Q: I own a business that is moderately successful and would like to see it passed on to my wife and children. How and when is the best time to start the process or begin planning the transfer?
A: The best time to begin the business succession process is right now, if it is your desire to keep your business as a going concern after your leaving, or even if you do not plan for the business to stay as a going concern. If you do not plan for the succession (or even non-succession of your business), your estate or heirs can and will be subject with the burden of making decisions that may not be the best for the business or your interests.
Q: Why is it important to perform estate planning even if you do not intend to pass your business onto the next generation or exit the business?
A: It is always better to have a plan than not have a plan. Even if your business is not intended to be an entity to be passed on, certain issues arise during the process of probate. Debts of the business can be the responsibility of the estate. Another possibility arises that the business may be large enough to warrant estate tax liability. Even though you may not want your business to be a going concern after your passing, your estate may have issues to deal with that can be planned for now.
Q: I rent my home out 2 weeks per year to a couple from Ireland each year. Do I have to report this income from the rental of our house?
A: No you do not. If you rent your home out for fewer than 15 days each year, you do not have to report the income. On the down side, you cannot deduct rental expenses associated with your home.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors