire the ownership of shares of the corporation. If an LLC is properly created with an appropriate operating agreement, a creditor cannot attach the interest of the LLC, as could happen with a corporation. Rather, the creditor can be limited to receiving only assets distributed from the LLC to the owner, which distributions the owner can control.
Coordinating Your LLC With Your Trust
Once a business entity is created, it can be titled in a trust. Titling your business in a living revocable trust gives you full control of the business during your lifetime. After you die, the assets go into a beneficiary trust that protects your children’s inheritance from taxes, creditors, ex-spouses, personal bankruptcy and spend-down for long-term care.
Without proper planning, the transfer of a business to the next generation of owners can result in devastating tax consequences for your beneficiaries.
Your family is worth protecting. Advanced planning entities, such as LLCs and FLLLPs, are often essential for your protection and theirs. Contact us to arrange a consultation with an experienced lawyer today. Our offices are located in Phoenix, Tucson, Albuquerque and communities throughout Arizona and New Mexico.