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THE SAMPLE FAMILY INVESTMENT COMPANY, LLC

A limited liability company can provide significant asset protection for assets owned by theentity in the event of a lawsuit against an individual member of the company. When a judgmentis entered against a member, the creditor has no right to seize the assets inside the company orthe member’s membership interest. Creditors have no right to manage the company or todemand that distributions be made from it. The law generally allows a creditor to seize anydistributions actually made to the member against whom a judgment is entered, but not the assetsinside it. Furthermore, since the creditor does not become a member, there is no way for thecreditor to force the managing member to take any action. The creditor would be forced to waituntil a distribution was actually made to the debtor-member. These asset protection benefits arenot available when a judgment is entered against the company itself. In that event, the creditormay satisfy the judgment with company assets. For this reason, high-risk assets should not becontributed to or purchased by the company. A limitedliability company is established by filingArticles of Organization with the Secretary of State. The managers of the company have totalcontrol and management of the company regardless of their percentage of ownership.Most investment assets may be held by your LLC, including real estate (other than your personalresidence), tangible personal property and intangible personal property (such as stocks, bonds,mutual funds, brokerage accounts and life insurance). As a general rule, no gain or loss isrecognized when assets are transferred to the LLC.

LLCs do have some continuing administrative fees and expenses. They may require a yearlyincome tax return, accounting and annual filing fees. They need to be reviewed by counsel atleast annually in orderto make sure the company is being operated properly. However, the LLCis not a separate tax-paying entity. Income and losses are passed through on a pro-rata basis tothe owners of the membership interests of the company. Therefore, with children orgrandchildren in lower tax brackets, the transfer of limited liability company interests to thesefamily members can shift income from you to them at a lower tax cost.

SAMPLE PLANNING TOOLS

Family Limited Partnerships

Gift Trusts for Family Members

Lifetime Family Trusts

Grantor Retained Annuity Trust

Charitable Remainder Trust

Private Foundations

Sale to Grantor Trust

Beneficiary Defective Trust