Defined-value gifts: A formula for estate planning success?

E. Hans Lundsten, Joseph Marion, and David Riedel suggest the use of value added gifts as a method to avoid gift taxes for families planning on making large lifetime gifts in a recent article. The article begins as follows:

Affluent families who wish to make large lifetime gifts should consider using defined-value clauses or other formula clauses to minimize or eliminate gift taxes. These clauses are especially effective when transferring assets that are difficult to value, such as closely held business interests or real estate.

By defining the gift according to the amount of value you wish to transfer — rather than a percentage interest or specified number of ownership units — you can protect yourself and your family in the event the IRS or state tax authorities challenge your valuation.

Read the full article here.

Posted by Logan Davis, Associate Editor, Wealth Strategies Journal.


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