If you are in business for yourself, hiring an Estate Planning Attorney such as one from the Law Offices Of Elan Wurtzel PC can allow you to transfer the business and/or its value to your beneficiaries. With careful estate planning, you can avoid taxes, make gifts and ensure your business continues to operate after you are gone. The steps you take will depend on whether you want to relinquish control before or after your death, and whether you’re transferring a working business or divesting your interest.
Being a Business Owner can Bring a Hefty Estate Tax Bill
The estate tax is an IRS levy on assets above a certain amount. Even the smallest business can put an estate over the tax threshold; without a plan, your beneficiaries will end up paying taxes on the full value of the business. These taxes can be up to 55%, and your heirs may have to sell the business to pay the bill.
Planning an Estate with a Buy-Sell Agreement
Buy-sell agreements are contracts that set up the sale of a business upon the owner’s death or retirement. These agreements are useful if you want to transfer your interest to a business partner, but want to keep your heirs from disagreeing over the price. The contract can require that the buyer transfer the price to a trust, keeping the business’ value out of the estate.
Consider the Structure of the Business
The manner in which your business is constructed can minimize your estate’s value. A family limited partnership allows parents to hand businesses over to their children without relinquishing control. Corporations can issue common stocks to children and preferred stocks to the business owner to decrease liability for estate taxes.
Using Trusts to Protect your Business
A special or ordinary trust can be set up to manage assets from the sale or management of a business. A trust allows you to keep your business assets out of your estate, hand them over to your heirs and retain control of them while you are alive.
Estate Lawyers can Help to Minimize your Estate Tax Liability
Every state has different laws on estate planning, and most business owners don’t know enough about the law to protect themselves. For details on how you can protect your business and pass it on to your heirs, contact an Estate Planning Attorney in your area. Follow us on Facebook for our latest updates!
