How Can I Transfer Business Assets to Family Members?

Naperville, IL estate planning lawyer

For business owners, the estate planning process involves a variety of complex financial issues related to the assets they own, the transfer of these assets to family members, and the plans that ensure that their businesses will be able to continue operating successfully. 

If you are a business owner, you should begin making plans for how you want to transfer business assets to family members during your lifetime or after your death. Taking the right steps now is essential for ensuring the continuity and longevity of a family business.

Family limited partnerships (FLPs) or family limited liability companies (FLLCs) may be used to facilitate these transfers while preserving family wealth and minimizing potential taxes. An experienced Illinois estate planning attorney can provide guidance on the best methods to use to ensure that business assets can be transferred correctly.

Benefits of Family Limited Partnerships and Family LLCs

FLPs and FLLCs are business structures specifically designed to help families manage and transfer business assets. An FLP consists both of general partners, who control the partnership and manage its operations, and limited partners, who have an ownership interest but limited control over the management. A family LLC operates similarly, with members holding ownership interests while a managing member oversees the business operations. These structures allow business owners to transfer ownership interests to family members over time while retaining control over the business. 

Benefits of these business structures include:

  • Tax advantages: One of the most significant benefits of using FLPs or FLLCs is the potential for tax savings. By transferring business assets into an FLP or FLLC, business owners can take advantage of valuation discounts for minority interests. This can lower the overall value of the transferred assets for gift and estate tax purposes, potentially saving families a considerable amount of money.
  • Control and flexibility: FLPs and FLLCs allow business owners to maintain control over the business while gradually transferring ownership to family members. A general partner or managing member can retain control over business operations and decision-making processes, even as ownership interests are transferred to their children or other family members. This flexibility can help ensure that the business will continue to operate smoothly and according to the vision of the business owner.
  • Asset protection: By transferring business assets into an FLP or FLLC, these assets may be shielded from creditors’ claims against individual family members. This helps ensure that the business assets are preserved for future generations, providing long-term security for a family.
  • Family unity and involvement: By bringing family members into the ownership structure of a business, they will be encouraged to take an active interest in the business’s success. This can foster a sense of shared purpose and responsibility, strengthening family bonds and ensuring that the business remains a family legacy.

The Importance of a Business Succession Plan

When transferring business assets to family members, it is important to have a business succession plan in place. This can provide the following benefits:

  • Ensuring continuity: A succession plan can outline the process for transferring ownership and management responsibilities, helping to avoid conflicts and ensure a smooth transition.
  • Protecting the business owner’s legacy: A business succession plan allows a person to set forth their vision for the future of their business and ensure that their values and goals are upheld.
  • Minimizing disputes: Family businesses can be vulnerable to disputes, particularly during periods of transition. A business succession plan can help minimize these disputes by clearly defining roles, responsibilities, and expectations.
  • Financial security: A business succession plan may outline strategies for addressing potential tax liabilities, ensuring that the business remains financially stable during the transition. Additionally, it can provide a framework for managing the distribution of business income and assets, helping to secure a family’s financial future.

Contact Our DuPage County, IL Business Succession Planning Attorney

Transferring business assets to family members and creating a comprehensive business succession plan are essential steps for protecting a family business and ensuring its continued success. At the Gierach Law Firm, our experienced Naperville estate planning lawyer can help business owners develop strategies that will meet their unique needs and goals. Contact our office at 630-228-9413 to schedule a consultation and learn more about our legal services.

Practice Areas

Archive

+2016

+2015

+2013

Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.

Blog Sign Up

 

Like what you see?

Follow us to stay current!

Facebook LinkedIn Twitter Youtube
search

630-228-9413

CONTACT US

Fields marked with a * are required
 
 
 
Napervile-attorne-disclaimer
The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.
 
 

Providing You With

Peace of Mind
Facebook LinkedIn Twitter Youtube BBB
From our offices in Naperville, Illinois, we handle matters throughout Illinois including DuPage, Cook, Will, and Kane counties and within towns such as Addison, Aurora, Barrington, Batavia, Burr Ridge, Carol Stream, Chicago, Darien, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Geneva, Hinsdale, Hoffman Estates, Lisle, Lombard, Naperville, Oak Brook, Roselle, Schaumburg, St. Charles, Warrenville, Wheaton, and Winfield.
association and logos
© 2024 Gierach Law Firm | 
1776 Legacy Circle, Suite 104, Naperville, IL 60563 | 
630-228-9413
OVC INC
Back to Top