Don’t Overlook Your Home in Your Tax Strategy

For years, countless business owners reduced estate taxes for their heirs through well-knownestate-freeze strategies. By making lifetime gifts in trust to his children, a business ownereffectively removed from his estate any future appreciation in his business interest, while continuingto enjoy control and income from the business. Other valuable assets, such as a home, also figured inthe overall tax planning needed to preserve the family's most important asset — the family business.

Recent Federal Tax Code changes attached conditions to most estate-freezing techniques, making thesestrategies much less attractive. But a few freezing techniques survived and still produce substantialtax savings. One often overlooked technique is the “residential GRIT” (Grantor Retained InterestTrust), which enables an owner to gift his home and freeze its value for tax purposes while retainingthe right to live in it for a specified number of years.

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