Maximizing Your Estate Plan with LLCs: A Smart Strategy Before 2026
As we approach 2026, many people are looking for ways to protect their wealth and ensure their loved ones benefit as much as possible. One powerful tool in estate planning is the use of Limited Liability Companies (LLCs). LLCs offer flexibility and control, making them a smart choice for families and individuals with significant assets.
Let’s dive into what LLCs are, how they can be used in estate planning, and why now is the time to take action.
What Is an LLC?
An LLC, or Limited Liability Company, is a legal structure that combines the benefits of a corporation and a partnership. It provides protection for your personal assets while offering flexibility in how the company is managed and taxed.
In estate planning, LLCs are often used to hold family assets, such as:
Real estate
Investments
Family businesses
By transferring assets into an LLC, you can manage and distribute wealth in a way that aligns with your goals.
How Can LLCs Help in Estate Planning?
LLCs can be a key part of your estate planning strategy for several reasons:
Centralized Asset Management When you place assets into an LLC, you can manage them as a single entity. This makes it easier to oversee investments, collect rental income, and handle other financial activities. You can also name specific family members or trusted advisors to help manage the LLC.
Gift Tax Benefits One of the biggest advantages of using an LLC is the ability to gift ownership interests to your family members. For example, rather than giving a piece of property directly to your children, you can transfer shares of the LLC that owns the property.
Here’s the benefit: The value of the shares can often be discounted because they represent a minority interest in the LLC. This means you can transfer more value without exceeding the annual gift tax exclusion.
Control While Sharing Wealth Even if you give shares of the LLC to your children or other heirs, you can retain control as the manager of the LLC. This allows you to make important decisions about the assets while still sharing the benefits with your family.
Protecting Assets LLCs can also shield your assets from creditors and lawsuits. If someone sues a member of the LLC, the LLC’s assets are usually protected. This makes LLCs a great choice for safeguarding family wealth.
Why Act Now?
The upcoming changes to the federal estate and gift tax exemptions make now the perfect time to consider an LLC. Here’s why:
High Exemption Limits: Currently, the federal gift and estate tax exemption is $12.92 million per person. This allows you to transfer significant wealth without paying taxes. But in 2026, the exemption is expected to drop to around $7 million per person.
Maximize Your Gifting Opportunities: By creating and funding an LLC now, you can benefit from the higher exemption limits. Transferring ownership interests before 2026 can help you lock in these tax benefits.
Steps to Get Started
Consult an Estate Planning Professional Setting up an LLC requires careful planning. A lawyer or financial advisor can help you understand the legal and tax implications.
Choose Your Assets Decide which assets you want to place in the LLC. This could include real estate, stocks, or a family business.
Draft an Operating Agreement The operating agreement outlines how the LLC will be managed, who the members are, and how profits and losses will be distributed.
Transfer Ownership Interests Once the LLC is set up, you can start transferring ownership shares to your family members. Be sure to follow all tax laws and reporting requirements.
Final Thoughts
Using an LLC for estate planning is a smart way to manage your wealth, reduce taxes, and protect your family’s future. With the federal tax laws set to change in 2026, now is the time to take action. By planning ahead, you can make the most of today’s tax advantages and ensure your legacy is secure.
If you’re ready to explore how an LLC can benefit your estate plan, our law firm is here to help. Contact us today to schedule a consultation and take the first step toward protecting your family’s future.