Given their fluctuating valuations and unique vesting arrangements, fund principals’ interests in a PE firm or the underlying funds thereof can be complicated to transfer to family members for estate-planning purposes. Techniques have been developed under the tax code to mitigate those risks, but those methods require careful planning and foresight at the inception of the equity interests. Failure to heed those considerations could result in potential unintended and adverse tax consequences in connection with transfers of carried interest. Those were among the issues addressed in a program recently hosted by Strafford CLE Webinars that featured Ropes & Gray partner Marc J. Bloostein and Meltzer Lippe Goldstein & Breitstone partner David C. Jacobson. This first article in a two-part series addresses features of PE funds and interests therein to optimize them for estate-planning purposes, as well as relevant transfer taxes and trust structures to minimize the tax impact of gifts. The second article will outline the merits and risks associated with different approaches to transferring carried interest to family members, including through the vertical slice exemption. For additional insights from Bloostein, see “Estate Planning Tips for Fund Managers” (Jun. 2, 2014).