There are many small business owners who would like for their business to stay in the family after they pass away. In most cases the family business gets sold off and the assets are distributed to the heirs, only about 20% of small businesses actually remain in the family after the owner dies. If someone wants to keep their business in the family they need to plan ahead. The small business owner may want to reduce the estate tax liability that their heir would be subjected to by setting up a life insurance policy that can pay down some of the estate taxes. Another technique involves setting up a Trust that will own the family business after the owner passes away. It is also important to get the heir involved in the business so that they can obtain much needed experience with running the company.
See Dave Lindorff, Keys to Keeping a Business in the Family, Financial Planning, August 28, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
