In the area of estate planning, you can use a number of tools to help protect your assets and property. Some people put their assets into the ownership of a limited-liability company, or LLC, while others use an irrevocable trust. While these can provide similar benefits, one may be better than the other for your situation.
An LLC is a type of business entity that you can set up for the purpose of holding property. While it is designed to be a kind of business structure, it can also be used in estate planning. Individuals can set up an LLC and then gift property to it. At that point, the LLC will technically be the owner of the property and the individual will no longer hold it.
An irrevocable trust is a type of estate planning arrangement that cannot be altered by the grantor once it is established. When the grantor sets up the irrevocable trust, he transfers ownership of some property over to it. At that point, he no longer is the owner of the property and it becomes the property of the irrevocable trust. The grantor gets to name a trustee to watch over the property and a beneficiary can receive the assets at some point in the future.
One of the differences between the irrevocable trust and the LLC is the setup process. When you want to setup an LLC, you simply pay a fee and fill out a form with the state. After that, your LLC is up and running. When you set up an irrevocable trust, you typically have to hire a lawyer. This could result in hefty legal fees. You may also need to commit a large amount of time to this process.
One of the differences between the LLC and the irrevocable trust for estate planning is the amount of control that you have over the assets. Once you setup an irrevocable trust, you have to name a trustee to be in charge of the assets. To keep the trust irrevocable, you must name someone other than yourself. This causes you to lose control over the assets. While you can still make yourself a beneficiary, you have little control over what happens to the property at that point. With an LLC, you can still manage the assets that the entity owns.