The stock market is down by more than a third, the real estate market has given up years of gains, your business is off from prior years’ performance, and the economic outlook is decidedly gloomy. But there is a silver lining for those whose estates are larger than the current Estate Tax exemption level of $3.5 million.
Now is a great time to think about wealth transfers to the younger generation. By combining depressed asset values with other Estate Planning techniques you may be able to transfer wealth at bargain basement prices, saving Estate Taxes that begin at a rate of 45% on each dollar over the exemption. Transferring minority interests in a business, commercial real estate, or family investment entity right now to insure continuity and train the next generation makes sound business sense. And it may also result in valuation discounts averaging from 10% to as high as 40% of today’s already depressed market value.
Don Schaffer is a CPA and member of the CJBS Business Valuation, Systems Consulting and Tax Practices team. Don works with numerous Estate Attorneys in developing tax saving plans for high net worth individuals and businesses. He also provides litigation support in the areas of valuation and investigative accounting for business disputes and marital dissolution cases.