What You Need to Know About Transferring Business Interests During a Recession

Many people are concerned about the long term impacts financially in America and around the world as a result of Covid-19. For business owners, this often means taking a step back and thinking about the strategy around estate planning.

There are a few different ways that business owners can contemplate estate planning, such as transferring a business interest at a discounted value, selling a business interest or gifting a business interest into a trust or another vehicle that is designed to protect the interests of the business and any future appreciation from being applied to the individual business owner’s estate.

Many people are watching the market to see how the impact of the pandemic will influence business values. If you’re thinking about selling your company or finding the best way to transfer business assets, you want a team of advisors in your corner to help you approach this subject with care. Our dedicated estate planning and business succession planning lawyers are here to guide you through that process.

The 2020 tax exemption is $11.58 million per person, meaning that any value above $11.58 million is subjected to a 48% tax rate. Business owners are therefore faced with a ‘use it or lose it’ challenge when it comes to federal taxes. Future transfers of a business interest could be subject to a much lower exemption amount. Now is a good time to think about structuring a gift into the next generation or into a trust for protection.

Business valuations are currently low due to the crisis and business owners might be able to pass a bigger share of their business to heirs as a result of this and in combination with valuation discounts. Schedule a consultation with a business succession planning attorney today to learn more.

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