Until recently, families acquiring long-lived appreciating business or real estate interests had to choose from several highly imperfect estate planning strategies. The U.S. Treasury’s Tax Cuts and Jobs Act changed that with the finalization of opportunity zone (OZ) regulations. Now, families can combine investments in qualified opportunity funds (QOF) with irrevocable grantor trusts (IGT) to pass down assets while saving money on taxes.
IGTs legally remove assets from the donor’s estate, allowing families to pass assets through generations with protection from unforeseen lawsuits, estate taxes, medical expenses and other perils. At the same time, IGTs leave families vulnerable to elevated capital gain tax liability. Qualified investments in OZs can eliminate the capital gain liabilities until 2047.