Category Archives for "Estate Planning"

Plan For the Future

Do you have a plan for the future of your business?

Is your company a statistic? If you operate a family-owned business, the answer may be yes. According to the U.S. Small Business Administration, over 50% of all small business owners are aged 50 or older. If you’re included in that group, you might be wrestling with the question of selecting and training a successor. Think you’re too young to retire? Getting an early start helps you avoid “crisis mode” decisions that may damage your company’s future prospects. Early planning also provides opportunities for helping your successor learn the business and get prepared to assume full responsibility.

Here are two initial steps to consider.

  • Choosing a successor. Do you expect a family member — perhaps one of your kids — to take over the company when you’re ready to retire? Be sure to align your company’s best interests with your child’s dreams, skills, knowledge, and passion for success. The decision can be an emotional one, so it makes sense to involve an objective third party such as a financial advisor, attorney, board member, or trusted friend. Be open to considering a long-term employee or an outsider with more extensive experience in your industry.
  • Establish a training plan. Identify the critical functions of the company and provide the opportunity for your chosen successor to gain experience in operations, sales, and accounting. Establish a timetable for training, allow for mistakes, and resist the temptation to override routine decisions. Let your successor develop a management style that fits both the company’s mission and your successor’s temperament.

Succession planning takes time and effort. For assistance, put us on your team.

Tips for setting up your estate plan

Remember other taxes when setting up your estate plan

As you begin your estate planning, strategies for reducing estate tax may be first on your to-do list. Or perhaps you think the current $5.45 million exclusion, combined with portability of the exclusion for married couples, means you have nothing to worry about. But overlooking other types of taxes that may apply to your estate can be costly. Here are two.

  • Generation-skipping transfer tax. The generation-skipping transfer tax is imposed when you transfer assets to your grandchildren, or others who are two generations or more below you. The tax has a maximum rate of 40%, and applies to transfers made directly or in trust. Similar to estate and gift taxes, you can apply a lifetime exclusion of $5.45 million to your generation-skipping transfers. Both the tax and the exclusion are separate from estate and gift taxes.Tip: You may need to report generation-skipping gifts on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
  • Gift tax. For 2016, you can transfer up to $14,000, estate- and gift-tax free, to anyone you choose. You and your spouse can combine gifts and make a tax-free transfer of up to $28,000. For amounts greater than the annual exclusion, gift taxes are “unified” with estate taxes under current rules, meaning the two share a current lifetime exclusion of $5.45 million. The result? Whatever portion of the $5.45 million exclusion you use to offset gift taxes is unavailable to offset estate tax.

We’re here to help with your estate planning needs. Contact our office.