Estate and Gift Tax Implications in a Family-Owned Business

by | Oct 31, 2023

Family-owned businesses are unique entities that can require special considerations, including taxes. 

Estate and gift taxes can be complicated to understand, especially when it comes to how they impact family businesses. To better prepare yourself for the complexities of estate and gift tax implications on family-owned businesses, it’s best to familiarize yourself with the different rules and regulations. 

What Is Federal Estate Tax?

First, there is a federal estate tax that is applied when property or assets are passed down upon death. This tax applies to some estates depending on the size of the estate and can be quite costly. The amount of gift taxes owed will depend on the value of the gifts given during one’s lifetime. In most cases, the recipient of a gift does not have to pay any taxes on it. 

When dealing with estate and gift taxes, certain strategies can be used to reduce or even eliminate them altogether. Some common tax reduction strategies include gifting assets during one’s lifetime, setting up an irrevocable trust, or taking advantage of various tax credits and deductions. 

It is also important to understand that some states have their own estate and gift taxes, which can vary greatly from the federal laws. It’s important to be familiar with the laws in your state so you can properly plan for any tax implications. 

Additionally, it’s always a good idea to consult with an experienced financial advisor before making any decisions regarding the estate and gift taxes for your family-owned business. An experienced financial advisor can help you understand the tax implications of different strategies, such as gifting or setting up a trust.  Doing so ensures that all the important details are taken into account and that the best decision is made for your family’s business. They can also help you to develop a plan that will maximize your savings while minimizing any potential taxes owed.

These are just some of the important considerations when determining the implications of estate and gift tax in a family-owned business. Knowing which taxes apply to your business, as well as understanding how best to plan for them, is key to protecting your assets and passing them on for generations.

Work with us

At Kreitler Financial, our knowledgeable financial advisor can make it easier to decide which strategy works best for your situation. We are proud to work with clients who have achieved a great level of success and who are committed to long-term relationships. Our clients have investable wealth from $2MM to more than $100MM and value our expertise and holistic approach to wealth management.

If you are interested in learning more about how we can help you, talk to our financial advisors today!