Restricting Assets Loophole

Donors, or family estate executors, can transfer assets and gifts to other family members without tax liability. Estates with a value of $5.45 million for a single person or $10.9 million for married couples are taxed. Some wealthier estates are artificially reducing values of assets to reduce tax liabilities.

Placing restrictions on assets is done to justify discounting values when gifts/shares/donations are transferred. This reduces the tax liability but does not reduce the value of the entire estate.

Minority Shareholder Discount

Financial advisors for large estates can help their clients by assisting that they divide shares or sell shares of the company to ensure that they own a minority number of shares. This would reduce a stakeholder’s power in voting and lower their level of control in the business. This discount can no longer be taken. This is one loophole that has completely closed for wealthy family estates.

Closing Thoughts

It is important that your family business estate account for every dollar appropriately. It is also vital to claim the proper values of assets and belongings. An annual appraisal of assets and possessions should be completed and available for the IRS to view when questions do arise.

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