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Richard
Richard, Attorney
Category: Estate Law
Satisfied Customers: 53948
Experience:  29 years of experience practicing law, including tax and estate planning.
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THREE INDIVIDUALS ENTER INTO A FARM LLC. MOST OF THE RL EST

Customer Question

THREE INDIVIDUALS ENTER INTO A FARM LLC. MOST OF THE RL EST IS OWNED BY THE CANAGER. CAN THE PARTNERSHIP BE SET UP WHERE THE MANAGER RETAINS OWNERSHIP. AND IF SO, CAN THE RL EST BE TRANSFERRED TO THE OTHER PARTNERS UPON DEATH WITHOUT TAX?
Submitted: 11 months ago.
Category: Estate Law
Expert:  Richard replied 11 months ago.

Good evening. My name is ***** ***** I look forward to helping you.

Can you provide me a bit more information? I'm a bit confused regarding the ownership? Is the property owned by the manager or the LLC? If the manager, what's the purpose of the LLC? How much is the property worth?

Customer: replied 11 months ago.
llc is not formed yet. Manager owns most of the land. We just thought llc would be better for distribution of profit. And wonder if one dies would the others owe inheritance tx
Expert:  Richard replied 11 months ago.

Thanks for following up. As long as the property is not worth more than $5,430,000, there is no estate or federal inheritance tax. Furthermore, Ohio no longer imposes a state estate or inheritance tax. Thus, there is no estate or inheritance tax issue for you. But, an LLC is a good idea because it allows for centralized management and a more orderly transition at death where you can transfer interests in the LLC rather than interests in the real estate itself.

Customer: replied 11 months ago.
manager is free to retain ownership?
Expert:  Richard replied 11 months ago.

Actually, if the manager is going to own the property, there is really no need to have an LLC if he's going to own 100% of the LLC. And, if he's not going to transfer the property to the LLC, what would be the purpose of the LLC since no one else is going to have any ownership. What you could do if the 3 individuals are going to share the farming operations is form the LLC, have the LLC lease the property from the manager, and then the 3 of you can share profits from the farming operations in the LLC.

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