How to pass along appreciated stock out of Estate.

Asked about 2 years ago - Park City, UT

I have had the fortune of holding Berkshire Hathaway for the last 50 years. What started as a small investment has turned into a small fortune, around $11 Million. My wife and I have already used up our $10M exemption so aren't sure what to do with this set of shares. What is the best way to pass on the $11M in BRK? Would it be best to sell, pay taxes, then pass along cash that is then taxed? This all makes my head spin. I have heard about certain Charity trusts but I would like to pass along as much as possible to my family, BIG family.
Thank you for your help!

Attorney answers (4)

  1. James Preston Alder


    Contributor Level 10


    Lawyers agree

    Answered . There are a few options would could discuss with you, including the option of charitable remainder trust planning. This option works quite well with highly appreciated assets, like the stock you describe. It would be important to assess your entire situation to adequately advise you on the best approach to take. We're located just off the I-80 freeway, so we're especially accessible for you where you're located in the Park City area. Please feel free to check out our profile and give us a call.

  2. Randall J Holmgren

    Contributor Level 9


    Lawyers agree

    Answered . FIRST, have you used the indexed $10M exemption which is now $5.12M? If not, there's an additional $240,000 you and your wife can gift in 2012.
    SECOND, you can continue to make annual gift-tax exclusion gifts of $13,000 per donor per donee. If you have numerous children/grandchildren, that could help the situation you've described. You say it is a BIG family. Let's say you have 30 potential donees (perhaps siblings, children and their spouses), you could gift $780,000 per year using the annual gift-tax exclusion and the "real" value could be even more if you utilize valuation discounting (see THIRD below).
    THIRD, have you utilized valuation-discounting when you have made gifts? By discounting the value of what you gift, you can actually gift more. For marketable securities such as BRK, valuation discounting is best accomplished via a Family Limited Liability Company (FLLC).
    FOURTH, have you utilized "freezing" techniques to freeze the value of the BRK so its future appreciation doesn't cause your estate to grow even larger. (Nothing wrong with appreciation, but you want to try try to avoid having it occur in your estate).
    FIFTH, the CRT strategy could benefit our family as well as some worthy charitable causes -- don't think that it doesn't benefit your family because it does. The techniques are too complex to discuss on the internet.
    SUMMARY: These are some of the "mainstream" estate-tax management tools. The interplay with income tax (capital gains tax) would require more of a face-to-face discussion.
    I hope this was helpful to you. Randy Holmgren

  3. Steven J. Fromm

    Contributor Level 20


    Lawyers agree

    Answered . Well it sound like you have done some planning as you have used up each of your unified credits. A couple of points worth mentioning. First selling this stock now does not make sense as you have a low basis. Beneficiaries who receive it at your death would take a step up in basis as of the date of your death. This would eliminate all capital gains.
    If you want these assets to go to your family then a charitable trust may not work for you.
    This is because whether you use a charitable remainder or charitable lead trust, the charity will take a significant share ultimately.
    You really need to get with an experienced estate planning attorney to explore all of your estate planning options spme of which may become evident and applicable once a full analysis is performed by the estates attorney. Doing it this way will stop your head from spinning and it will be done right.

    For more on estate planning and other issues, see Estate Planning Mistakes: 5 Not So Easy Pieces at Please hit the like button at the end of the article if you found it helpful.

    Hope this helps.

    Please remember to designate a best answer to your question.

    Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336, his email address is , for more tax, estate and business articles visit his website and blog

    LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia... more
  4. Charles Patrick Kincannon

    Contributor Level 3


    Lawyers agree

    Answered . I would concur with my colleagues. You need to review the planning you have completed, discuss your goals, charitable intent, etc. There are no canned solutions to this issue.

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