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
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Estate Planning
- event Date
Thursday, February 15, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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.
Ms. Sapers focuses her practice on sophisticated estate and tax planning for high-net worth individuals, preparation of wills and trusts and the administration of large trusts and estates. Her area of specialty is working with hedge fund managers and principals of private equity firms on estate planning transfers of interests in their investment funds, including their carried interests. She has substantial experience handling IRS gift and estate tax audits and negotiating and resolving trust and estate disputes. She also counsels donors on charitable giving and advises private foundations and public charities on tax law, nonprofit corporation law and other matters.
Ms. Dungey's practice focuses on transfer tax planning, estate planning and trust structuring for wealthy individuals and their families. She works with individuals and their advisors to develop and implement sophisticated planning strategies designed to minimize gift, estate and generation-skipping transfer taxes with trust planning optimized to achieve the individual's tax and non-tax goals, including creditor protection, charitable giving and income tax efficiency. She regularly advises on planning with complex assets including interests in hedge funds, private equity funds and family businesses. She also advises on estate and trust administration matters, including adapting existing trusts to improve their tax efficiency and utility.
Mr. Khetan is a Managing Director in the Valuation Advisory group. He has extensive global experience in corporate finance, valuations and strategic planning. He has advised clients ranging from Fortune 500 companies to medium and small privately held companies, private equity and investment funds, family offices, and accounting, legal and tax advisors. He has over two decades of financial advisory experience covering many industries, resulting in a comprehensive understanding of valuation concepts, capital markets, financial and economic analyses.
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.
- Overview of private equity and hedge fund structure and estate planning issues
- Discussion of IRC Chapter 14 and potential gift tax implications
- The unintended impact of carried interest on founders' estate planning
- 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?
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