Small Business And The Estate Tax

Small businesses and family firms are vulnerable to estate taxes due to the sudden liquidity that might be needed to pay off the IRS. In many cases, the estate plan of a family will not take this need for money into account and it can have a devastating impact on the ability of the firm to continue. One potential solution is to take out a life insurance policy for the amount of the expected tax hit so that the business is not forced to take detrimental action to create liquidity.

See McBrayer, McGinnis, Leslie & Kirkland, PLLC, Estate Tax Planning Prevents Heirs From Having to Liquidate Estate, National Law Review, May 4, 2015.