Mission Impossible: How To Give Away Something That Seems Impossible To Give Away

Often people own things that seem impossible for them to contemplate giving away for a constellation of reasons--even to immediate family members--let alone to their highly valued charitable organizations.

What things?

Deeds to farms, ranches, vineyards, mineral rights, oil and gas interests, royalty contracts, patents, copyrights, promissory notes, lease agreements, artwork, collections, etc.

Solution?

The owners of these “mission impossible” assets can create a family limited liability company (LLC), or partnership and transfer these assets into it, in exchange for 100% of the ownership of the LLC (or partnership). A very small percentage of the LLC ownership can have all of the voting powers, so the owner can keep whatever control is needed or wanted, in the form of voting shares. The owner owns the rest of the LLC with non-voting shares.

What's next?

The owners can now give away non-voting shares to family members and charitable organizations (including family donor advised funds and family foundations), or to family trusts and charitable trusts.

What is accomplished?

The owners are able to give something away that's "impossible" to give away. So, if the above mentioned assets produce significant income, the owners can shift away unneeded and taxable income and share this with others without giving up the ability to control the asset itself and also decide who gets what income and when, from the LLC.

Down the road, the owner can decide when and if the LLC assets should be held indefinitely or sold. The owner can also eventually decide to give away the LLC voting shares to someone else or to a voting trust that would hold the shares to be controlled by that successor trustee.

 

By: Dan Rice, Co-founder of CTAC and Philanthropy Architect for Convoy of Hope

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