Brown & Streza Blog
Feb 22

Written by: Matt Brown
2/22/2011 11:56 AM  RssIcon

Wall Street Journal, Family Businesses Catch a Big Break, by Anne Tergesen:

It is the gift tax that keeps on giving.

Families now have the chance to pass a substantial stake in their businesses to the next generation—even before handing over the reins. But transferring ownership can raise complicated succession and estate-planning issues that families need to address before giving away so much as a share of stock.

To recap: As part of the tax deal passed by Congress late last year, the gift-tax exemption jumps to $5 million from $1 million for individuals and to $10 million from $2 million for couples in 2011 and 2012.

Yes, that means people can give away that much now without paying a penny in taxes.

"We have a golden opportunity to move wealth at no tax cost," says Mark Nash, a partner in private-company services at PricewaterhouseCoopers. And those who make a gift now, tax-free, also shield future appreciation from taxes.

But the two-year window raises difficult questions for family-business owners. While those in charge don't necessarily have to give up control, they may need to make some momentous decisions. Among them: who will eventually lead the business, how to treat other beneficiaries fairly and how to pass down wealth without jeopardizing their own retirement security.