A strong succession plan will center not only around grooming heirs to take on key business functions, but also around estate tax planning. The current estate tax law allows individuals to avoid taxes on estates valued at no more than $5.25 million, or $10.5 million for spouses who file jointly. In addition, the gift tax enables individuals and business owners to gift up to $14,000 – or $28,000 for joint filers – to as many individuals as they wish. Keeping these two exemptions in mind, business owners may have more leeway when it comes to establishing a succession plan that keeps their tax liability low.
The first step is to hire an appraiser to conduct a business valuation. When business owners don’t know the true value of their assets, tax planning becomes more challenging and their estates may be forced to pay out more in taxes than the company head intended. Once the true value is determined, owners can make more informed decisions about managing their affairs. As an example, businesses that are high in value will undoubtedly be subject to more taxes, and owners can avoid this scenario by gifting assets to successors to reduce their taxable estate.
Gifts can be made in the form of real estate, cash, investments, and other business property on a tax-free basis. This method can also be particularly impactful if owners plan to have several successors, as it allows them to transfer larger chunks of their business to heirs. In addition to gifting, owners might also consider setting up a trust for successors that enables them to manage or monitor certain business functions and investments and provide guidance to beneficiaries.
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Changes to Qualified Small Business Stock Will Benefit Startup Founders and Investors
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly impacts federal taxes, credits, and deductions. A key change relating to Qualified Small Business Stock (QSBS) allows greater tax-free gains for investments in startups and other qualifying small businesses. Company founders and other investors should understand how the enhanced tax strategy works or risk missing […]
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
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