Wednesday, November 14, 2012
Many wealthy clients are nervous to give away liquid assets to reduce the size of their estates. Another way to reduce estate taxes is to use a lease-back strategy to give a home to the next generation. The end result is that clients gift the property to heirs and then make lease payments directly to the heirs.
This strategy can work for clients who have a highly taxable estate and a desire to hold onto their investment portfolio. The residence in question has to be fully paid off and the clients must have the cash flow and reserve to make the rental payments.
See Ann Marsh, When to Purposely 'Lose' Your Home to Reduce Estate Taxes, Financial Planning, Aug. 9, 2012.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.