Page 88 - Ultimate Guide to Estate Planning

ownership to the junior generation so that
they can become accustomed to the operation.
The majority/controlling ownership is

normally within the value of the exempt
estate, meaning the value of the estate is
below 5.45 million, and is passed after the
senior generation passes. When a mixture of
gifts and inheritance are in play, the junior
generation inherits a mixed basis. They

receive step-up in basis for the interest
acquired following the passing of the senior
generation but they inherit the senior
generation’s basis relative to the percentage of

ownership they have received before their
passing.

The same circumstances exist when passing
to an irrevocable trust. The irrevocable trust,
however, has more asset protection than the

interest in a limited liability company because
the financial interests of the trust cannot be
attacked by creditors either. With a limited
liability company, creditors can play catcher

to income received by the junior generation
debtor. With an irrevocable trust, the junior
generation continues to enjoy the financial
benefits in accordance with the provisions of
the trust and creditors cannot latch on.

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