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Treasury Prompts Planning Opportunity

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Edge Capital Research Team

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Treasury Prompts Planning Opportunity

Summary

The past month has brought about a number of concerns from those in the estate planning world after the Treasury Department released new proposed regulations for Section 2704 of the Internal Revenue Code.  These regulations seek to limit discounts commonly applied to transfers of family controlled, entity interests (including corporations, limited partnerships and LLCs).  The use of such discounts has given tremendous leverage to the value of assets transferred for estate planning purposes.

For example, a transfer of a family limited partnership interest from a parent to a child may have received a 40% combined discount (including the lack of marketability discount and the lack of control discount).  Gifting such interests could have theoretically increased the lifetime exemption amount for a married couple from $10,900,000 to over $18,000,000!  Said differently, an estate could pass along nearly 8 years of organic growth today (assuming a 7% annual rate of return) without using the lifetime exclusion amount for transfer purposes all because of the power of the discounts applied.

For those of you who are interested, we will outline the proposed regulations and possible implications in more in the link below.  For those of you who have had enough tax talk for one day but feel that you may be impacted by the new regulations, please do not hesitate to contact members of your client team who can help arrange a discussion among your trusted tax advisors.

THE OPINIONS EXPRESSED HEREIN ARE THOSE OF EDGE CAPITAL PARTNERS (“EDGE”) AND THE REPORT IS NOT MEANT AS LEGAL, TAX OR FINANCIAL ADVICE. THE PROJECTIONS OR OTHER INFORMATION GENERATED BY THIS REPORT REGARDING THE LIKELIHOOD OF VARIOUS INVESTMENT OUTCOMES ARE HYPOTHETICAL IN NATURE, DO NOT REFLECT ACTUAL INVESTMENT RESULTS AND ARE NOT GUARANTEES OF FUTURE RESULTS. YOU SHOULD CONSULT YOUR OWN PROFESSIONAL ADVISORS AS TO THE LEGAL, TAX, OR OTHER MATTERS RELEVANT TO THE SUITABILITY OF POTENTIAL INVESTMENTS. THE EXTERNAL DATA PRESENTED IN THIS REPORT HAVE BEEN OBTAINED FROM INDEPENDENT SOURCES (AS NOTED) AND ARE BELIEVED TO BE ACCURATE, BUT NO INDEPENDENT VERIFICATION HAS BEEN MADE AND ACCURACY IS NOT GUARANTEED.

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