Wealth Counsel™ recently published an interesting blog about a portion of President Donald Trump’s estate plan.
As president, father, and real estate magnate, President Trump’s planning should give you some food for thought–and that’s true even in these early days of the administration. So, consider one idea that relates to President Trump as father and real estate magnate.
Let’s begin by talking about the Trump Organization’s unique estate-planning strategy in a lease document of Trump International Hotel in Washington, D.C.
Trump gave three of his children immediate interests in the hotel. His children hold a 7.425 percent interest each in the property, but they make zero equity contributions. Therefore, the law considers their stakes “gifts.”
Trump has to pay gift taxes on the hotel, but he’s likely saving a fortune on bigger taxes in the future. If the hotel sees success, its value will appreciate, and his children’s stakes will become more valuable over time. So, it’s cheaper to pay the tax now, than pay based on that increased value down the road.
Perhaps this estate planning technique would be great for entrepreneurial clients who want their children to be active in the business.
And you can create an LLC to offer personal liability and asset protection, so you can gift parts of your business to children over time, while still controlling the general interest.
Yes, the Trump Administration and the GOP have been campaigning for changes to taxation, including estate law tax. However, as of today, there are no new estate tax laws in effect. Therefore, if you are putting off your estate planning, waiting for changes in the law, the Trump Administration’s initial forays into a new health care legislation are a good reminder: Massive changes of laws are complex, difficult and take time. And in practice, the reality of those can be much more modest than those originally proposed.
Therefore, you shouldn’t assume that estate taxes are going to vanish overnight. You should still protect your assets with trusts and other tools that are already viable under the law.
Remember, good estate planning and trusts should be regularly reviewed–not just when laws change, but when you acquire or dispose of assets when your heirs get married or divorced and so forth. There’s no reason to wait: Estate planning is a process.