- On June 16, 2016
Have you been thinking about making significant gifts to your children or other family members? Are you thinking about gifting interests in real estate, a family-controlled business, investments or other assets to your loved ones? Do you desire the opportunity for a 20-49% discount on the value of such transfers? If so, time may be running out to benefit from a 20-49% estate, gift and generation-skipping tax savings opportunity. Although there are no guarantees of success, if immediate action is taken before the issuance of the signaled IRS Treasury Regulations discussed below, there may still be time to plan and attain significant savings. The time to act is now.
In May 2016, without disclosing content or exact timing, the IRS once again signaled the issuance of new Treasury Regulations to significantly reduce, or possibly eliminate, the use of valuation discount planning as early as any day now.
How have taxpayers successfully attained 20-49% valuation discounts? Among many strategies, one method is for taxpayers to place business interests, investments, real estate and other value into Family Limited Liability Companies (FLLCs) containing properly designed voting and transfer restrictions over the FLLC interests. Then, on a valuation discounted basis, such taxpayers transfer significant portions of such FLLC interests into estate and transfer tax-free trusts benefiting family members. Again, valuation discounts typically range somewhere between 20-49% for the FLLC interests transferred which usually results in significant transfer tax savings. Similar valuation discount planning is also available for S corporations, C corporations, farms and other outright real estate holdings and limited partnerships.
Although valuation discount planning is an ancillary reason for establishing an estate plan, taxpayers should consider planning ahead for any new Treasury Regulations.
For more information, please call one of our 22 attorneys at (847) 382-9130.