Planning is Peace of Mind

Transfer Business Ownership Using Estate Planning Strategies

Planning to transfer business ownership or liquidate your business when you are ready to retire or when you die is as important as the planning you did when you established your small business. Here are some tips on how to use estate planning strategies to transfer your business interests:

  • Business Structure – How your business is set up – as a sole proprietorship, partnership, limited liability company (LLC), C Corporation, or S Corporation – can greatly impact estate taxes. A family limited partnership can help you preserve your business for future generations by allowing you to transfer business ownership to children as limited partners while you maintain control over the business. Setting up a business as a corporation will allow you to issue stock to the owner and common stock to children utilizing the IRS’ estate freeze rule, thereby decreasing tax liability.
  • Trusts – Business owners can use trusts to remove the value of the business from their estates and transfer business ownership to the next generation while maintaining some control over the assets.
  • Buy-Sell Agreements – If the time comes for you to transfer business ownership to a partner or partners when you retire or die, a buy-sell agreement will be a necessity. The agreement should specify that the sale proceeds will transfer to a trust for your beneficiaries, which will keep the value of your business out of your estate, so your heirs will not be hit with a hefty estate tax bill.

Estate planning for businesses can be complicated, so small business owners should consult with a business attorney to ensure the right strategies are put in place for your individual circumstances.

If you’re a small or mid-size family business owner, call us today or CLICK HERE to schedule a consultation with our business attorney. Our office is conveniently located in Modesto, California and services clients throughout the Central Valley and Bay Area, including Stockton, Merced, Santa Clara, San Jose, Oakland, Pleasanton, Tracy, and Manteca.

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