Using LLCs in Estate Planning

 Posted on November 21, 2025 in Estate Planning

Many Illinois families think estate planning begins and ends with a will or trust. In reality, certain assets, including real estate, business interests, and investment property, may be protected more effectively through a Limited Liability Company (LLC). An LLC can serve as a powerful estate planning tool that protects assets from creditors, avoids probate, and allows you to control how and when future generations receive ownership.

An LLC can offer flexibility, protection, and control that traditional estate planning documents often lack. When used strategically, an LLC can streamline inheritance, reduce conflict, and safeguard your hard-earned assets. To gain these benefits, the LLC must be properly formed and structured. A knowledgeable Wheaton, IL estate planning lawyer can help you determine whether an LLC fits into your Illinois estate plan and whether there are any potential pitfalls you should avoid.  

How Does an LLC Benefit Illinois Families During Estate Planning?

LLCs (805 ILCS 180/) can offer flexible management, which protects personal assets from the risks associated with property ownership or business operation. An LLC allows for faster asset transfers and greater privacy than probate filings. An LLC can also provide multi-generational control over family property and can make succession planning easier. Families who own real estate or operate small businesses can find that an LLC may be more efficient than placing those assets directly into a trust.  

What Assets Work Best Inside an LLC?

LLCs are most often used when the assets involved include:

• Rental properties – When there are tenants, the risk of liability increases, making LLC separation important.
• Vacation homes – LLCs can prevent heirs from arguing over management.
• Investment accounts – Can be used for family LLCs, but tax implications must be reviewed.
• Farms and agricultural operations – Farms can benefit from the structured generational transfer and liability protection of an LLC.
• Small businesses – LLCs can simplify ownership transfers and prevent operational disruption after an owner passes away.

What Are the Primary Advantages of Using an LLC in an Illinois Estate Plan?

An LLC can help families avoid probate, keep the family business private, and save time and money. An LLC offers a level of liability protection. If a rental house is sued, the owner’s personal assets are generally protected. An LLC offers custom operating agreements that can include rules for access, sales, buyouts, and decision-making, reducing future conflicts. Parents can gift small percentages of the LLC to heirs each year without losing full control, and in some cases, valuation discounts can reduce the impact of estate tax.

Consider Using an LLC and a Trust Together

For Illinois families, the most powerful structure could be having an LLC own the property, and a trust own the LLC membership interest. This setup can avoid probate for both the property and the business interests. A successor trustee can manage the LLC should the owner become incapacitated, and this setup can simplify multi-property estate plans. This approach can also avoid the complication of having multiple deeds sitting in the trust’s name.

When Should an LLC Not Be Used for Estate Planning?

There are some situations where using an LLC should be avoided, and a trust alone can be simpler and more effective. If family dynamics are fragile and there is little to no liability exposure, then a trust on its own could be the better choice. If the property is the primary residence, the LLC should be avoided, and insurance matters can become complicated. Finally, if a minimalistic estate plan is preferred, then a trust on its own should be considered. LLCs are pass-through entities, meaning income is reported on the owner’s tax return, so tax issues should always be considered.  

Contact a Lisle, IL Estate Planning Attorney

If you own rental property, a business, or multiple homes in Illinois, an LLC could be a wise addition to your estate plan. An experienced Wheaton, IL business lawyer from The McCormick Law Firm, LLC can evaluate your assets, explain the benefits, and help you build a customized strategy to protect your family and your assets. You will work directly with Attorney McCormick, who offers discounts for military, veterans, and first responders. Call 630-517-8570 to schedule your free consultation.