What Can Fred Trump’s Estate Teach Us?

The recent New York Times investigative report on President Donald Trump’s father, Fred, and the methods that the family used to transfer wealth between generations has left many people with questions. The estate and gift tax regime is a labyrinth of ever-shifting rules and laws, with goals of clients changing to keep up with the new regulations. To make matters worse for those that are trying to make sense of it all, the Internal Revenue Service is underfunded and understaffed, so some mistakes or discrepancies may not be caught in time.

Certain aspects of Fred Trump’s estate, such as the shell company he allegedly set up with his kids or blatant under reporting on income and gift tax returns that facially do not past muster. But the main reasons many of the experts quoted did not outright say that Fred Trump broke the law was because many of the technique’s appear legal or are too difficult to determine.

The article appears to “out” grantor retained annuity trusts (GRATs) as “one of the tax code’s great gifts to the ultra-wealthy,” but at the time of their use by the President’s father they were absolutely legal. The valuations seemed iffy, however. But truth is that there is no exact science to appraising the value of assets. There is no single set of rules that governs what criteria an appraiser must apply in any given circumstances, so different appraisers can apply different techniques to the same asset and end up with wildly different results.

See David H. Lenok, What Can Fred Trump’s Estate Teach Us?, Wealth Management, October 3, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.