Andrew Ewalt's Law Blog

Protecting the Family Business or Farmers

Estate taxes can become a very real problem when an estate includes a farm or real estate used in a family business. Since federal estate tax have been repealed for only one year (2010), and Connecticut has recently implemented it own separate estate tax it is smart to plan now. 

For federal estate-tax purposes, land and buildings have to be valued at their “highest and best use.”  Thus, a farm that could be sold to a developer for more than it is worth, as a farm generally must be assessed at the higher fair market value. Unless the farmers family has another source of cash to pay the tax this may mean the farm will have to be sold in order to create the dollars necessary to pay Uncle Sam.

Proper planning now can help the farmer get around this problem.  If you are in this situation please call me now so we can advise you of any steps you should be taking to protect your family business or farm.

Business Sucession Planning

Statistically, only thirty percent of family owned businesses survive from the founding generation to the next generation. Beyond that generation the success is even worse.

The primary reason for the lack of success rests on the fact that most business owners fail to make plans, have the wrong plan or have not updated the plan. 

A comprehensive estate plan should include planning for the succession of the business. Here are some things to consider.

1.  If some children are active in the business and others are not, how do you treat everyone equally?

2.  If they business is to be sold to a third party how can the sale be structured to protect your family and loved ones?

3.  Will there be sufficient liquid cash in the estate to pay any death taxes or will the business have to be liquidated in order to raise the cash needed?

If you are concerned about the succession of your business it is very important to plan accordingly.