Each summer, my grandparents would take their three young children on vacation to Miller’s Idlewild Inn in Hideaway Park, Colorado. I have a picture of my mother as a young girl posing with her family in front of the Inn in the late 1940s. In 1966, the growing family met at the Inn for a Thanksgiving ski trip. They had such a blast that they decided it was time to build their own ski cabin in the area. My grandfather then purchased a lot across the road from the Inn.
Family Office Blueprint
Your home is more than just a collection of floors, walls and ceilings. It shelters your family. It’s where you’ve nurtured your children. It’s also where many of your greatest memories have been made. Your home has significant sentimental value… in addition to its monetary worth. But you should never let that sentimentality get in the way of prudent family office planning. Because if you die owning your home, the IRS will stick your heirs with a 40% tax bill. Your $2 million home will cost your kids $800,000. But it doesn’t have to.
History is full of families who have amassed fortunes… but it also shows us that few have managed to keep them. What’s the secret to success? Mayer Amschel Rothschild knew. His dynasty continues today after 200 years. And although many factors contributed to his success, the single most important thing he did was foster his children’s independence. He set each of his five sons up in their own business.In 1798, old man Rothschild sent his son Nathan to London to further the family’s interests in textile importing with £20,000 (about $1.9 million today) in capital.
If I told you that the Waltons pioneered a method to pass millions of dollars to their kids without paying any gift taxes, you’d be forgiven for thinking that John-Boy was one of the richest ex-farmhands in America. But I’m talking about that other famous Walton family: the Waltons of Wal-Mart fame. The TV Walton family was best known for always being upbeat during the Great Depression. The Wal-Mart Waltons are best known for building one of the largest family fortunes in history out of the ashes of the Great Depression.
What better way could there be to save on your tax liability than to give money to your family? In this chapter, I’ll show you how you can give up to $166 million in businesses and investments to your dynasty trusts without paying a dime to the IRS. This allows you to “freeze” the value of your businesses or investments so that all future appreciation escapes taxation. Even better, it’s relatively straightforward. If you’ve been taking the steps outlined in previous chapters, you’re already over halfway there. In setting up your family office, your goal should be to put as much family money as possible into your dynasty trusts.
How would you like to save $1,119,984 – or more – on your estate tax bill? Congress has given you an often-overlooked “loophole” to do this: the annual gift-tax exclusion. It’s really very simple. And hugely beneficial. Because this “loophole” allows you to gift $14,000 every year to each of your kids – tax-free. Even better, you don’t need a team of high-powered attorneys to implement this simple plan. This may seem like a relatively small amount. After all, how can $14,000 a year solve a multimillion-dollar estate tax problem? But in just 10 years, it can save your family up to $1,119,984.