Estate Planning for Qualified Opportunity Zone Fund Investments

Description

If properly structured, investors in Qualified Opportunity Zone Funds (“QOZ Funds”) have tremendous planning opportunities for their interests. But significant nuances are presented, as the ordinary rules that apply to gifts of interests in partnerships, LLCs and other entities do not apply to transfers of interests in QOZ Funds unless the transfer is to a grantor trust. In addition, because the deferred gain amount that is invested in a QOZ Fund constitutes “income in respect of a decedent” upon the investor’s death, there is no step-up in basis upon death for QOZ Fund interests, which means that ordinary estate planning techniques need to be modified to take into account the need to fund a deferred tax liability that will become due following the investor’s death by no later than December 31, 2026.

This program will address the rules that trusts and estates counsel, and other estate planning and financial advisors, need to know in implementing a plan that involves investments in QOZ Funds. Special attention will be paid to the practical application of these rules, including state specific decoupling considerations, and what estate and financial planners need to know about these specialized rules. The panel will also address how investments in QOZ Funds may fit within the panoply of estate planning techniques that are commonly employed to facilitate the transfer of wealth, such as GRATs and installment sales to grantor trusts, and carried interest planning considerations where representing the fund manager that is sponsoring the QOZ Fund.

Listen as our experienced panel discusses estate planning challenges for qualified opportunity zone fund investments. The panel will discuss planning techniques that take advantage of wealth transfer opportunities while avoiding unintended adverse tax consequences.