Page 86 - Ultimate Guide to Estate Planning Third Edition_Neat

establish this entity prior to the senior
generation’s passing and provide token
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

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