Eleanor and Samuel, an elderly couple, come to you for some tax planning advice. They have $8,000,000
Fantastic news! We've Found the answer you've been seeking!
Question:
For estate tax planning reasons that I do not want you to worry about or consider in this assignment, they want to set up a trust or company that will manage their $8,000,000. They want the ownership of the assets to be divided among all of their descendants. Essentially, they will put all of the money into an entity and the ownership of the entity will be owned in essentially equal shares by all 42 of their beneficiaries.
Eleanor and Samuel tell you that they are considering a few different possible strategies:
1) Setting up a trust to hold their money with all of their descendants as trust beneficiaries who will be entitled to the income generated by their shares of the trust and will be entitled to withdraw their shares in certain emergency cases.
2) Setting up a limited partnership or LLC to hold the money and gifting shares of the entity to all of their descendants.
3) Setting up a corporation to hold the money and gifting shares of the entity to all of their descendants. You ask them whether they mean a c-corp or an s-corp but they look at you blankly. They don't have any idea what the difference is.
Since Eleanor and Samuel have already hired another firm to work out transfer tax issues, they only want from you an analysis of the income tax ramifications of these possible plans.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: