As a business owner, you’re going to have to decide when will be the right time to step out of the family business and how you’ll do it. There are many estate planning tools you can use to transfer your business. Selecting the right one will depend on whether you plan to retire from the business or keep it until you die.[emember_protected custom_msg=”Click here and register now to read the rest of the article!”]
Some of the more common strategies for minimizing taxes are explained briefly here. Remember, none are without drawbacks. You’ll want to consult a tax professional as well as your estate planning attorney to explore all strategies.
You and Your Estate May Get Some Relief under the Internal Revenue Code
If you are prepared to begin transferring some of your business interest to your beneficiaries, a systematic gifting program can help accomplish this while minimizing the gift tax liability that might otherwise be incurred. In 2013, you can give up to $14,000 ($13,000 in 2012) per year, per recipient without incurring gift tax. By transferring portions of your business in this manner, over time you may manage to transfer a significant portion of your business free from gift tax.
Selling Your Business Interest Outright
When you sell your business interest to a family member or someone else, you receive cash (or assets you can convert to cash) that can be used to maintain your lifestyle or pay your estate taxes.
In my next column, we’ll look at some more common strategies to consider when transferring your family business.
As federal and state tax rules are subject to frequent changes, you should consult with a qualified tax advisor prior to making any investment decision.
column by BRAD DANTZLER
Raymond James & Associates, Inc. member New York Stock Exchange/SIPC
BIO: Brad Dantzler is a trusted financial advisor with over 18 years of experience. He is active in his church and community, has been an active President’s Club member for six years, and is currently president of the Winter Haven Library Board as well as a Winter Haven city commissioner. [/emember_protected]