This is a very loaded topic so let’s break it down:
Limited Liability Company (LLC) – a business entity that is created to provide limited liability to its owners. Is often used as a low level form of asset protection.
Joint Tenancy With Right Of Survivorship (JTWROS) – a way that at least two people own property. Each person has equal right to the asset. All tenants have survivorship rights in the event that another tenant dies. Because the transfer of assets to the surviving tenants happens automatically, this avoids probate.
Community Property With Right Of Survivorship (CPWROS) – a way that a married couple can own property jointly. CPWROS has the same probate avoidance as JTWROS but also has some additional tax advantages for cost basis.
Tenancy In Common (TIC) – a way for two or more people to own property. In this ownership method the parties do not need to have equal rights to the asset. There are no survivorship rights if a tenant dies. Their interest will go through their estate plan and will most likely go through probate, unless their interest was owned by a trust.
Recently the Arizona Legislature enacted a new law, A.R.S. § 29-732.01, that allows LLCs to be owned JTWROS or CPWROS. This does great things for estate planning. Because LLCs can now be owned either jointly or by the community with right of survivorship, this allows for the deceased’s LLC interest to pass to the other LLC owners without probate.
If you are thinking about establishing a LLC it is important to speak with a knowledgeable attorney who can ensure the LLC is created in the best manner to establish your goals. If you already have a LLC, contact your trusted attorney for assistance in converting the ownership to JTWROS or CPWROS.