Businesses Require Proper Estate Planning

When the majority of people envision estate planning, they imagine retirement and a lengthy list of assets for individuals. The truth of the matter is that businesses, especially small business, can benefit from proper and efficient estate planning.

By taking appropriate estate planning measures a business owner can help keep a business from absorbing the heavy burden of estate taxes. Two IRS tax breaks, Section 303 and Section 6166 can help alleviate the burden for small businesses. Section 303 allows an estate to redeem stock in a business with very little tax consequence while Section 6166 offers outright estate tax deferral for small businesses. To be eligible for Section 6166 however, at least 35% of a person’s adjusted gross estate must come directly from their small business interests.

Sole proprietorships are the most common types of businesses that require estate planning as the business is not separate from an individual’s personal assets, and in a sense, your business is you.

See Inna Fershteyn, Businesses Require Proper Estate Planning, Brooklyn Trust and Will, June 25, 2018.

Special thanks to Ronald Osherov for bringing this article to my attention.