Planning for What Comes Next: How the HZ Evergreen Fund Simplifies Estate Planning

Key Takeaways

• Professional management, liquidity features, and consolidated reporting can simplify estate administration for families and heirs.
• HZ Evergreen Fund shares are designed to be more easily transferred and divided among heirs than individual property investments.
• The Fund structure preserves valuable step-up in basis tax advantages for beneficiaries.

Also included in the HZ Evergreen Fund Series: The Liquidity Advantage and The Power of Diversification.

America’s largest wealth transfer is already underway. Baby Boomers own an estimated 58% of all U.S. rental properties, and as they move into retirement, the question of what happens to those holdings is becoming increasingly urgent. For many of these investors, the goal has shifted from accumulation to preservation, simplification, and transfer.

Even with professional management by a sponsor in place, a single-property investment can present structural challenges at the estate level. A highly appreciated asset carries an embedded tax basis that may limit heirs’ options. A single property cannot be easily divided among multiple beneficiaries without a sale or complex legal restructuring. And heirs who inherit a stake in an individual asset inherit a timeline tied to that property’s eventual disposition, regardless of their own financial needs or goals.

These are not management problems. They are structural ones. And they are exactly the kinds of challenges the HZ Evergreen Fund was built to address.

A Structure Designed for Transfer

For investors whose properties have been contributed to the HZ Evergreen Fund, or whose contributions are forthcoming, the Fund’s structure offers meaningful estate planning advantages that a single-asset investment does not.

Fund shares are divisible by design. Heirs can inherit proportional interests without triggering a sale or a capital gains event, and each heir can manage their inherited shares according to their own financial goals and timeline. For heirs who need access to capital, the Fund’s twice-yearly redemption windows provide a defined, orderly path to liquidity that does not require negotiating a buyout among co-owners or waiting for a property disposition.

And because the Fund is professionally managed by Hamilton Zanze, heirs receive the benefit of quarterly distributions backed by a diversified portfolio, without taking on any operational responsibilities.

The Step-Up in Basis Advantage

For investors holding highly appreciated, low-basis real estate, one of the most powerful estate planning benefits is the step-up in basis that occurs at death. When heirs inherit HZ Evergreen Fund shares, their cost basis is stepped up to the fair market value at the time of inheritance, effectively eliminating the embedded capital gains tax liability that accumulated during the original investor’s lifetime.

This means heirs can hold, redeem, or rebalance their inherited shares without the tax overhang that would otherwise constrain their options. For families with significant unrealized gains, the combination of Fund-level diversification and a stepped-up basis creates a materially stronger starting point for the next generation.

Simplification Across the Board

Estate planning benefits extend beyond divisibility and tax treatment. Fund investors receive a single consolidated K-1 for all holdings within the Fund, replacing the multiple tax documents that typically accompany a portfolio of individual properties. For heirs and estate administrators managing a transition, this simplification is practical and meaningful.

Together with the Fund’s diversification, liquidity features, and tax-efficient structure, these estate planning advantages reflect a more modern approach to long-term real estate ownership, one built to serve not just the investor, but the people who will eventually inherit what they have built.

To learn more about the HZ Evergreen Fund, visit hamiltonzanze.com/evergreen-fund or contact our Investor Relations team at [email protected].