Although most people prefer not to consider their eventual demise, facing the "inevitable"-even if it does appear to be quite a ways off-is certainly better than ignoring the possibility. Horror stories abound of real estate investors (and others) who failed to address succession planning, only to come to a point where it was too late.

They say no partnership should be formed without a viable exit strategy. The same type of care should be taken with regard to succession planning. Property ownership should be structured towards an eye towards the future, right at the very beginning.

If you have decided that your offspring will someday be the beneficiary of your carefully cultivated real estate portfolio, you have taken the all-important, and sometimes hardest, first step towards succession planning.

The succession waters can quickly become muddy, however, if thought isn't given to the various factors involved. What if you have multiple children? What if one of them is a fearless and savvy real estate investor, schooled by none other than yourself, while the rest are not only hopeless with regard to investment decisions, but totally uninterested in anything but the profits?

What if you only have one child, who, while a truly wonderful person, has absolutely no aptitude or interest in managing the portfolio you've spent years-and a small fortune-to develop?

Depending on the complexity of your real estate portfolio, it may take years of mentoring to prepare a successor to step into your shoes. Meeting the issue head-on doesn't mean you have to step off the stage any time soon. It just means you are planning the preservation of your portfolio with the same smart level of thinking you used to select your investment.

A primary goal, of course, is to transfer your estate in such a manner that your heir(s) escape gift and estate taxes. This is no small feat in today's turbulent tax environment, with the unpredictable tax law tweaking that can alter the estate planning landscape on a congressman's whim.

A failure to minimize transfer taxes can result to an excessive reduction in value, forced liquidation of assets, and even a business failure.

One of the best strategies for beginning a tax-free transfer process is to take advantage of the annual gift tax exclusion by gifting a partial interest (up to the maximum allowable deduction) to your offspring each year. If the amount gifted is a minority interest in the property, the value of the gift may even be discounted. The rationale here is that, since the recipient is not receiving a large enough portion of the property to gain control, the value of the gift is discounted.

If you want to continue a steady stream of income during your retirement years, consider selling real estate to your offspring through an installment sale. Through this strategy, any taxable gain on the sale can be spread over a number of years. The installment sale method of property transfer also avoids eligibility for the gift tax.

Taking the time to discuss succession planning issues with your family can be somewhat thorny. It's also necessary, however, in order to ensure that the bulk of your hard-earned real estate portfolio lands in the hands of those you would choose, instead of the taxman's coffers.