Are you old enough to remember when the idea of claiming a valuation discount for gifts or sales of limited partnership interests was new and controversial? If you are younger (like 40-something) it may be hard to imagine but back in the day, gifts of limited partnership interests discounted in value based on lack of control, limited marketability, etc. was considered to be an aggressive and risky strategy.
Then, raising the bar even further, in 1995 Michael Mulligan wrote an article for Trust & Estates magazine in which he described a strategy of selling discounted LP interests to an irrevocable estate planning trust in exchange for an installment note. This had the potential to be superior to a GRAT. Revolutionary (or so it seemed)! That idea was unproven and cautious planners saw many risks. Vigorous discussion ensued in the professional advisor community about whether the IRS would accept such an arrangement. Most advisors took a wait and see approach. Today, this idea has become mainstream among advanced estate planners. This is just one of many examples I could have used.
In retrospect, it is easy to see that many opportunities for clients were missed because advisors, CPA's, attorney's, and professionals were not informed, therefore not confident and therefore not willing to recommend strategies, although they may have "looked good on paper." Most of these kinds of ideas were generally safe but not guaranteed. The potential benefits to clients were significant and the downside risks were small when compared to the benefits.
There is a predictable pattern of innovation. What is this pattern? What lessons can we learn from the past that can help us explain creative strategies to clients today? How do we evaluate the risks of new strategies for clients and for our practices? Finally, how can we share these concepts with clients, so they have confidence to take action?
Do not let a lack of understanding cause clients selling appreciated assets miss out on significant benefits!
Contact Adam Ausloos firstname.lastname@example.org 414.269.2600 to learn things that will build your practice and lead clients to better outcomes.