Commercial Real Estate Appraiser: $2MM Unnecessary Estate Gift Tax

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Local Expert Opinion Survey Interview with an Experienced Commercial Real Estate Appraiser:

Huge $2MM Unnecessary Estate Gift Tax Liability for Beneficiaries of Willed Properties. Major Additional Tax Consequence could have Easily been Avoided if Early and Proper Planning for Family Trust was Made in Advance and Advice Followed.

Tax Shelter Benefit: Regarding Commercial Real Estate Appraisal, I asked a State of California licensed Advisor, designated with both an MAI - Member of the Appraisal Institute and also an ASA - American Society of Real Estate Appraisers to share his extensive market insight on how to Appropriately Plan in order to Benefit from the current $5.43MM Estate Tax Shelter exclusion from income taxes that the federal government is still allowing for owners of properties in 2015.

Background / Qualifications: A Real Property Appraiser Consultant with 35+ years' practice, he also specializes in Business / Goodwill Valuation, Discounts of Corporate Partnerships and Fractional Interests. Providing Planning for Estate, Trust and Probate: Succession Gifting / Inheritance, Transfer of Shares, Death, Divorce and Partner Buy Out / Separation, Bankruptcy / Reorginization. All Real Estate Types: Retail, Industrial, Office, Medical, Multi-Family Apartments, Vacant Land and 1 (SFR's - Single Family Residences) to 4 Unit Income Producing Residential Property Types. Throughout 6 Counties of Southern California: Los Angeles, Ventura, Orange, Riverside, San Bernardino and San Diego.

Question to Real Estate Appraiser: What have you seen as fairly common / costly mistakes with clients when a well thought out game plan is given, advising the right way to set up Tax Shelters for current and future family members or business partners of Estates and Trusts?

Answer from Real Estate Appraiser Based upon Actual Case Study: Unfortunately, clients do not always follow highly recommended / necessary steps to protect their assets strategically, to immediately take care of business at the time it is needed to plan for mid and long term success and security. In order to save money in the short term, bad decisions are made to skip crucial items and documents are not filed on time when critically needed.

In particular, a father was getting much older in years, prior to passing away in order to correctly set up and minimize future tax burdens for his soon to be heirs (sons and daughters) requested the siblings contribute and help out with fees: First perform updated Real Estate Appraisals of the properties owned in the portfolio and secondly, a recommended split between the LLC (Limited Liability Company) and TIC (Tenant in Common) entity interests with portions transferred between the heirs. After all, beneficiaries eventually would be receiving the benefits of the real estate via the will that they would one day own and would also obtain associated stepped up new property values as a basis for future taxes owed at the time of death.

End result, father died and children earlier had decided not to pitch in when told to. Major consequence is that all of a sudden, shock sets in that $2MM in new taxes have to be paid and immediately owed which could have been easily avoided early on. Important to get the right team members specialists in place: Attorney, CPA / Financial Advisor to properly protect many years of hard work.