Whether you wish to continue to own your business until you pass away or pass it on during your lifetime, there are different options to meet your goals.
There are a variety of options available to accomplish business succession as recently discussed in the Insurance Journal article "Gifting Agency Stock & Grantor Retained Annuity Trusts
Business succession planning is sometimes considered merely part of the general planning for the owner's estate. However, many people who have family businesses prefer to have younger family members run the business long before the current owner passes away. Those owners seek options for other family members to gain ownership of the business in a cost-friendly way.
The options discussed in the article are:
- Gifting - A business owner can take advantage of the gift tax exemption and give stock in the company to other family members. This would need to be done with a careful plan over many years as the individual gift tax exemption in a single year is only $14,000. Owners must also be aware of the lifetime gift tax exemption of $5.45 million (double for married couples), which makes gifting an entire business away only an option for smaller companies.
- Grantor Retained Annuity Trusts - These are fairly complicated trusts that should only be considered with the advice of an attorney. They allow a business owner to transfer ownership to the trust and receive an annuity for a set period of time. After that time runs out, the assets in the trust transfer to the trust beneficiaries.
An estate planning attorney can guide you through your options on business succession.