Q: I have begun estate planning this year. How much is the estate tax exemption this year?
A: The estate tax exemption is $3,500,000 until December 31, 2009.
Q: Is my business worth more or less this year due to the dampened economy?
A: Generally, most businesses will see a slight dip in their value this year due to the slow down in the economy. The silver lining to this is that the depressed value allows business owners to transfer more stock to their successors on a tax free basis, as opposed to when the economy and their business value is inflated. This fact makes 2009 a great time to begin estate planning and business succession planning.
Q: If the annual gift tax exemption is $13,000 per person and $26,000 per couple in 2009, how can I begin transferring a business interest when the assets of the business must work as a whole to continue business?
A: Estate planners are aware of and attune to many different ways to make business succession plans work. One way to begin transferring a business is to gift an undivided interest to children year by year. Another way is simply to sell the business to them under favorable terms.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors