When your family owns a business or is the owner of a farm, you want to leave behind a legacy of what you have built. Unfortunately, more than 70 percent of family businesses do not survive a transition to the next generation. The probate process, estate taxes, and infighting among heirs are among the problems that can arise and undermine farm or business operations.
At the Law Offices of Cheryl David, our attorneys have extensive experience helping clients with family owned businesses and farms. We will help you to create a plan today that can protect your family legacy tomorrow.
Estate Taxes and Your Family Farm or Business
When a farm or a family business is passed to the generation, estate taxes are one of the biggest issues that can make ongoing operations difficult.
Estate taxes are assessed on larger estates. The specific value an estate must reach before taxes are assessed varies annually, but is over $5 million. The problem for many farms and family businesses is that company assets can push the estate above this threshold. The value of your family land or of the business properties that you own can make it appear as if your heirs are inheriting a fortune.
In reality, however, your heirs may inherit very little cash to pay the taxes they are assessed on the farmland or on the family business. This leaves your loved ones with the difficult choice of having to sell off what they inherited in order to pay the taxes on it.
There are ways to prevent this through strategic methods of transferring ownership. Structuring your business a certain way, transferring your assets through the use of a trust, or purchasing appropriate insurance policies are just a few of the steps you can take to ensure your heirs can continue to operate your farm or your family business instead of losing it due to high taxes.
Planning for the Future of Your Farm or Business
Estate taxes are only one factor that complicates the transfer of a family business or a family farm to the next generation.
You may have to sell assets to afford nursing home care, or your heirs may see assets tied up during the probate process, which affects ongoing operations. There may be fighting among family members and a will may be contested, undermining the goodwill of the brand you built or making it difficult to continue effectively farming the land. There may be claims made by creditors on the estate that could lead to the sale of business property or land, and your heirs may not take care of what you built.
Using legal tools like Medicaid planning, incorporation, trusts, and joint-ownership are among the steps you can take to protect your organization or your family farm. Call the Law Offices of Cheryl David to learn more about how you can plan ahead to keep your business or farm going long after you are no longer here to tend it.