Giving Stock to the Next Generation Are you gifting stock to the younger generation for the right reasons?

The younger generation is eager to get stock in the family business, but the older generation is reluctant to give it up. How does this impasse get resolved?

Estate-planning experts suggest gifting stock from one generation to another in family businesses be done often and early. "It makes sense to give stock away to your successors when its value is low-assuming you have a growing company and expect the stock to increase in value," says Ross Nager, executive director of the Arthur Andersen Center for Family Business in Houston and co-author of The Family Business Answer Book(Prentice Hall). "That's because gift tax consequences are based on the fair market value of the stock at the time it's given."

But Nager would be the first to advise against making decisions solely based on what makes tax sense. In family businesses where multiple considerations come into play, estate tax is just one factor.