Tax question - Parking lot?

Question

The following topic is my question. If anyone can give me some ideas, I will very very very appreciate you. ^^

Paul dies owning a parking lot in downtown Honolulu. The fair market value of the land upon which the parking lot is located is $3,000,000. The current use value of the parking lot is $1,000,000. Paul left the parking lot to his spouse and his children. What would recommend for estate tax and gift tax planning? What are the approximate tax savings?

Thank you so much!! ^^

Answer 1

There is not much left to do (trusts and things are too late).

Sell the parking lot, divide up the spoils, and bite the bullet on the amount over the estate tax amount on the kids.

Answer 2

If the lot can be sold or assessed at 3 million, then that will be the amount on which estate tax will be assessed, not whether the parking lot is worth 1 million as a parking lot. To avoid estate tax, I would list the wife as a co-owner, so when Paul dies, there is no transfer and therefore no estate tax. If this makes you feel uncomforable a portion of the ownership can be slowly gifted to the spouse every year below gift tax levels (which I want to say is 35,000/year) However, it would take about 90 years to gift it in increments, so I would probably just make either the wife or the kids a co-owner.

Answer 3

Well, Freya, if Paul already died, the first step in estate planning would be to build a time machine so he could make his arrangements pre-mortem.  Was this a trick question?  

Answer 4

i say sell the property so that you will be better off and don't have to worry about it.