The family LLC, state by state.
A family LLC holds family assets in one entity: real estate, business interests, marketable securities. Parents typically form it, contribute the assets, and gift membership interests to children over time. The federal frame is the same everywhere. What the state adds, above all whether it runs an estate tax of its own, is not. Pick your state for that picture.
Four things that change with your state.
The mechanics of a family LLC are federal and much the same everywhere. The environment it sits in is not, and the estate tax question is the one that moves most at the state line.
What your state adds
Most states levy no estate or inheritance tax at all, leaving the federal estate tax as the only layer above the federal exemption. Some states run one of their own on top, often starting lower, which means an estate that owes nothing federally can still owe at state level.
Interests, not assets
Once assets sit inside the entity, what moves between generations is membership interests rather than the property itself. Interests can be gifted gradually, using the annual gift exclusion, without dividing a building or a portfolio into pieces or touching a deed each time.
Why the discount matters
A minority interest in an entity is not the same asset as a share of what the entity owns, and it is not always valued as though it were. That is what valuation discounts refer to. What one is worth in a given family is an appraisal question, and the answer gets examined closely.
Control lives in the document
Ownership and control are separate questions in an LLC. The Operating Agreement decides who manages, how decisions are made, how interests may be transferred, and what happens when a member dies or wants out. Without one, the state's default rules answer those questions for the family.
The entity is the straightforward half. The plan around it belongs to your advisers.
Pick your state.
Each state page covers formation in that state, its estate and inheritance tax position, what the Articles of Organization require there, and how the Operating Agreement and the gifting sequence fit around the entity.
A clean handoff, in four steps.
A family LLC is built once and lived in for decades. The order matters: the entity exists first, the agreement defines it, and only then do assets and interests start to move.
Pick the formation state
Where the entity is formed is a real decision here rather than a default. Where the family lives, where the assets are, and what the state adds in tax all feed into the answer.
Decide the structure
Who the members are, who manages, and how interests will be issued and transferred. These answers are what the Operating Agreement gets written around, so they come before the drafting.
File and draft
We prepare and file the Articles of Organization with your state. The Operating Agreement is drafted alongside it, because an entity without one runs on the state's default rules.
Contribute, then gift
Assets are contributed to the entity, and membership interests begin moving to the next generation on whatever schedule the plan calls for. Books and annual returns are kept from year one.
Formed once, maintained for a generation. The books are what keep it real.
The rest of Form a business.
Every one of these is built the same way: a national explainer above its state pages. They are the filings that sit closest to this one.
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The questions families ask before they file.
What is a family LLC?
An LLC whose members are members of one family, used to hold family assets in a single entity: real estate, interests in a family business, marketable securities. Parents typically form it, contribute the assets, and transfer membership interests to their children over time. In the state's eyes it is an ordinary LLC. What makes it a family LLC is who owns it and what the Operating Agreement says.
Where should the family LLC be formed?
The state pages are organized around that question because it is a genuine choice here. Where the family lives, where the assets sit, and whether the state runs an estate or inheritance tax of its own all bear on it. Forming in one state while holding property in another has consequences for filings in both. It is worth settling before the Articles go in.
How does it actually move wealth?
By moving interests instead of assets. Once the property is inside the entity, parents can gift membership interests gradually rather than transferring real estate or securities each time. The annual gift exclusion is what makes the gradual version work. Nothing changes on a deed, the entity keeps holding what it holds, and the ownership percentages shift across years.
How is a family LLC taxed?
By default it is a pass-through, so the entity itself does not pay federal income tax and the members report their shares. With more than one member it files a partnership return and issues a K-1 to each member. State treatment sits on top of that and varies. The estate and gift side is a separate question from the income tax side, and it is where the planning happens.
Do we need an Operating Agreement if it is all family?
Especially if it is all family. The agreement is where control is defined: who manages, how decisions get made, how an interest may be transferred, and what happens when a member dies or wants out. Without it the state's default rules apply, and those were not written with your family in mind. It is the document doing the real work here.
Does a family LLC protect assets from creditors?
It adds a layer, and it is not a vault. An interest in an LLC is not the same thing as the asset behind it, and states differ in what a member's personal creditor can do about one. That variation is real enough to belong on the state page rather than here. Asset protection is usually a secondary reason for a family LLC rather than the first one.
Keep going, in order.
Form a business
Every hub in form a business, in one place.
Open the index → IndexAll 51 state guides
Every filing a business does, organised by jurisdiction.
Open the index → ServiceCompliance calendar
Every deadline that touches your entity, watched.
Track deadlines → ServiceTalk to a specialist
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