You’ve successfully reached your golden years, and you’re ready to kick back and enjoy everything you’ve worked so hard to build. The real estate portfolio you’ve amassed is successfully fueling your retirement dreams—not without effort—and your hard work has paid off in stable returns. You made smart investing choices—and you finally get to savor the kind of life you’ve been working the last few decades to achieve. However, what about your children?
We don’t mean this in a negative light: we know you provide well for your family with what you’ve built your portfolio to be. What we’re getting at are your plans for the future beyond this point. If you’re like most investors, you’ve slowly acquired your properties over time—but only in one area. This lack of diversity in your portfolio makes it hard to walk away from clustered, self-managed properties. The entire point of your portfolio was to design it so that it should work for you—not the reverse.
It’s possible that the beneficiaries you plan to list in your will likely aren’t living near your properties now: the modern American family is highly mobile! Plus, trying to divide physical assets has always been trickier (and more work) in the long run for your devisees. This issue becomes even more complicated when you try to incorporate gifts for charities of your choice when all of your assets happen to be tied up in property.
Even if you rely on excellent property management to oversee your portfolio to continued profitability, that won’t address your real issue. At The Peak Group, we realized there had to be a better way to continue enjoying the kind of passive income real estate investing provides with more flexibility for the kind of lifestyle many investors want to pass on as an inheritance. That’s when we realized we needed to bring REIT investing to you!
Your Struggle as an Investor and Benefactor
Ultimately, physical assets are creating an estate planning issue that you probably didn’t realize would come to a head when you began accumulating properties all those years ago. Thankfully, all your hard work is not lost! Even if your children or your favorite charity may not be able to work with your gift in the form of tangible properties, you don’t have to throw your hard-fought wealth away to brutal capital gains taxation.
We know that for investors with a sizeable, appreciated portfolio, you’ll potentially face as much as 20-30% in losses if you decide to liquidate your properties en masse. This is partly due to changes in the tax code made by the Trump administration a few years ago, and partly because Oklahoma exacts an additional capital gains draw. While you could wait for your beneficiaries to manage your properties on a stepped-up basis after your death, that still leaves them with the complication of managing sales. That gets even more difficult for your favorite charity.
This spells double trouble for investors, and it’s one of the reasons why, at The Peak Group, we advocate for portfolio conversion—not a sale. There’s no reason to lose so much of what you worked your whole life to obtain to taxes simply because you were successful! However, when we discuss converting your property to defer taxation, we’re not referring to simply trading one property for another as you’d experience with a 1031 exchange. That approach doesn’t actually meet the needs of the problem you’re trying to solve. You need an alternative to a 1031 exchange: you need the benefits of private REIT investing.
Working With a Private UPREIT Benefits Your Estate Planning
Choosing the right UPREIT allows you to truly convert the assets you have in your portfolio into high-yield, professionally-managed operating units that continue to support your current lifestyle while streamlining your estate-planning efforts.
Private UPREITs offer the kind of returns that one can only dream about with a self-managed portfolio; it’s a new kind of partnership that can enhance and accelerate the kind of benefits you currently enjoy from your properties. It also makes gift-giving simple when you decide to bequeath your assets to a beloved charity or family member in the form of tax-deferred operating units.
Capital gains tax, in many cases, often exceeds any amount you might be expected to pay in estate tax after estate and gift tax limits were raised for 2020. This makes preparing for the fallout your beneficiaries might be expected to manage in the form of excessive capital gains tax one of the most important elements for you to consider. When deciding how to parse your properties in the future, it’s also one of the most significant reasons why choosing to transform your portfolio into robust, tax-deferred operating units is smart for investors! If your devisees need to convert the operating units into cash later on, they’ll be able to parse these transactions, sparing them the tax blow of property sales en masse.
Let The Peak Group Lead the Way
Not every form of REIT investing can fuel your lifestyle and fit into your estate planning strategies the way you need them to. This is what makes having the right guide crucial when deciding how to proceed with portfolio conversion. You need a fellow expert investor with a detailed track record of success who is just as invested in the outcome. You need The Peak Group to show you a better way to enjoy your retirement and prepare for the future!
As dedicated investors ourselves, we are in a unique position to show you the benefits of converting—not selling—your real estate portfolio. Learn more about why you should leave the “landlord life” behind and join us on the path to financial freedom with our free guide, Let Freedom Ring!