Preserve Wealth

Estate planning • Probate • Estate Administration • Business Planning

Case Study: Wealth Preservation

The Situation:
Our client was the owner of multiple properties, including her personal residence and two vacation properties as well as multiple interests in various partnerships. The net value of her estate was estimated to be approximately $5,000,000. Due to her poor health, we were asked what we could do to help our client minimize the amount of estate taxes that would be due at her death in order to avoid a liquidation of her assets in order to generate the funds that would be necessary to pay the tax.

She had transferred approximately forty percent (40%) of her estate to her children, free of estate taxes. Independent appraisals further reduced the value of the remaining assets in her estate by approximately forty percent (40%), thereby resulting in an estate tax savings of approximately $900,000.

What We Did:
Not knowing how long our client would live, we immediately proceeded to establish a family business to hold her various business interests. We also assisted her in making annual exclusion gifts to her children of interests in her personal residence as well as one of her vacation properties. Once the family business was in place, we assisted our client in converting one of her vacation properties to a rental property. This property was subsequently sold to the family business in exchange for a promissory note payable to our client. While our client’s health did not improve, she was able to gift interests in the family business to her children in various amounts up until she passed away. When our client passed away, she had transferred approximately forty percent (40%) of her estate to her children, free of estate taxes. Independent appraisals further reduced the value of the remaining assets in her estate by approximately forty percent (40%), thereby resulting in an estate tax savings of approximately $900,000. In addition, the nature of the family business permitted the estate taxes to be paid in installments, thereby avoiding the forced liquidation of any of the estate’s assets.

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