Carried Interest Transfer ValuationsCarried Interest Transfer Valuations

During the most recent presidential election, it was reported that Mitt Romney had more than $100 million in his individual retirement account.¹ How did that happen? Likely, it was a result of the same magic strategy that allows family trusts of fund managers to fill up with riches year after year: a transfer of carry.² 

Pure profits interests, like a carried interest of a venture fund or hedge fund, at their inception, have zero intrinsic value.³ Much like out-of-the money stock options, they either make rapid leaps in value or expire worthless; therein lies an opportunity. 

Due to the substantial growth in estate planning with carry—ongoing since at least the late 1990s—one would expect to have significant authoritative guidance by now o...