Biz Owners Need to Be Cognizant of Estate Tax Implications
By JJ Thomas • Nov 14th, 2007 • Category: Legal & TaxesMANY business owners are so consumed with day-to-day operations that they don’t think about estate planning. But the federal estate tax, with a top rate of 45 percent, can have a big effect on the business you leave behind, and planning while you are hearty is the best way to manage that.
Among the arrangements to make are leaving a source of cash to cover the tax bill and, as much as you can afford it, giving assets to younger family members while you are alive. These lifetime gifts, as they are called, have a dual benefit: they reduce the size of your taxable estate, and, if the assets increase in value after you have passed them on, the appreciation is tax free.
When Congress was considering a permanent repeal of the tax, which currently applies to estates worth more than $2 million, small-business owners lost interest in this kind of planning, said Dennis I. Belcher, a lawyer with McGuireWoods in Richmond, Va. But since the repeal efforts failed last year, more clients have asked about lifetime gifts, Mr. Belcher said.
JJ Thomas is the founder and chief promoter and contributor for BirminghamSmallBusiness.com. JJ has a passion for entrepreneurship and enjoys helping fellow aspiring and practicing entrepreneurs. JJ has also founded other related business ventures, such as Entrevisor (providing entrepreneur advisory services) LOLO Rewards (coalition loyalty and rewards program for locally owned, independent businesses), The Entrecyclopedia (the Entrepreneur's Encyclopedia of useful information) and EntrePulse (a weekly roundup of practical info for aspiring and entrepreneurs).
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