valuation discount is one of five criteria in choosing the proper trust. Investors use it to primarily tax decuction purposes. But would it disadvantage the benefactors/hiers/charity who receive the transfered assets if the market value is decreased for this purpose?
I view it this way: Less taxes now = greater wealth later. So in future generations there may be a larger tax liability, but the asset base was larger to begin with (due to taxes being defered) so the benefit of delaying taxes outweighs the cost of larger taxes down the road due to a larger overall asset base. This of course assumes the effect of positive returns on the trust and therefore a growing asset base.
as I understand it, the “valuation discount” would result in a smaller estate tax bill, thus actually benefiting the heirs, etc.