LLC as Beneficiary of Trust

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[MattHilfer]

Isn't the LLC-as-beneficiary a way to create a "backdoor DAPT" in states that don't recognize DAPTs?

Theoretically, you would grant your assets to the trust through an LLC, serve as the Trustee as an individual, and receive trust benefits through a second LLC that is the named beneficiary.

This would be complex, but legal?

[LynneJacob-FunAfter]

A lawyer who has the $@??! to say ""I don't know." There are a few of you out there, for sure, and during my ¼-century as a legal assistant, being chief-cook & bottle-washer in small law firms, I met VERY few. Refreshing!

[DejaLouco]

Just playing devil’s advocate here so correct me if I’m wrong, please! If an LLC is the BENEFICIARY of an IRrevocable trust and the Grantor is still alive, wouldn’t the Grantor have access or gain use of property as an LLC member (kind of a ghost Beneficiary)? A rather complex example, a piece of real property is place into the IR trust by the Grantor. The beneficiary is XYZ, LLC. As member of XYZ, LLC, Grantor retains the right to rent, live in, or otherwise use the property until their done with it and it’s back to being unused trust property. From what I understand after watching a few of your other videos, the rental income can be funneled back into the trust and retained so it’s technically not a disbursement to the Grantor. 😂 I don’t know, it’s a rather crazy, complex hypothetical. But I believe somewhere in this “LLC as beneficiary” idea was that a Grantor could indirectly benefit as an LLC member while still relinquishing ownership and protecting assets with a spendthrift provision. Now how something like this is actually litigated in the future is whole nother can of worms 😅

[amoszook]

Plain speak is just fine, and wonderful.

[kimcoulter]

Should do a video on making the LLC a Member of aTrust. Popular planning tool.

[jeremyleonbarlow]

I could see a use for an LLC being a co-beneficiary for life of for example a Charitable Remainder Trust wherein the primary beneficiary and measuring life of the trust is not the grantor of the trust and the grantor wanted to provide an annuity payment to the beneficiary for life, and provide a life insurance benefit to the heirs of the beneficiary upon their death to make up for the loss of the CRT's annuity.

I mean say you had a windfall and you wanted to take care of your extended family as much as you could to a reasonable degree while not exceeding the gift tax lifetime exemption. You gift the primary beneficiary an amount that will at a 5% distribution rate for life easily pay the more than 2x the cost of a whole life premium for a $1million dollar policy to cover that individual. You then set up an ILIT which owns the LLC and make the LLC a co-beneficiary of the CRT. The ILIT pays it's annual trust tax rate on the income from the CRT, and with the remainder buys a whole life or an Indexed Universal Life policy and if the income grows, maybe it overpays into that IULP some years. On the death of the beneficiary of the CRT, you have passed on a nice nest egg to the next generation of the extended family after taking a nice tax break on the CRT you set up to benefit the first generation of the extended family.

To me this seems like a practical way to spread the wealth around in a family with minimal taxes incurred on the transfers.

The ILIT passes outside both the original grantor and the descedent's estate and the LLC clearly has an insurable interest in the life of the measuring life of the CRT as a co-beneficiary, so as a practical matter it makes sense.

[SurfSkSnow]

In some jurisdictions, LLC more powerful than Spendthrift Provision for protection of other assets that Beneficiary may own outside of future interest in Trust or Trust distribution after death of Grantor. In court, Successor Trustee discretion weaker than charging order protections or transferee/assignee restrictions in an operating agreement. Especially with a Multi-Member LLC.

[laurayongblod]

Can an LLC be used to 'hide' misappropriated funds

[Saxon]

Wouldn't the purpose be to keep anonymity? If a Wyoming LLC does not require you to publicly disclose who owns NLC, and that LLC is named as trustee and beneficiary, both ends of that trust would keep your name off public record.

[foreverwealth]

Hello Lee,
If the house is held inside a land trust, regardless the beneficiary is an individual or an llc, then the creditors can still dismantle the trust and take the house anyway.

Should people just feed the house directly into the llc for asset protection if their lender allows?

[hermesdavid]

Lee,
Great content;
Do you see any benefits of owning a California property in a Wyoming Statuary Trust, whose beneficiary or (trustee) is a Wyoming LLC?

[swedishmanguy]

Is there such a thing as making the LLC the TRUSTEE of the trust?

[johndeneen]

100% correct! People go LLC nuts sometimes w all these layers. Easier to put in an LLC. Keep it simple.