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Estate Planning and Carried Interest: Estate Tax Reduction Strategies for Private Equity and Hedge Fund Sponsors

Strategies for Wealth Transfer and Asset Protection to Avoid Adverse Tax Consequences

Note: CPE credit is not offered on this program

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, February 15, 2024

Recorded event now available

or call 1-800-926-7926

This CLE course for estate planning counsel who advise private equity and hedge fund founders will discuss the estate planning opportunities presented by carried interest. The panel will outline how planners can help structure founders' transfers of carried interest to family members, dive into the particulars of Chapter 14 of the Internal Revenue Code, explore the unintended impact on founders' estate planning, and discuss multidisciplinary strategies specialists are implementing for these high net worth clients.


Virtually every private equity or hedge fund uses carried interest--a share in the fund's profits more than a minimum return--as part of its economic structure. Because carried interest can appreciate substantially if a fund is successful, it is an ideal asset to plan for use in various estate planning techniques.

Careful planning is required to take advantage of the opportunities that carried interest offers for transferring wealth. IRC Chapter 14 governs the valuation of certain lifetime transfers to family members.

Under the typical private equity or hedge fund structure, a founder's transfer of carried interest to one or more family members may trigger gift tax consequences under Chapter 14 as well as under traditional gift tax principles. Strategic estate planning can help fund sponsors take advantage of specific transfer techniques to achieve tax savings.

Listen as our experienced panel discusses the estate planning opportunities presented by carried interest. The panel will discuss how a professional team of advisers can work together to provide private equity and hedge fund managers with bespoke carried interest planning techniques that take advantage of wealth transfer opportunities while avoiding unintended adverse tax consequences.



  1. Overview of private equity and hedge fund structure and estate planning issues
  2. Discussion of IRC Chapter 14 and potential gift tax implications
  3. The unintended impact of carried interest on founders' estate planning
  4. Strategies for avoiding unintended tax consequences


The panel will review these and other relevant issues:

  • How can proper planning help avoid triggering adverse tax consequences under IRC Section 2701?
  • Which estate planning techniques are most effective for transferring carried interest?
  • How can a fund founder structure an investment to take advantage of the vertical slice exception?
  • What are the principal "non-vertical" planning ideas to consider?
  • What is the impact on estate planning of the final regulations under IRC Section 1061 that were released in January 2021 concerning the income taxation of carried interests in private investment funds?


Dungey, Marissa
Marissa Dungey

Dungey Dougherty

Ms. Dungey's practice focuses on transfer tax planning, estate planning and trust structuring for wealthy...  |  Read More

Khetan, Shishir
Shishir R. Khetan, CFA

Managing Director
Stout Risius Ross

Mr. Khetan is a Managing Director in the Valuation Advisory group. He has extensive global experience in corporate...  |  Read More

Matz, Kevin
Kevin Matz, Esq., CPA, LL.M. (Taxation)

ArentFox Schiff

Mr. Matz concentrates on domestic and international estate and tax planning, estate administration and related...  |  Read More

Sapers, Cristine
Cristine M. Sapers

Co-Chair, Trusts & Estates
Loeb & Loeb

Ms. Sapers focuses her practice on sophisticated estate and tax planning for high-net worth individuals,...  |  Read More

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