Estate Of Affairs
How to pass down your business--but not to Uncle Sam.
How to pass down your business--but not to Uncle Sam.
Think of the taxes family businesses might have to pay when the
leader dies as voluntary taxes," says David Geller, an
attorney and president of the Atlanta family-business consulting
firm Geller Financial Advisors.
The good news? A 50 percent-plus tax bite doesn't have to
destroy your family's business at estate tax time. A myriad of
planning vehicles can provide solutions to 90 percent of the estate
tax liability, says Geller.
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The bad news is that the later you start thinking about and
implementing estate plans, the closer your estate may come to
shelling out 50 percent of the business's worth. "The
longer you wait to address the issues," says Geller, "the
fewer options you have."
While reducing estate taxes is what usually fuels thoughts of
estate planning, no family business leader wants to jump into a
taxworthy solution without taking into consideration ownership,
management and family issues. Steve Swartz, principal with
McGladrey & Pullen Family Business Group/Management Development
Institute, a Minneapolis firm that consults to family-owned
businesses, urges business owners to think about four nonlegal,
nonfinancial issues before implementing a plan:
1. Whether you want the business to stay in the family.
2. How to be fair to all children.
3. How much the rest of the family should participate in estate
planning and how much they should know about the plan that's
ultimately implemented.
4. How the senior generation will be compensated upon
retiring.
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