Along with succession planning, both estate planning and
wealth planning are critical to the success of a multi-generational family enterprise. Succession and estate
planning are the two primary topics family business owners procrastinate most
on.
While what will become of the estate tax next year is
uncertain, it can be safely assumed that it will go up. The current rate is 35% with an exemption of
$5 million ($10 m for couples).
Restoring rates of 2009 would increase the rate to 45% with exemptions
of $3.5 million ($7 m for couples). If congress does not act it will
automatically return to the pre-2001 rates of 55% with exemptions of $1 million
($2 m for couples)
The challenge with estate taxes in family businesses it that
often the cash available to family members is tied up in the business; and the next
time the next generation has to liquidate the business to pay the estate tax will
not be a first.
I know none of you are planning to die early to avoid a
higher tax rate next year, and that this is a topic most of us would rather not
have. There are actions you should take now, however, to not only minimize your
children’s tax bill also provide resources for them to lead when they take over
the business. Guidance from an (your) estate attorney, CPA, and financial advisor are needed to do
the proper planning.
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