How to Utilize a Family LLC to Pass on the Ranch
Many clients are looking for ways to pass on what we refer to as Legacy Property, such as farms, ranches, family cabins, and/or mineral interests. A common challenge with Legacy Property is parents choosing to gift their estate unequally to their children to preserve their Legacy Property, or gift equally and risk ownership becoming fragmented over generations, potentially losing the Legacy Property. Ranch families understand that, while looking very valuable on paper, ranches rarely produce income sufficient to support more than one family. When minerals become too fragmented, the title gets messy, and owners miss out on valuable development. The same is true for surface development. All too often, we see siblings and cousins fighting over who gets to use the family cabin and when.
One possible solution is a Family Limited Liability Company (FLLC). An FLLC provides a structure to keep your Legacy Property in one piece and in the family. It provides an avenue to allow parents to treat their children more equitably and greatly simplifies the transfer of the Legacy Property to future generations. It provides a management structure and establishes how to pay bills and distribute any profits, helping to avoid fights amongst several owners. FLLCs keep the title clean and clear and provide a single point of contact, making it a more desirable target for oil and gas production. FLLCs can help families avoid probating each member’s interest at the time of their death. They can provide buy-out structures for members that wish to sell. Most beneficial, FLLCs can be used to devalue a family ranch in the eyes of the IRS and to avoid additional inheritance taxes.
You’ve worked hard to build your Legacy Property and leave it to future generations. Give us a call at 307-682-1313, to discuss whether a Family LLC is the right vehicle for you to pass on your Legacy Property