Client, age 81 and widowed, is the founder of a chain of retail stores which bore his name. He has five children, two of whom are active in the family business and two of whom are not, and one deceased child. He has 11 grandchildren. He wished to pass along the value of the family business to his children in a way that rewarded the two in the business for their continued efforts, but to also treat his other children fairly, including the children of his deceased child. His estate was valued at approximately $15MM with an estate tax exposure of over $6.5MM.
Recommendations included a sale at fair market value of the family business to the children in exchange for a private annuity; creation of a family limited partnership to manage and control the rest of the client’s property, a sale of those limited partnership units to a defective grantor trust in exchange for a private annuity, a testamentary charitable lead annuity trust and a family foundation. The client’s estate tax exposure is $0.