There are three significant tax issues that could affect an individual’s estate plan. For Illinois residents thinking about estate planning, those issues include tax faux pas that could be financially costly in the long run. Not taking advantage of Family Limited Partnerships (FLPs) and Limited Liability Companies (LLCs), may thwart a person’s ability to have control over investments and distributions of wealth.
There are certain requirements to be met when taking advantage of either of these tax incentives. Not adhering to the rules could jeopardize the reason for their existence in the first place. For instance, personal assets should be kept separate from business or entity assets. If these assets are commingled, the IRS may negate the benefits of FLPs or LLCs.
Documents must be kept current with these entities. A less than ideal situation is that the rules governing FLPs and LLCs may change when governments change. A lawyer can offer advice as to when FLPs and LLCs should be dissolved or left in place. Legal documents need to be updated on a regular basis.
There are many tax issues wrapped up in estate planning. An experienced Illinois attorney is likely the best person to offer advice and guidance when it comes to the financial aspects of an estate plan. He or she is knowledgeable about things like FLPs and LLCs and how they can be of benefit to each client’s individual situation. An attorney can explain the positives and negatives of things like FLPs and LLCs and explain them in an easy-to-understand way.