CASE STUDY
Carol and her sister Pat were about to inherit family wealth from their surviving parent in the late 1990’s. Pat, a real estate professional at the time, had been a client of the firm for several years. Given the anticipated large estate tax obligation that would have been due at their parent’s passage, Pat and Carol engaged our firm to evaluate and recommend strategies to help minimize the potential liability.
After several planning meetings where we reviewed, analyzed and compared alternative estate tax minimization strategies, the family decided to form a Family Limited Partnership (FLP) and invest in real property assets. Once the real estate assets were acquired, the parent established a systematic gifting plan of its majority interest in the partnership. Over a number of years the family was able to reduce the parent’s interest in the partnership to an acceptable level for the eventual payment of a discounted estate tax when their parent passed.
Immediately after the parent’s passage, the beneficiary sisters incorporated their own gifting program to enable the efficient and cost effective transfer of the wealth to their eventual heirs. During all this time the real property assets that were invested in were continuously repositioned to optimize distributable tax sheltered income and growth in value.
Most recently the family succession planning was advanced to incorporate asset separation techniques to facilitate appropriate distributions to the next generations. In addition ownership structures were updated to allow for a harmonious separation of ownership entities.
Throughout the last 20 years the family continued to encourage next generation involvement in major evaluations and decision making thus enabling key players to take over when and if needed.
