Estate Planning tax question

[Kash Johnson]

I'm not sure if this is the right spot to ask this question, so please let me know if it's incorrect. My father-in-law has been dabbling in real estate since he purchased his first parcel of land at 16. He's a small town Georgia investor who now has 150+ residential and commercial properties, all income producing and mortgage free. He's closing in on 80 and in the last few years, everything financially has finally worked in his favor, while sadly, his health has begun to deteriorate steadily. 

He's reached a stage where estate planning has begun to be at the forefront of his thoughts, but being a "shade tree" investor for 60+ years, he's always handled everything on his own, one purchase at a time. Researching here is a challenge as well. He's not 100% computer illiterate, but he has a flip phone, doesn't text and has to have someone open a website for him as he doesn't even use web browsers enough to understand them. That is not to say he's lacks intelligence, he just came from a different generation and doesn't see the need to learn a computer as paper works well for him.

Currently, every single property is individually in his name and not under an LLC or corporate structure. He wants his family to continue owning everything and not sell it off as he realizes that his investments have finally begun to pay off handsomely. But, my wife is not sure what the challenges will be with the estate and taxes once he passes.

I know this is a very broad question, but does anyone foresee challenges with the current ownership structure that can be alleviated prior to the estate passing down? Or, will transferring properties into an LLC or corporate structure prior to his passing, result in a taxable event that will be unavoidable regardless of the actions taken beforehand.

He, his wife and my wife(his daughter) are meeting with a tax attorney this week to look into suggestions moving forward, but as I lurk around here absorbing knowledge, I thought a question to this group would be a good path to start.

Thanks for your help!

[Jenny Zhang]

Quote from @Kash Johnson:

@John Malone

Is there a path to transfer/re-classify multiple properties from a single owner to that of the single owner plus his heirs that doesn't result in immediate tax implications? He's trying to keep the business entity running, under himself and the heirs, but not have the estate eaten up by inheritance taxes or having to probate 150+ properties.

Any suggestions on what terms and concepts to search for here on Bigger Pockets so I can research this in a more detailed manner?

 Hi Kash, 

I am an experienced tax accountant for many years. BiggerPockets forums are very helpful on basic things.  Be very honest with you and respectful to this platform, this is not a place you will get the sound advise you will need/deserve.   

Depends on the size of your in-law's net worth, the structure could be complex including estate planning, usage of  certain types of trust, and various and/or combination of business entity structures to achieve the result your family desires. This will have the following basic considerations (but not limited to) : 

1. The goal your father-in-law is trying to achieve with the legacy he will, one day, left behind. 

2. family dynamic - who gets what, when, how, and how much 

3. Who will be the executor, who will be the beneficiary, who will in charge of his affairs when his clear mind escapes. 

4. assets protections, liability protections, and right making business decisions vs. right to profit only. 

5. also how to handle the possible changes in tax laws, what strategies will suit your family the best 

This is a long process first to have your father-in-law to sort out his wishes and priorities on his wishes. Then he will be given a few options to weigh in... 

Good luck with sort this all out.  But it is definitely a good task to have on hand instead of has nothing to plan for.  

Have a good holiday.

Jenny