How to Prepare for Family Wealth Transitions

Mar 26, 2024

You’re successful. You’re mid-career or maybe even late-career and starting to think about retirement. You likely have children and want your children and their children to benefit from your smart investment decisions long into the future.

You have lots of places to put your capital:

  • stocks
  • NNN
  • multi-family residential
  • office buildings
  • bonds
  • mutual funds
  • CDs
  • PE
  • VC

For longevity of your assets and estate planning that actually works, you need to slowly build your wealth in stable, proven investment strategies. Gone are the days where you should be investing in high-risk, high-volatility investments that have high highs and super low lows. Slow, steady investments that build wealth slowly over time are the best long-term strategy for you and your family.

Stable, proven, low-risk investing with proven YOY returns? That means: NNN lease investing.

NNN lease investing builds family wealth.

When deciding on a long-term investment strategy that benefits both you and future generations, NNN leases are the best fit.

As you contemplate your investment strategy, make sure you’re clear on:

Benefits of NNN Lease Investing for Family Wealth Transitions

Generational Wealth Transfer

When a person passes away, their designated heirs inherit property, such as stocks, real estate, or other investments. These heirs receive a “step-up” in the basis of the property to its fair market value at the time of the previous owner’s death. This means that, for tax purposes, the cost basis of the property is reset to its current market value at the time of inheritance.

This stepped-up basis is significant because it reduces the potential capital gains taxes that the heirs would have to pay when they sell the inherited property. Capital gains tax is typically calculated based on the difference between the selling price of the asset and its original purchase price (or basis). With a stepped-up basis, the original purchase price is effectively adjusted to the fair market value at the time of inheritance, potentially reducing or even eliminating capital gains taxes for the heirs.

NNN lease investments can be structured to facilitate seamless wealth transfer across generations. By holding properties within a trust or other estate planning vehicles, families can pass down income-producing assets to heirs while minimizing tax liabilities and ensuring continued financial security for future generations.

Tax Advantages

NNN lease investments offer various tax benefits, including depreciation deductions, interest expense deductions, and the potential for tax-deferred exchanges. These tax advantages can enhance overall investment returns and reduce the tax burden on family wealth.

Stable Passive Income

NNN leases typically offer long-term agreements, often spanning 10 to 20 years or more, providing investors with a predictable and stable income stream. This steady cash flow can serve as a reliable source of income to support family needs and aspirations over time.

Preservation of Capital

Unlike other forms of real estate investment, such as residential properties or multi-tenant residential properties and multi-tenant commercial spaces, NNN lease investments offer minimal landlord responsibilities. Tenants handle property maintenance, repairs, and operational expenses, reducing the risk of unexpected costs that could erode wealth. This allows families to preserve their capital for future generations.

Inflation Hedge

NNN lease agreements often include built-in rent escalations tied to inflation or other economic indicators. As a result, investors benefit from potential increases in rental income over the lease term, helping to protect against the erosion of purchasing power caused by inflation.

Diversification and Risk Mitigation

Investing in NNN properties allows families to diversify their investment portfolios beyond traditional asset classes like stocks and bonds. Commercial real estate has historically exhibited low correlation with other asset classes, providing a hedge against market volatility and economic downturns.

NNN lease investing sets you and generations to come up for financial security.

In an increasingly uncertain economic landscape, preserving and growing family wealth, and preparing for family wealth transitions as you think about retirement and end of life planning, requires a strategic approach that prioritizes stability, sustainability, and long-term growth.

NNN lease investing offers a compelling solution for families seeking to prepare for wealth transitions across generations. NNN lease properties:

  • Provide stable passive income
  • Preserve capital
  • Offer inflation protection
  • Facilitate asset diversification
  • Enable seamless wealth transfer
  • Deliver tax advantages

NNN lease investments stand out as the ultimate long-term strategy for securing family wealth and ensuring a prosperous future for generations to come.

Westwood Net Lease Advisors is on your side. We’re buyer’s advisors. We will assist you in establishing your NNN lease investing strategy today and be your advocates on the buyer’s side journey from start to finish.

Our team works closely with you so that you can grow your wealth for generations to come.

Please note that this article is not legal tax advice. It is purely informational about the different tax options. Consult your CPA or go to the IRS’s website for more.

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