Bryan and Kelly worked hard over their career to build a portfolio of 15 residential real estate properties, including six multi-family housing units. The couple’s properties significantly appreciated in value over the life of their investment. When Bryan and Kelly wanted to generate liquidity to support their adult children, they knew they would need to unwind a portion of their real estate assets, but they were unsure how to accomplish this in a tax-efficient way.

Bryan and Kelly turned to their tax and financial advisors at Leelyn Smith to guide them through this important moment on their financial journey.

Designing and executing a tax-efficient strategy

Bryan and Kelly believed in the future upside of their real estate properties. But the couple realized that if they were to pass away, their children would have an immediate need for cash and may not be able to cover expenses while they waited to liquidate the rental properties. The couple needed help identifying which properties to sell — and when — to generate the cash they sought to support their children while also limiting the tax consequences of the sale.

Leelyn Smith determined the level of liquid assets Bryan and Kelly needed to meet their children’s immediate needs. Using a detailed property-by-property analysis of the couple’s real estate portfolio, we identified one asset that was particularly well-suited for a sale given its more limited tax liability. Leelyn Smith guided the couple through the strategic timing and structuring of the sale, which included the prudent use of trusts for estate planning purposes.

The value of cross-functional financial, tax, and investment expertise

Leelyn Smith’s approach allowed Bryan and Kelly to achieve their financial and tax goals without materially affecting their targeted portfolio exposure. Most importantly for the couple, they were able to maintain the vast majority of their real estate assets and continue benefitting from the potential growth of these assets. Throughout the process, Leelyn Smith also developed a strong relationship with the couple’s adult children to lay a foundation of support for their financial futures. 

We believe that Leelyn Smith is ideally positioned for guiding clients through these types of challenges because of our holistic, integrated approach to planning. We incorporate financial, tax, and investment expertise to deliver the best possible outcomes for our clients.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.