This election season has re-energized the debate about the tax code and how to make it more effective. In general, most proponents of “tax reform” call for simplification through a combination of fewer (and presumably lower) marginal tax rates and an elimination or sharp reduction in tax preference items. To understand the evolution of the
There are several estate-planning strategies that can be used to transfer business wealth efficiently. Buy-sell agreement A buy-sell agreement is a legally binding agreement for transfer of ownership when one owner exits. The agreement is usually funded with life and disability insurance. Typical models include cross-purchase and stock redemption. A cross-purchase arrangement involves business partners
Advisors can play a role in helping clients navigate the many options for transferring business ownership. Step 1: Choose a successor • Sell to partners. This option may provide continuity with customers and associates, but a sale in the open market could be more valuable. • Transition to family. Family ownership can have challenges and
From financial security to providing for family members, succession planning is an important process for any business owner. Unfortunately, many entrepreneurs, particularly small, family-owned businesses may not have a plan in place. Of the more than 25% of family-owned businesses expected to change hands in the next five years, nearly half of them do not
With major changes to estate and gift tax rules on the horizon in 2013, affluent investors should consider taking action now to plan a financial legacy. Download Putnam’s new investor education piece, Gifting opportunities in 2012, for details on: The federal gift tax rules Rules about lifetime gifts How gifting strategies may skip a generation
Unmarried couples have unique financial planning considerations because the rules involving retirement, insurance, income taxes, and estate taxes differ from those that apply to married couples. Fortunately, planning strategies may be used to deal with varying limitations or exclusions. Retirement. Beneficiary designations are critical for unmarried couples because they cannot take advantage of rules governing
Next year the federal estate tax environment will change dramatically unless legislation is passed in Washington. In fact, according to the Tax Policy Center, the number of estates subject to tax will increase by over ten times (roughly 3,600 taxable estates to over 43,000) while total estate tax revenue received by the government will increase
While much attention has been focused on the new federal estate tax, clients working on estate planning also need to know that many states have estate or inheritance taxes. Exemptions vary, and some states have laws that set exemption rates that are not as favorable as the federal law. The federal estate tax is set
The increase of the estate tax exemption amount to $5 million per individual will dramatically reduce the number of estates that will have to pay estate taxes. Does this mean that only families with significant wealth need to focus on estate planning? The reality is that proper estate planning extends well beyond minimizing or preparing
With the estate tax reinstated by the 2010 federal tax law, now may be an opportune time to review estate tax strategies with clients. The current tax rate is in place only until the end of 2012, and after that, estate tax rates could rise. As Congress increasingly focuses on the national debt, rising income