Generational Succession Planning for Tax Efficiency

To minimize estate tax, every high net worth family needs to make the best possible financial decisions about generational succession planning. Cendrowski Corporate Advisors consultants help ensure that the decisions you make are smart and tax-efficient in both the long and short-term.

Cendrowski Corporate Advisors’ tax planning specialists have structured estate plans that can reduce the fair market values of assets and interests and have saved past clients up to $20 million in estate taxes.

How Does Generational Succession Planning Work?

When transferring assets from one generation to the next, there is a $25 million lifetime exclusion, limited to $11 million per spouse. Creating a family LLC as a generational succession plan allows assets to be transferred to the next generation based on a valuation, while retaining control and restricting transferability. This restriction can create a discount against that valuation for tax purposes.

Client Success: Minimizing Estate Tax Risk

Cendrowski Corporate Advisors engaged with an estate for generational succession planning after the death of a spouse. The assets were organized into a marital trust, a non-exempt trust, and a preferred equity LLC. The majority of the marital trust assets were contributed to the LLC, along with the portfolio assets of the surviving spouse. Upon the creation of the LLC, the non-preferred equity contribution received a 42% discount in value on the stocks and bonds, which ended up saving our client a substantial amount in gift taxes. Upon the second spouse’s death and after a step-up in basis as of the date of death, the overall value of the non-preferred LLC interests was discounted an additional 67%, saving another substantial amount in estate taxes. These results went through a taxable estate audit with no changes or questions.