Who do you want to inherit your
business? Do you want them to take
ownership before or after you die? How
can you be fair to all your children while
leaving your business to only one of
them?
These are the types of questions any
business owner should contemplate
before preparing an estate plan which
should include a business succession
plan.
Although many business owners may
choose to utilize gift tax exclusions to
minimize estate taxes associated with
transferring business-related assets prior
to death, Dick Fohn of Moss Adams,
LLC, a large west-coast-based
accounting firm, cautions exclusions
may not be the best tactic. Getting the
most from exclusions may require
gifting to many children, and having
multiple owners in a business setting
may not be the best thing for the
business. Fohn describes this as when
"The estate-tax tail is wagging the
ownership-succession dog..."
Fohn also indicates selling the business
outright to a second-generation owner is
probably not the best approach in terms
of minimizing taxes.
Fohn recommends focusing on two
factors: the financial interests of the
business owner as he enters his golden
years and being fair to all heirs even if
only one heir should inherit the business.
Once the owner has a general idea as to
how to address these issues, an estate
planning professional should be allowed
to design an estate plan to minimize
taxes within this framework. Fohn
contends your business succession plan
is more important than avoiding estate
taxes.
Source: www.SkagitBusinessPulse.com, 4-10-06
