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We have long discussed setting up a LLC, to own our home, and bank accounts [with our names. mine and my DW, on the checks.
Then naming; myself, DW and children, each as joint-owners and members of the board of the LLC.
If the corporation owns all of it, then when either [or both] of us pass, the corporation will still own it and be ran by the remaining board members [ie, the children].
If the corporation owns all of it, then when either [or both] of us pass, the corporation will still own it and be ran by the remaining board members [ie, the children].
That's a great idea, Sub! We went with a land trust for all of our real properties. Our vehicles and other chattels are owned by an LLC. Definitely look into a land trust before you decide on your property! It may or not work for you; it worked out great for us!
We have long discussed setting up a LLC, to own our home, and bank accounts [with our names. mine and my DW, on the checks.
Then naming; myself, DW and children, each as joint-owners and members of the board of the LLC.
If the corporation owns all of it, then when either [or both] of us pass, the corporation will still own it and be ran by the remaining board members [ie, the children].
I'm by no means an expert in this area, but I've always been under the impression that putting your primary residence in an LLC was an exceedingly bad idea tax-wise. For one, I believe you would lose your $250k/$500k capital gains exemption. Secondly, your children wouldn't receive a stepped-up basis when they inherited the home. And finally, I believe you also lose your homestead exemption when you transfer the property into the LLC (at least in some states).
I haven't looked into this in quite awhile, so the laws might have changed and/or I could be way off on this, but at least I thought I'd throw those issues out there for you to at least look into them if you're going to follow-through with such a course of action.
I'm by no means an expert in this area, but I've always been under the impression that putting your primary residence in an LLC was an exceedingly bad idea tax-wise. For one, I believe you would lose your $250k/$500k capital gains exemption.
You can only take advantage of that, when you sell. Selling a large expensive house, to shift to a smaller less expensive house is the idea for that to work.
It remains our intent to stay here until we die, so we will never use our exemption.
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... Secondly, your children wouldn't receive a stepped-up basis when they inherited the home.
The cost-basis on the home would depend a lot of when you put it into the LLC, either early or later.
I often think in terms of Multi-Family-Residences, I forget how it works for Single-Family-Residences. We went through four MFRs before we cashed out and bought this home.
Quote:
... And finally, I believe you also lose your homestead exemption when you transfer the property into the LLC (at least in some states).
I haven't looked into this in quite awhile, so the laws might have changed and/or I could be way off on this, but at least I thought I'd throw those issues out there for you to at least look into them if you're going to follow-through with such a course of action.
You likely would lose the Homestead Exemption, ours is $10,000 reduction on the tax assessment.
Our Mil Rate is 0.00866 so our property taxes are reduced by $86/year. You would likely lose that reduction.
When only daughter was born, I purchased shares of bank stock in the name of a trust for her benefit. Dividend income was/is used for her benefit. The value has risen from $185 share to $1500 share and with the dividends has about a 10% ROE. Now thinking about using the income for the education (private school) for her children. Her college costs were entirely paid for via investments made in her name..UGMA.
When only daughter was born, I purchased shares of bank stock in the name of a trust for her benefit. Dividend income was/is used for her benefit. The value has risen from $185 share to $1500 share and with the dividends has about a 10% ROE. Now thinking about using the income for the education (private school) for her children. Her college costs were entirely paid for via investments made in her name..UGMA.
That was a great return!
Private school is now becoming a hot issue. Opinions differ, but I think we can all agree that public schools produce mixed results, at best. 4 of our 6 grandchildren are in parochial schools. The other 2 are in public schools in a small, rural community, and are doing quite well with it. In the cities, it may not be so good.
Consider using a trust for all of your property when you both are dead. The children can be the trustee. Pay out to the grandchildren as their needs dictate.
If you have the funds you could help pay tuition now. Pay the school directly to avoid gift taxes.
We thought we would only have one grandchild, and we set up a college fund shortly after birth. We were happily surprised when we got our second grand, and we set up a college fund again. The accounts are FBO funds set up through a brokerage, and added to every month.
Additionally, we have designated a percentage of our estate for the two little ones, not to exceed a certain amount of money, and to be used only for educational purposes.
We now give our kids and spouses small monetary gifts for birthdays and Christmases, because money always fits!
And I help with school clothes expenses.
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