Many sophisticated tax planners have helped wealthy clients avoid estate taxes by using something called “valuation discounts”. An asset that cannot be sold is worth less than another asset that can easily be sold. This is a common concept used in business to value various types of property. This is especially true in the area of corporations, partnerships and other business entities.
A good estate planner could take a valuable and easily valued asset like land, stock in a corporation sold on a stock exchange or even cash and put it into a limited partnership that had no market on which the interest in the partnership could be easily valued or sold. Further the person with the valuable property could receive a minority interest in the new partnership and the loss of control would create additional valuation discounts on the value of the partnership. This is true even though the assets within the partnership remain easily valued and easily sold.
New tax regulations are being prepared that will create a category of “disregarded restrictions” for family owned entities. This will result in the property being valued for tax purposes as if the container with the value discounts did not exist. This is going to be a highly partisan and heavily lobbied issue.