Estate Planning is Not Just about Taxes

These considerations can help you maximize the amount of wealth you will be able to pass on to your heirs.


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Congress has made it easier for small business owners to leave wealth to their heirs, raising the federal estate exemption amount to $5,340,000 per individual ($10,680,000 between husband and wife). 

With that being said, estate planning is about much more than just leaving wealth to your heirs. The following considerations can help you maximize the amount of the wealth you have worked so hard to create that you will be able to pass on. 

One of the first questions asked of a business owner during estate planning is: Who receives the business if you die? Many owners never address this question during their lifetimes, so, when they die, the business follows the law and is transferred to the surviving spouse. 

The next questions then become: Does the surviving spouse know how to run the business, and/or does he or she even want the business? What happens to any of the owner’s children as it relates to the business? Does the surviving spouse give the business to the children, and, if so, how does the surviving spouse continue to receive income? And if the business is gifted to the spouse or children, what about gift taxes?

Business owners often have children who are involved in the family business as well as others who are not. If the bulk of the business owner’s estate is contributed to the business after his or her death, and owned real estate is used by the business, who receives what? If a child working in the business receives the business, does another child receive the real estate? If so, does he or she have the right to raise the rent whenever he/she desires? It’s also important here to consider that the child who receives the real estate could always have that wealth (real estate tends to increase in value), whereas the child who receives the business may lose everything if he or she cannot keep the business profitable when faced with industry or economic changes. 

Also keep in mind that fair does not necessarily mean equal. It might be better to leave both the business and real estate to the child working in the business and then purchase life insurance and leave its proceeds to the child who is not involved the business. 

These are just a few questions to consider as you plan for your estate. Since the estate tax codes were implemented 90 years ago, the government has made 27 of them permanent. That’s right, 27—about one every three years. With those odds, there is a good chance the estate tax laws will change again in the near future. After all, as the government continues to run a deficit, it will look toward the wealthy for additional revenue. Your best bet for preserving your wealth for future generations is to start the planning process now and adjust your plans as needed.