Real Estate Consulting

Ray

Growing a property portfolio with more smarts.

Ray came to our firm for tax and estate planning assistance centered around an existing portfolio or real estate. His goal was to make sure he did not miss any planning opportunities.

What 3-5 questions did we ask Ray to better understand what was needed?

When I first met with Ray, I asked him a handful of questions to make sure we had a good idea of what he was looking to accomplish. We explored:

• What is your biggest fear when it comes to taxes?
• How aggressive are you willing to be with your planning while staying within the rules?
• Where do you stand when it comes to estate planning for your family?
• Are you holding your assets in the right structures to maximize tax savings?
• What are your five, ten and twenty year goals we should start planning for now?

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What solutions did we propose?

Once Ray and I had a chance to dive into the questions above, we came up with a robust plan to set Ray on the right track. Ray wanted to make sure he was exploring every tax planning opportunity but not giving himself any unnecessary scrutiny with complex tax structures. We decided to do the following:

• Set up all his properties in LLC’s and ones owned with his wife, show them as 2 two member LLC’s as opposed to just one member.
• Implement cost segregation studies on his larger properties to capture up front depreciation and shield a gain he has next year from the sale of a property.
• Implement the new repair regulations allowing him to more quickly expense certain items.
• Implement a management company to maximize operating expenses and create a pension plan for him and his employees
• Begin work with an estate planning attorney to understand how to pass real estate wealth tax free to the next generation through the use of exchanges, gifting, discounting, and various trust structures (i.e., Grantor Trusts) to see how his family wealth can grow at various points over the next thirty years.

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What does our ongoing relationship with Ray look like in the present day?

Ray and I first met six years ago. Since then, he has been able to double his real estate holdings through tax deferral techniques and section 1031 like kind exchanges. Ray is working with one of our trusted estate planning partners and started to move assets into various structures to begin passing on wealth and cash flow to the next generation. More importantly, Ray is managing the size of his own estate to be flexible with the ever-changing estate tax laws. Ray and I chat at least one a month and enjoy exploring new planning opportunities as new laws are passed and Ray’s situation evolves warranting a review of his current plan to make sure it is still optimized for Ray’s particular circumstances.