Intended as an
alternative to outright gifts of property, another option in reducing the
taxable estate is through the use of a lease-back strategy.
In this arrangement, the client gifts property to his or her designated
heirs and then enters into a lease arrangement making rental payments directly
to those heirs. This strategy is optimal
for those clients with highly taxable estates and retain possession of their
investment portfolio. Additionally, the property subject to the arrangement must be
unencumbered and the clients must have the cash flow and requisite reserves to make
the rental payments.
See Ann Marsh, When to Purposely 'Lose' Your Home to Reduce Estate Taxes, Financial Planning, Aug. 9, 2012.
Wills, Trusts & Estates Prof Blog
(November 14, 2012).
Posted by Anne E. Brown, Esq., Associate Editor, Wealth Strategies Journal