Tax Planning, Structuring and Compliance for High Net Worth Individuals in Chicago and Bloomfield Hills

We were engaged in restructuring an estate tax return and a valuation for the estate. The estate was valued in the eight-figure mark and had to be broken down into guaranteed annual return to grantor and transfer of assets to descendants at only 7% of the gross value, a 90+% discount. After our engagement, our findings resulted in estate tax savings in the tens of millions of dollars.

The details? A complex estate, organized with numerous multi-family real estate assets and liquid assets held for new acquisitions, was designed into a three-tier flow-through of income and distributions. The first tier was analyzed like a standard family limited partnership (FLP) or Tier One. The Tier One limited partnership interests were transferred to a newly formed LLC (Tier Two), which gave total control to a Class A Member Group, and the Class B Members (99%) had no voting rights or any form of control of any cash flow passed through from Tier One. The Tier Two 99% Class B interests were passed up to a Preferred Equity LLC (Tier Three), where the interests in the LLC were recapitalized into Class A Members (Preferred Equity) and Class B Members (Junior Equity). The Class A Members receive a fair market annual rate of return (preferred return) on the fixed value amount attributed to the Class A Members. The Class A Member value was established at about one-half the fair market value of the 99% interests contributed with an annual return to the Class Members in low seven figures. The Junior Equity was sold to a descendants’ trust at 7% of gross value.