One of the most common entities in Florida is the limited liability company. (“LLC”). In fact, there are over 100,000 LLCs in Florida. Many people form LLCs in Florida and do not contemplate the estate planning implications. Unfortunately a business owner’s failure to consider the estate planning issues will result in the LLC’s units having to go through probate upon the death of the owner. The good news is there are different ways that you can avoid probate of your LLC’s units upon your passing. Before we discuss some of these options to avoid probate let’s first look at why it is a good idea to form an LLC in Florida.
- Protects your assets against Creditors
- Can Provide Tax advantages
- LLC’s have less onerous rules concerning corporate governance than other entities
- Ease of Formation
A Florida LLC is quite easy to form online and you can quickly get your LLC up and running. However, a large group of people that form these entities do not take the necessary steps to avoid probate of the LLC’s units upon their death. One of the most common ways to avoid probate on your units is having your Trust Agreement be the owner of the LLC’s units. So, instead of the units being owned by John Smith they will be owned by John Smith, as Trustee of the John Smith Revocable Trust. Then in the event John Smith dies the successor trustee will manage and devise the units as set forth in the Trust Agreement. A second option is to draft or update your LLC’s Operating Agreement to put language that states what happens to your LLC’s units upon your death. For example, if John Smith dies then his units shall immediately vest and transfer to Jane Smith.
It is important to discuss these different options with a qualified estate planning attorney to ensure the smooth transfer of your LLC’s units upon your death. If you have any questions do not hesitate to reach out directly to Jason Siegel, Esq. at (561) 284-1160 or via email at [email protected].