A well-structured trust is a central estate planning tool for small businesses and closely held family business owners when passing a business or wealth to your children. This includes heirs, beneficiaries, and future generations of your family and spouses while minimizing the impact of taxation and maximizing control.
The state you live in will determine where your business and assets go if you pass away without a well-conceived estate plan. Many states would divide these assets in half; the children would divide one half, and your spouse would receive the other half. The costs of probate alone would consume more than 10% of your wealth in most states.
The estate tax provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 almost doubled estate tax exclusions. The estate tax deduction is currently $13.99 million for an individual. If Congress elects not to address the sunsetting TCJA, the estate tax deduction would revert to 2017 levels adjusted for inflation, or approximately $7 million. Small business owners should carefully watch developments surrounding the TCJA this year. This could also impact the amount of the Alternative Minimum Tax (AMT), and lower the initial AMT taxation level by $20,000 (meaning, you will be paying more taxes on less income in fiscal tax year 2026).
The estate planning and trust attorneys at Allen Barron work to develop a uniquely tailored estate plan that preserves all of the wealth you worked so hard to build and protect. We help you to work through important decisions surrounding the division of property and assets while providing needed liquid assets for a surviving spouse.
Business succession planning ensures that your company is protected and that ownership and control of the company pass smoothly to your designated beneficiaries or designated internal management if and when the time comes. Passing a business or wealth to your children while providing for the needs of your surviving spouse requires careful planning and execution. Our seasoned tax attorneys provide insight and advice into taxation’s impact on your wealth and how to reduce or eliminate this burden altogether.
Business owners appreciate the convenience, efficiency, and cost-effectiveness of utilizing a single source provider to prepare the trust(s) and manage all areas of concern, including legal advice, business guidance, tax planning, and accounting services. These services and our sound advice and counsel ensure you are prepared to pass wealth or business interest to the next generation.
What do you want to happen to your company? Do you want your spouse to be supported by the income it generates, but have someone else run the business? Do you want to pass ownership to your child(ren) when they are prepared to step in to run the company? In many cases, a trusted partner or remaining members or shareholders will have the option to acquire your interest. In other instances, selling your interests and preserving wealth for your spouse, children, heirs, and beneficiaries may be most prudent. There are many types of legal trusts, and your goals for transitioning or preserving the business after passing will determine the best solution to accomplish those goals while minimizing the impact of taxation.
If you own a foreign corporation or have offshore assets or interests, our experienced FBAR and international tax attorneys will provide insight into the complications of transitioning offshore assets and interests. Developing an estate planning and business succession strategy that ensures compliance with the IRS tax reporting, Form 8938, and FBAR requirements will be essential while preserving and protecting all you’ve built.
The process of passing a business or wealth to your children requires extensive planning that often begins with the development of a thorough, well-documented, and detailed inventory of checking and savings accounts, retirement accounts and pensions, real estate, as well as business assets, including machinery, inventory, and intellectual property.
A soundly-crafted strategy for providing for a spouse while passing a business or wealth to your children will require several disciplines, including legal, tax, accounting, estate planning, and business advisory services. Look for a business partner who can integrate these disciplines and develop and implement the right solution for your unique circumstances and portfolio.
Learn about the protections of the attorney-client privilege and how that extends to all our work on your behalf. These protections are unavailable from CPAs, accountants, tax preparers, financial planning, and wealth management professionals.
If you are considering a trust for passing a business or wealth to your children, providing for a spouse, protecting assets, and reducing tax exposure while preserving and protecting all you’ve worked so hard to build we invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.
We will work with you to develop a plan to accomplish your goals, provide peace of mind and a solid framework for managing the transition, and ensure your intentions are fulfilled.