How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Richard - Bizlaw Your Own Question

Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 8788
Experience:  30 years of corporate, litigation and international law
18695994
Type Your Business Law Question Here...
Richard - Bizlaw is online now
A new question is answered every 9 seconds

In order for a child to obtain income by owning a "membership

Resolved Question:

In order for a child to obtain income by owning a "membership with a travel company (club) that produces multilevel income (major amount), I would like to set up an LLC with the child as a member (perhaps with his father as a LLC member trustee with the child being beneficiary untill legal age) and purchase the Travel membership in the LLC's name.

This way, "The Child," could be accumulating income till he reaches legal age. The LLC would be taxed as a corporation, basically holding the income etc. However, I was originanlly planing to have the Childs father be the "managing member" in the first place with a 1% interset (or perhaps a bit more say up to 10% interest) and the child basically having the rest of the interest in the trust portion.

I guess the question is "How could the father be in the role of the managiing member and also be the non managing member that represents the trust. AND if he can't, perhaps his mother could then instead take on one of the roles as either the managing member or perhaps the Trustee of the trust to make it possible for the child to be a member.

The Idea would be basically to turn the whole LLC over to the Child when he was legal age, with there being MAJOR funds in the LLC's accounts.

Any thoughts?

PS: I am the Childs Greandfather and also can't be an LLC member - because of conflicting interests with my own existing memberships with the Travel company mentioned above .
Submitted: 4 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 4 years ago.

You could just have the child be a member of the LLC with the father as the managing member. If you have the LLC taxed as a corporation, you will introduce double taxation when it comes time to take the funds out. His parents as legal guardians of the minor can place the funds that are disbursed in an account for the benefit of the minor until he reaches majority. You do not need to create a trust. The child will be taxed at the rate of the parents which may well be lower than the corporate tax rate.

 

This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.

Customer: replied 4 years ago.

I perhaps should have mentioned that the Child in question is in fact a baby less than 1 year old. However I didnt think that was relevant anyway because I was acting under the impression - which I thought was fact, that a minor can't sign legal documents and also cannot therefore be a member of a LLC.

 

So now, based on your answer, you are saying that they in fact "could" (I would definetely prefer to not have a trust anyway).

 

I, don't want to get myself in hot water either, is it possible for you to be sure that the child could be a non-managing member. Also, then the passing income could just go into a bank account set up for the child from the LLC.

Expert:  Richard - Bizlaw replied 4 years ago.

Minors can have property. They can receive it by gift, inheritance or having their legal guardian, their parents, act on their behalf to purchase the interest. Holding the membership is no different from owning stock. The child would not be the one exercising things like voting rights, the guardian would. If you have a managing member, then the child's membership is passive and he just votes on things a shareholder would vote on and the vote is made by the minor's guardian on the minor's behalf.

 

This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.

Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 8788
Experience: 30 years of corporate, litigation and international law
Richard - Bizlaw and other Business Law Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
< Last | Next >
  • http://ww2.justanswer.com/uploads/LA/lawpro/2012-6-25_171315_PT206740s.64x64.jpg Law Pro's Avatar

    Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
  • http://ww2.justanswer.com/uploads/DC/DCraneEsq/2012-8-14_14436_DCrane.64x64.jpg MShore Law's Avatar

    MShore Law

    Attorney

    Satisfied Customers:

    1233
    Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    1162
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    1142
    Run my own successful business/contract law practice.
  • http://ww2.justanswer.com/uploads/ohioatty/2009-1-22_185545_me.jpg J.Hazelbaker's Avatar

    J.Hazelbaker

    Attorney

    Satisfied Customers:

    393
    Experienced and trained in the area of business law.
  • http://ww2.justanswer.com/uploads/scottymacesq/2009-6-10_221523_small.jpg RGMacEsq's Avatar

    RGMacEsq

    Attorney

    Satisfied Customers:

    393
    Licensed Texas General Practice Attorney
  • http://ww2.justanswer.com/uploads/BA/barristerinky/2012-6-10_22423_office.64x64.jpg Barrister's Avatar

    Barrister

    Attorney

    Satisfied Customers:

    301
    13 years practicing attorney, MBA
 
 
 

Related Business Law Questions