The ultimate shrewdness is found not in the balance sheet, but in the qualitative excellence of the business.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 3
I have a question that I’d appreciate your input or thoughts.
What, realistically, is the chance/risk Berkshire holdings could result in a large, forced capital gain for us—years down the line post-Warren?
In doing estate planning, I’m looking at possibility of gifting low basis Berkshire shares to my son to remove from my estate—part of overall strategy to reduce my estate taxes. This would be a limited number of shares..my son has no intention or (hope) presumed need to sell before he then left shares to our granddaughters with basis step-up
I understand the real life family risks here—but the one risk I can’t quantify is THIS. I’m ok with a distribution from a subsidiary holding here and there, even a large one (which I fully anticipate btw at some point in the next 50 years).
This only works as a generation skip….because my son otherwise would inherit shares with step-up and they are very low cost basis. But inheritance tax is 16% here at the margin—so moving this stock plus its appreciation over maybe 20 years would reduce estate tax by a few hundred K
Has anyone else looked at this essentially generation skip strategy? Or are you, unlike me, not stupid enough to live in Massachusetts and have no need :)
No. of Recommendations: 1
"Has anyone else looked at this essentially generation skip strategy? Or are you, unlike me, not stupid enough to live in Massachusetts and have no need :)"
two comments:
1) I think the step up basis as an ongoing standing tax preference will go away within the next 10-20 years. Medium probability.
2) Boston & Massachusetts are great. Perhaps establish a 6 month residence in a more tax / estate friendly state. I did.
No. of Recommendations: 1
Appreciate the advice. I looked at going to a tax free state 183 days or more but the frictional costs of doing so are massive and to me not worth it imo. Plus I don’t want the relocation headaches.
Step-up going away only ENHANCES my strategy as it makes it a slam dunk avoiding estate tax with little downside.
Plus a huge unforeseen risk with the relo strategy— and I’ve seen this play out twice with people I know: Husband dies —wife wants to go back home near family and friends with fat estate tax. Strategy killed.
No. of Recommendations: 5
"Step-up going away only ENHANCES my strategy as it makes it a slam dunk avoiding estate tax with little downside."
I can't avoid the estate tax given my situation. But I am ok with it since everything over the limit just goes to my 3 designated charities.
Relative to the step up, I have begun gifting my kids and grandkids early.
