Often estate planning includes the transfer of assets through an ownership interest. The entity may own investments in real estate, private equity, marketable securities, or even intellectual property, such as patents or royalty rights/agreements. When property is structured and operated for a valid business purpose, and based on the specific facts and circumstances, these ownership interests may be subject to some significant discounts.
If you are an estate planner or you are considering doing some estate planning take note:
According to recent statements out of Washington, we will likely soon see proposed new regulations regarding IRC Section 2704 that might establish additional restrictions on valuation discounts that may impact the value of transferred interests in these entities, including limited partnerships and LLCs. These new regs may very well reduce or eliminate a popular estate planning strategy for many individuals.
Treasury officials back in May said that the proposed regs would be the first in a series of gift, estate, and trust projects to be released over the “next four to eight weeks,” according to Tax Notes Today (a subscription is required). It has not yet been disclosed whether the effective date of the new rules will be retroactive to date of release or when finalized, whether or not valuation discounts will be completely eliminated, and what specific entities will be affected.
Advent Valuation Advisors has three decades of experience in valuing these interests, providing valuations with supportable discounts. We stand ready to help you and/or your clients with this potentially ending estate planning opportunity. Call us today at 845-567-0900.