Tax consequences to transfer ownership of single member llc to wife upon death


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I have a single member LLC in New Jersey. Upon my death, will my wife be taxed (and how much) if I assign my ownership interest to her as per an operating agreement?

LLC Tax USA

asked Nov 22 '13 at 12:28
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Infi
1 point
  • Spouses are exempt from estate tax in the USA (and all states). – Ekoostik Martin 6 years ago

2 Answers


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First - how would you assign ownership to her upon your death? I assume you'd be dead, being that upon your death, and unable to assign anything to anyone.

Second - It doesn't matter whether you assign ownership to your wife in the operating agreement (assuming you're talking about a succession clause to member's interest, talk to a lawyer), or will. In any case, tax treatment would be the same (consult with your lawyer and tax adviser, EA/CPA licensed in your state, to verify - I'm neither).

The fair market value (FMV) of your interest is added to your estate, which is then taxed as a whole. The executor of the estate will then assign the ownership to your wife (if it is in the will - then through probate).

As rightly pointed out in the comments, spouse 's (as recognized by the IRS) portion is exempt from the estate tax even if the estate as a whole is above the limits of the general exemption. Spouse may also re-use some of the unused exemption from your estate (this is new).

The estate tax is currently up to 40%, and with the exclusion amount being $5250000 for 2013 (adjusted yearly for inflation) I'm sure you can afford a professional advice if this is a concern for you.

Make sure to talk to an estate attorney and a tax adviser with experience in estate planning on what are the tax consequences of being dead.

answered Nov 22 '13 at 17:43
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Littleadv
5,090 points
  • Spouses aren't tax exempt? – Jeff O 6 years ago
  • Spouses are, but this is part of the overall estate tax preparation. If you're above the general exemption - you'd still have to have a tax return prepared, with spousal exemption claimed on it. – Littleadv 6 years ago

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There is a way you can transfer ownership to a trust to avoid "inheritance" or estate tax. You should consult a good CPA for professional tax advice. A good CPA is worth his weight in gold.

answered Nov 25 '13 at 21:09
Blank
Corporate Nevada
11 points

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