Step 1:

Create an FLLC.
-Register Articles of Incorporation with the state.
-Draft an operating agreement.

Step 2:

Transfer Assets to the FLLC (valued at $3,000,000).

Step 3:

Initially, the client receives a 100% interest in the LLC.
– The client serves as the LLC’s manager.

Step 4:

Client gives a 10% interest in the LLC to his children.
-After appraising the 10% interest in the LLC, a valuation discount may be applied, if appropriate, to determine the value of the gift. For example, if 10% of the LLC’s assets are worth $300,000 (10% of the total value of $3,000,000), and a 30% discount is applied, then the value of the gift for gift tax purposes is only $210,000.