Estate Planning
In those jurisdictions that have estate taxes, sophisticated estate planners utilize family based structures such as the family limited partnership or the LLC (sometimes also called the family LLC when used in this context) as part of their client’s estate plans. An estate planning benefit in that instance is primarily the result of the availability of valuation discounts through lack of control and marketability of LLC interests. Practically, this is achieved first by making the parents or older generation responsible for management of the company. Most of the interests in the LLC will be initially held by the parents but are gradually transferred by gifts to their children over the years using the maximum amount that can be transferred free of gift taxation.

Eventually, the majority of the interest will be transferred to the children and, on the parents’ passing, the parents’ estates will be left with a minority interest. Because these minority interests are in a closely held entity the interests are not very marketable – thus the discounts for lack of control and marketability. As will be seen in the next section, if an Antiguan LLC is used the discounts may be significantly larger than if a domestic entity is used because the provisions of the governing LLC law makes it more restrictive to freely dispose of LLC interests.

Non-residents of the United States who invest in US real estate or corporate stock may also gain estate planning benefits by holding their corporate stock or US real estate in a non US entity. Non-residents of the United States are taxed on their US property. However, putting such property in a non-US entity may reduce the estate taxes that would otherwise be payable by the decedent’s estate.

Another aspect of estate planning benefits is succession planning. Succession planning ensures the continuity of an entity. By putting assets in a family held LLC, the company will continue after the death of its founder, so that planning for future generations can be achieved. In addition, because the assets are held by the LLC rather than individually, on the demise of the founder there will not be a need for any probate formalities to transfer assets of the company.

Asset Protection
In addition to offering every member of an LLC limited liability, the signature characteristic of the LLC is its charging order protection. This limits the remedy of a judgment creditor of an individual member to a “charging order.” In layman’s terms, the charging order is similar to a deposit box; the creditor waits for any distributions made by the LLC to its members. When such deposits/distributions are made, the distribution to which the judgment debtor member is entitled is distributed to the judgment creditor. Judgment creditors cannot compel the managers to make distributions. Statutes that make the charging order the sole remedy for a judgment creditor are the most effective in reaching this asset protection objective.

Ideal business vehicle
Because of the asset protection benefits of the LLC and its flexible structure, the LLC is the ideal business vehicle. It allows an entrepreneur to start a small business which has a professional quality while at the same time affording him limited liability and protection of his personal assets from any business liability. LLCs are ideal for holding real estate and other types of assets or property, affording insulation for each asset or property from the claims against other properties.

Tax Benefits
In those jurisdictions where the laws provide that taxes on income are determined by residential status, the LLC may offer a tax planning opportunity. In such cases the LLC’s residential status may be determined by the place of organization or place where its operations are administered. If it is determined that the tax residence of the LLC is Antigua, there may be a planning opportunity.