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Estate Planning Update on Valuation Discounts

July 14, 2015

A potential update to valuation discount guidance involving intra-family transfers was shared with us by the Blum Firm, P.C., and we wanted to make you aware.

 
Cathy Hughes with the Treasury’s Office of Tax Policy recently announced at an American Bar Association Tax Section meeting that estate planning techniques allowing gifting or selling assets to next generations and between family members to receive discounts are being reconsidered and will soon be finalized.
 
Dates and restrictions are still undecided, but we have been advised by the Blum Firm that “transfers made prior to the issuance of the new regulations (including any you have done already) will be grandfathered.”
 
Time is truly of the essence to make these transfers to maximize benefits in the most tax-favorable way, especially if you own substantial assets that would be subject to the 40% estate tax at death. The Blum Firm also notes that while assets may have been transferred to a family limited partnership, if the assets remain in the transferor’s name, the valuation discount is not locked and the assets are not truly considered to be transferred out of the estate until the partnership gifts or makes a sale to the next generation.
 
If you have any questions or would like discuss potential changes in your estate planning, please contact LGT at askus@lgt-cpa.com or your legal counsel.

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