The best way to leave assets, like your business, to heirs before big changes in estate tax laws take effect next month.
Take Advantage of Expiring Tax Rules to Benefit Your Heirs
Current estate tax laws exempt the first $5.12 million per person (double per couple) in assets from estate taxes. This limit drops to $1 million in 2013. and the tax rate on all assets above that threshold will be taxed at a rate of 55 percent. If you plan to leave your business to your children or other heirs, failing to protect that valuable asset could see the majority of its value lost to taxes.
One strategy to avoid this scenario is to transfer your business into a trust, taking advantage of the high exemptions available through the end of the year. Because this process takes time and we are already in December, business owners are funding their trusts now with cash, taking advantage of the fact that you can fund a trust with one asset and then replace it with another asset (in this case your business) in the future. Once your business is in the trust, its future appreciation in value is protected from the estate tax.
About small business finance expert Mike Periu
Mike Periu has experience in small business finance. He founded Proximo, LLC a company that offers consumer and small business training services focused on technology and money.
Mike Periu teaches individual empowerment through entrepreneurship and financial literacy. He has appeared 500+ times on television and radio. Visit the Reach and Media pages of his website to learn more about where he has appeared.
You can read more of Mike’s articles on his blog or at American Express OpenForum, Yahoo! Finanzas and the Huffington Post.
Mike has a degree in International Business and Finance which he received at Georgetown University in Washington, DC. He received a Fellowship from the Kauffman Foundation for the Labs for Enterprise Creation program in Kansas City.
