ABA Family Legal Guide

Estate Planning

Death and Taxes

I'm the owner of a business, and I understand that my estate would have to pay taxes on the value of the business if I don't do anything--but what can I do to lighten the tax load?

Congress is sympathetic to the plight of business owners and has created several breaks in the tax code for you. One of these allows your estate to pay the estate tax on the business over as long as fifteen years, while paying only a 2 percent interest rate on the deferred tax. Another allows your executor to reduce the value of the business by as much as $300,000 for estate tax purposes. Both of these tax breaks have complex requirements, and you should not assume that you will qualify automatically.

But you are not limited to these targeted tax-reduction methods. There are a number of other tested estate-planning techniques—such as annual gifting and placing your business in a family partnership—that can have the effect of reducing the value of the business in your estate. The successful implementation of these techniques will require the services of an experienced estate-planning lawyer.