Got Lemons? Make a Lemonade Stand with a Twist
The economic conditions accompanying the COVID-19 pandemic have created many avenues of change. Out of the decreasing valuation of closely held businesses, investment portfolios and real estate, comes an opportunity that only exists once in a generation. To that end, we introduce you to the Preferred Partnership Freeze (PPF).
The assets you expect to appreciate in the long run can be frozen at today’s lower valuations while shifting the future appreciation into a dynastic trust for future generations spanning 365 years. For depreciable property, like rental real estate, the PPF combines the best of the estate tax deferral of the “freeze.” It provides for a favorable income tax-free “step up” in basis for capital gains elimination and increased depreciation and amortization at your death. It is rare that a strategy will allow both.
The overriding essence of the PPF captures natural discounts associated with the current low interest rates combined with declining asset values created by the pandemic.
The bottom line is this once-in-a-generation planning opportunity will not likely be available once we recover from this current crisis – so now is the time for an action plan.