YOUR FAMILY BUSINESS AND YOUR ESTATE
As Penn State professor William Rothwell ominously points out in
the forward to Exit Right: A Guided Tour of Succession Planning
for Families in Business Together, more than 40% of the people
who run the closely held operations that comprise 80% of the
North American economy will retire by 2007. Those businesses
will either be sold to a third party or management team, closed
down, or passed on to the next generation. In this article I
will focus on passing the business on to the next generation.
Tax laws still favor home ownership with mortgage interest as a
tax-deductible expense. The government has also encouraged the
passing of a business from one generation to the next with
several favorable estate and gift tax rulings. Estate planning
attorneys have utilized IRS ruling 5960 to minimize the estate
and gift tax owed for a business either gifted to or inherited
by the next generation. The business is often placed in one or
more LLC