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PrintTransferring Assets
You can't take it with you, or so they say. Well, if you can't take it along, at least you can decide who gets it and when. Accomplishing this without horrendous tax consequences is a complicated challenge, but it can be done. Passing it along after you're gone is a minefield of tax traps but there are ways your lawyer can navigate through it.
But when the "IT" is a business, the techniques of giving it away or passing it along become even more specialized and highly evolved. A laundry list of some of the more commonly used strategies for minimizing taxation on a transfer of assets would look something like this:
- liquidity strategies (deferrals, redemptions, buy/sell agreements)
- private annuities
- GRATS
- recapitalizations
- the family office
Valuation of the business is the foundation of all these methods. Wherever possible, periodic reevaluation should be made a part of any technique used.
The value of assets transferred either by gift or bequest is subject to a federal tax at graduated rates applied on a cumulative, unified basis. Federal transfer taxes can be reduced by the unified tax credit, which (for 2006 - 2008) is equivalent to exempting $2,000,000 worth of assets free of tax, but any property in excess of that is taxed. If your business is large enough, you'll need to provide for liquidity so that taxes can be paid without depleting the business's working capital.
