Mitchell (Mitch) A. Meneau Partner

The 2017 Tax Cuts and Jobs Act, coupled with the recent taxpayer victory in Lender Management, LLC v. Commissioner, has made family office planning a major focus of 2018.  This article provides a general overview of family offices and their use in planning for the deductibility of investment management expenses before offering some considerations regarding the proper organizational structure for family office entities and family investment funds.

The Tax Cuts and Job Act of 2017 (the Act), was signed into law on Dec. 22, 2017, bringing a myriad of changes to the Internal Revenue Code and sparking a substantial amount of commentary and analysis. While much attention has been centered on the consequences of the Act for individual and business taxpayers, relatively little focus has been given to the impact of the Act on trust and estates.

The Tax Cuts and Jobs Act of 2017 and the recent taxpayer victory in the U.S. Tax Court’s Lender Management, LLC decision have created important planning opportunities for both our closely held and family-controlled entities in 2018.

With the passage of the Tax Cuts and Jobs Act of 2017, attorneys in Perkins Coie’s Trust & Estate Planning practice, along with our clients running closely held businesses, have already begun reviewing and implementing tax-efficient strategies. 

With the Great Recession still fresh in the nation's collective memory and its wealth still seemingly in flux, and as the lifetime gift tax exemption shot up from $1 million to $5 million in 2011 and continued to rise (despite the threat of a return to $1 million after 2012), many individuals who were in a position to take advantage of the increase were hesitant to part with a significant amount, fearful that they could give away assets they may later need.