BORELLI CASE

PERSONAL INFORMATION AND BACKGROUND

Louie and Kathleen Borelli have been married for over $50$ years and live on a ranch outside of Reno, Nevada. They have enjoyed a comfortable retirement for $20$ years, living off the wealth created through Louie$$s company, Borelli Casinos.

Sadly, last month, Louie was diagnosed with a terminal illness and is only expected to live another $12$ to $18$ months. Louie and Kathleen feel a sense of urgency around planning for the distribution of their estate to ensure that they minimize estate taxes and maximize the value of what will be left to their heirs.

Louie and Kathleen have two children, Jerry and Sal, who have continued their father$$s legacy by working in the family business. Jerry serves as the CEO of the publicly traded organization, while Sal is a floor manager at the property in Las Vegas. Jerry currently lives with his girlfriend Irene in the penthouse suite at the casino in Reno. He does not have any children. Sal and his wife reside in Las Vegas and have a $22-$year old daughter named Emily.

Last year, Louie confessed to Kathleen that about $20$ years ago, he had an affair with another woman that resulted in the birth of a daughter named Ava. Ava works as a cocktail waitress in one of the company$$s casinos, and Louie has been secretly sending money to help with her financial situation.

Name Relationship Age Occupation Health Comments

Louie Husband $78$ Retired Terminally Ill

Kathleen Wife $75$ Retired Excellent

Jerry Son $50$ CEO, Borellis Casinos Excellent

Sal Son $47$ Casino Floor Manager Excellent Married, one child

Emily Granddaughter $($Sal$\text{'}$s Child$)22$ Just graduated from college Excellent Getting married this summer

Ava Non$-$marital child $($Louie$\text{'}$s child with another woman$)20$ Cocktail waitress Excellent Relies on Louie for support

GOALS AND OBJECTIVES

$1.$ Louie and Kathleen want to ensure the efficient transfer of their estate to their heirs.

$2.$ Louie wants to make sure that Ava is not disinherited at his death.

$3.$ Louie and Kathleen would like to give $$20,000$ in cash to Emily to help fund her wedding.

$4.$ Louie and Kathleen would like to give their shares in XYZ Company to their neighbor whose child was recently killed in a car accident.

$5.$ Louie and Kathleen would like to continue to support the nonprofit research organization that is looking for a cure for Louie$$s disease, while maximizing their income tax deduction. They have set aside $$175,000$ in a savings account for this purpose.Which type of tax will be due and payable at the time of the gift to Emily for her wedding?

Generation$-$skipping transfer tax only

Gift tax only

No tax will be due.

Both gift and generation$-$skipping transfer tax