What is a Charitable LLC?
The Charitable LLC (CLLC) is an advanced and comprehensive tax, estate, and charitable giving plan which has evolved for nearly twenty years. The CLLC is a structure which creates the following benefits for you.
• An income tax deduction which reduces up to 50% of your total tax.
• Assets contributed grow without tax.
• Appreciated assets contributed can be sold or liquidated without tax.
• Assets are exempt from gift and estate tax
• Assets are creditor and divorce protected.
• Client and heirs maintain total control over the assets transferred to the CLLC.
• Client and heirs will make substantial charitable gifts to their preferred designated charities.
How This Works
The client establishes a single member LLC and then transfers identified assets) into the newly formed entity. The LLC will initially be controlled and owned by the client as both the Manager and 100% Member. As the Manager, the client then transfers 99% of Limited Partnership Units to a public charity. The Manager (You), by agreement, will control and manage the assets owned by the LLC. The Member charity has ZERO control over the assets or their management. This structure will not result in loss of control over the assets you transfer to the LLC.
For this contribution they receive a charitable income tax deduction equal to the appraised value of the gift which reduces current income taxes owed in current and possibly future years. Further, any income derived from the assets in the LLC is not subject to tax (except on remaining 1%- Managing Partner Unit) and appreciated assets in the LLC can be sold or liquidated without tax. This result occurs as the income and gains are allocated from the LLC to the charity which is legally exempt from paying such tax. Therefore, 99% of any income or gains will not be subject to tax in the LLC. Since the charity owns the membership interests in the LLC and not the client, there will be no estate or gift tax on the contributed assets and will allow you to protect their assets from creditors. When you die, your children/heirs take your place and manage the LLC as you did and receive the same favorable tax benefits.
This setup allows you and their heirs to make substantial current and future charitable gifts to their favorite charities. The substantial charitable gifts are the primary component in the plan that justifies the tax benefits received.
Who Can Benefit from A CLLC
• High Income Individuals ($315K and above)
• Business Owners
• Individuals in 32% and above tax brackets
• Anyone with Highly Appreciated Assets
• Anyone over the Estate Tax thresholds
• Anyone selling fully/highly depreciated assets
• Owners of C-Corps- Avoid Double Taxation
• Business Succession Planning
• Over funded or highly taxed Qualified Plans, Annuities, Deferred Comp, 401k, IRA, Pensions or Business Deferral Plans
• Individuals looking for tax free retirement income