Estate Planning for Transfers of Hedge Fund and Private Equity Interests

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


Conducted on Tuesday, May 4, 2021

Recorded event now available

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Program Materials

This CLE webinar will provide estate planning counsel who advise owners of private equity and hedge fund interests guidance on the estate planning opportunities and challenges in the transfer of such interests. The panel will discuss the impact of final carried interest regulations, establishing the structure, and common techniques such as GRATs and installment sales, as well as discuss multidisciplinary strategies specialists are implementing for high net worth clients.

Description

Hedge fund managers and private equity interest holders have tremendous planning opportunities for their interests if properly structured. Estate planners must identify potential income, estate, and gift tax issues for holders of these interests and implement effective techniques to minimize or avoid unintended tax consequences.

Most private equity or hedge funds use 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. 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.

Trusts and estates counsel must implement planning techniques to assist owners of hedge funds or private equity firms geared toward facilitating the transfer of wealth, including common techniques such as GRATs, installment sales, intra-family loans, the use of vertical slice safe harbor rules, and other available options.

Listen as our experienced panel discusses estate planning challenges for hedge fund and private equity interest holders. The panel will discuss planning techniques that take advantage of wealth transfer opportunities while avoiding unintended adverse tax consequences.

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Outline

  1. Income, estate, and gift tax issues
  2. Use of GRATs, CLATs, and defective grantor trusts
  3. Planning with carried interests
  4. IRC Section 2701 and vertical slice planning
  5. Valuation issues

Benefits

The panel will review these and other key issues:

  • What are the income, estate, and gift tax ramifications of hedge fund transfers and private equity interests?
  • What are the available planning techniques for fund managers and limited partners?
  • How can GRATs, CLATs, and defective grantor trusts be utilized to minimize taxes, and what are the challenges?
  • What are the key planning considerations for carried interest, and what is the impact of recently finalized regulations?
  • What are the issues stemming from Section 2701 and the use of "vertical slice" transfers?
  • What are the valuation issues and their impact on overall planning?

Faculty

Berselli, Brent
Brent Berselli

Partner
Holland & Knight

Mr. Berselli is a partner in Holland & Knight's Portland office and is a member of the firm's Private...  |  Read More

Bloostein, Marc
Marc J. Bloostein

Partner
Ropes & Gray

Mr. Bloostein has been practicing in the private client group since 1989, and has been a partner of the firm since...  |  Read More

Jacobson, David
David C. Jacobson

Counsel
Meltzer Lippe Goldstein & Breitstone

Mr. Jacobson's practice encompasses all aspects of estate planning and has considerable expertise in minimizing the...  |  Read More

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