IRS Targets Popular Estate Planning Technique (Are You Surprised?)

It was obviously just a question of time:

Tirs2he regulations address the practice of discounting the value of ownership stakes in closely held businesses or land. The discounts are permitted because some stakes are worth less since they are harder to sell or represent a minority interest. The reduced values allow wealthy families to pack assets inside the $10.9 million lifetime exclusion from estate and gift taxes for married couples.

A typical strategy would place, say, $14 million worth of assets—stock, a business, real estate or even cash—into a company with restrictions on some of the owners’ ability to sell their pieces, said David Scott Sloan, a partner at Holland & Knight LLP in Boston who advises high-net-worth families. Those restrictions could allow the owners to get an appraisal saying that the actual value of those assets was about $10 million.

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