Are LLCs subject to inheritance tax?
John Thompson
Published Apr 18, 2026
Most people form a family LLC to avoid the estate tax. Below that amount, you will not need to pay the estate tax. You will have to pay a gift tax if you are unmarried and transfer over $14,000 in assets in a year or if you are married and distribute $28,000 in assets. The person giving the gift has to pay the tax.
How is an LLC inherited?
An LLC can survive beyond the death of its owner. This is determined by the LLC’s operating agreement. Even if the LLC is not mentioned in the will, the next of kin will automatically inherit the deceased’s member ownership interest unless the operating agreement prohibits it.
LLCs and Estate Taxes When an LLC holds a property instead of the individual holding the property outright, it is not considered part of the person’s estate. This is a significant benefit because it allows that property to avoid federal estate taxes entirely.
What should family do before opening an estate?
It is important for the family, even before the opening of an estate, to protect all assets that belonged to the decedent. No one, including family, should begin to take or distribute assets. An estate needs to be opened and a personal representative or executor needs to be appointed.
How does a family LLC work in estate planning?
In a family LLC, the parents maintain management of the LLC, with children or grandchildren holding shares in the LLC’s assets, yet not having management or voting rights.
Can a family member take or distribute assets?
No one, including family, should begin to take or distribute assets. An estate needs to be opened and a personal representative or executor needs to be appointed. It is very difficult to recover assets after they have been distributed or taken. Probate estate probably needs to be opened.
What are the most frequently asked estate and inheritance questions?
Frequently Asked Estate, Probate, and Inheritance Questions. Many times, clients come to us with a lot of questions about their estate or trust situation. Below are some of the most common questions along with general answers about what to expect.
