Taxes, Assets & Heirs by Bill Hrapmann
Author:Bill Hrapmann
Language: eng
Format: epub
Publisher: Lioncrest Publishing
Published: 2022-08-14T00:00:00+00:00
Your Potential Savings: Gifting Shares
and Minority Shareholders
Imagine John and Sue, a husband and wife, own 100% of their manufacturing company, and the business is growing. They currently have a taxable estate, meaning if they died, they would owe taxes on the amount of estate above the exemption equivalent ($24.012 million). They feel that the business will continue growing, and their estate taxes will increase. In that case, they can go ahead and gift a portion of the business to the next generation, before their tax liability increases even higher.
If they were to gift $1 million worth of minority non-voting shares to the next generation, the IRS may view the value of that gift, for gift tax purposes, as only $700,000 (after a 30% discount). If the business grows 10% per year for the next twenty years, the $1 millionâgift would be worth $6â7 million when the couple dies. At a 40% estate tax bracket, this may save $2.4â2.8 million in estate taxes.
Save on Estate Taxes
Review this valuation with your CPA and tax attorney before doing any in-depth estate planning. Do not have unrealistic valuation expectations (either too high or too low) when it comes to your estate; get it evaluated realistically so that you can decide estate planning strategies and minimize estate taxes. If you are in a position to be paying estate taxes, then perhaps now is an excellent time to give shares or assets to the next generation at discounted values while the exemption equivalent is $12.06 million per person.
Action Steps
What is the estimated value of your taxable estate?
Which estate tax strategies do you feel would help meet your objectives?
If you have questions or need more information, reach out to Bill Hrapmann Wealth Advisor, Inc by emailing [email protected].
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