Wow. It is recommended to never put real property into an S Corp. "Wants to leave 2 of the 4 properties to his daughter, the other 2 to his son and form 4 separate LLC's" specifically shows the problem. He doesn't own them. He owns shares in the entity that owns the property; all of it belongs to the S Corp.

"so basis is minimal compared to FMV"

Others will have to step up, now, but I believe your client might be facing some taxable event with this dissolution.

And S Corps require payroll, which is another reason Property and Services under payroll do not mix well.