As an expert who specializes in tax and corporate law, I can tell you many business owners still don’t properly plan for valuable tax-saving strategies, especially when it comes to estate taxes. Anyone who owns a business should be concerned about potential estate taxes upon death. I know, what a dreaded topic, but one that is certainly necessary.
As a business owner, it’s quite likely a significant portion of your wealth is locked in to the family business. Your family’s financial security is dependent upon the business being transitioned to the next generation, or sold to someone outside of the family for a fair price. Either way, it requires a lot of pre-planning and preparation.
Whether or not you take the steps necessary to ensure your business’ survival, estate tax laws will very likely assign a value to the business that could possibly result in your family owning substantial taxes. As a general rule, inherited assets are not subject to income tax. However, certain types of assets derived from transactions that would be taxable during your lifetime may be subject to income tax.
There are a number of ways to minimize taxes. Suffice it to say, as a business owner, you should work with an experienced tax attorney to explore all possible scenarios.
Joseph Andolino has more than 20 years of experience working in Corporate America and presenting a framework of tax-saving mechanisms.