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Splitting Inheritances Evenly May Not Always Be the Best Policy
Author: Scarinci Hollenbeck, LLC
Date: February 22, 2013
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How Will You Split Their Inheritance?
When it comes to dividing up an estate among heirs, many affluent individuals and business owners balk at leaving one child more assets, cash, or property than their other children for fear that it will cause sibling rivalry. However, when business interests or family heirlooms are involved, this may be the best policy.
Changes to the estate tax law allow individuals to leave $5.25 million – or $10.5 million for married couples filing jointly – to heirs in 2013, up from $5.12 million in 2012. The gift tax exclusion also increased to $14,000 for singles and $28,000 for couples, compared to 2012 limits of $13,000 and $26,000, respectively. As business owners may now transfer larger portions of their estates to heirs without triggering a tax, it’s important to make objective, rather than emotional, decisions regarding wealth transfers, according to recent article in the Pittsburgh Post-Gazette.
Many business owners hand down family assets in an effort to further their legacy and continue to build wealth for future generations. Splitting up assets evenly among several children can lead to family squabbles about how to manage assets, a scenario that could eventually diminish wealth. In addition, those who have different ideas about how to run the company or simply want no stake in it at all could sell their shares or make other decisions that impact a company’s future.
For these reasons, business owners are advised to take the competency and future goals of each heir into consideration before handing over a sizable portion of the estate. If one member is better suited to handle day-to-day operations than another, splitting assets evenly may not be a smart move. In addition, working with an estate attorney to create trusts designed to keep assets within the family is another move that may prevent heirs from selling off or jeopardizing a company’s future.
- Practices: Tax and Trusts & Estates, Sophisticated Estate Planning & Wealth Preservation, Estate & Trust Litigation, Real Property Tax Strategies
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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