Strategic Wealth Transfer: Maximizing Business and Real Estate Value for Generational Success ![Sacramento Lawyer Tax Estate Planning Goralka Roseville]()
By, John M. Goralka
Sacramento, CA
Clients own a Distribution and Manufacturing Business operating as an S Corporation. That business is worth $2.7 million. Clients also own a commercial building which is worth approximately $2.7 million in which the business operates. Clients seek to retire and transition business and the building to their son. He has been working in the business for may years.
The Business:
The S Corporation stock was transferred to their son by means of a Qualified Subchapter S Trust (“QSST”) that included upstream basis provisions. When either client dies, son will receive a basis step-up to the fair market value at the date of death in the shares of the S Corporation. Another basis step-up is received when the surviving Client dies. This means that the business could be sold then for no capital gain tax.
The Building:
The building will be transferred to the son utilizing a structure that prevents the reassessment of property tax at transfer or upon the Client’s death. The property tax will not be reassessed for the son’s entire life. This provides a significantly higher return on investment from the building. The building will be held in an LLC which is held by the upstream basis trust described above. Client will receive a basis step-up upon the death of each of the Clients. This means that the building could be sold after those deaths with little if any reassessment. If the building is not sold, then the son’s basis will be increased to the fair market value at the date of death. This provides for higher depreciation deduction which also increases the return on investment from the building.
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Sacramento Estate Planning, Tax Planning and Business Attorney.
I’m John Goralka, a Sacramento Estate Planning, Tax Planning and Business Attorney at the Goralka Law Firm, P.C. If you have an estate, tax or business situation needing legal help, contact our team for experienced and friendly advice. You can contact us at 916-440-8036. Alternatively, you can use our convenient online contact form here on our website. We listen, and you can have your questions answered, your case evaluated, and explore your options for getting the legal help you need.
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