What if you could save millions of dollars in US Estate Tax by splintering into little pieces (figuratively)?
Well, if you have a Palm Beach art collection or are advising Boca Raton families that have a valuable piece of art, then consider fractional discounts and read this recent Court of Appeals (Tax Court) case.
Backround of Estate Tax Case: Executors Tussle with IRS
- 2014 WL 4548527
- Estate of Elkins v. Commissioner of Internal Revenue
- US Court of Appeals, 5th Circuit, Case 13-60472
- Judge Wiener wrote the opinion which was released on September 15, 2014
- Art collection in the estate
- Executors of the will want to value artwork by taking huge discount off US Estate Tax
- Based on fractional ownership interest (“fractional discounts“)
- 64 pieces of art
- The late collector and his wife each created a Trust (grantor retained income trust) that held title to their one half interests in each of the pieces of art
- He owned 50%
- She owned 50%
Saving Estate Taxes: Good Estate Planning
- What’s the value of a 50% interest in a piece of art?
- Shouldn’t the 50% of the value of the art be reduced even further because
- What’s the fair market value of a % or a fraction of a piece of artwork for estate tax purposes?
- Who really wants to own only a half interest in art?
- Wouldn’t you pay less for a 50% interest in artwork?
- If a painting is worth $5 Million, what’s a 50% interest worth? $2.5 Million? No ! Less…. a fraction of the 50%
- That’s estate planning with fractional discounts
- Can you use fractional discounts for real estate? Mutual funds? Partnership interests? Collectibles? Wine Collections?
- Something for your Florida probate lawyer Palm Beach to consider
- Ask your estate planning lawyer Palm Beach Gardens about this estate tax technique and whether it’s right for you.