When Patagonia founder Yvon Chouinard announced this fall that he was selling the company and transferring part of the ownership to a purpose trust, the immediate reaction was that he was doing so for purely altruistic purposes. Chouinard chose this estate planning vehicle to fulfill a specific purpose, of course—fighting climate change and advocating for workers’ well-being.
But he also structured the deal in such a way that while he will have to pay $17.5 million in gift taxes for the shares he transferred to the trust, he is not on the hook for $700 million in federal capital gains from the sale (based on Patagonia being worth $3 billion). And by not transferring the company—and his large fortune—to his heirs, he avoids the 40% U.S. estate and gift tax.
WealthManagement.com covered this story in great detail over the course of the year. What follows are a few of our top stories on the topic, as well as some more resources for advisors when discussing trusts and taxes with clients.
Click through the slideshow to review our coverage of this story.