Transferring your closely held business to your children could likely have a favorable tax outcome.
Note that a gift of a family business doesn’t necessarily need to be made directly to your children. The gift can be made to a trust with special provisions to prevent future GST tax (Generation Skipping Transfer Tax). The trust can even be drafted to allow you to continue paying the income taxes on the asset(s) transferred to the trust. You may be thinking, “why would I want to continue paying the income tax after I have gifted the business to the trust”? The answer is that you can “burn” your other assets, further reducing your exposure to the estate tax down the road and allow your children to not assume that burden.
If you have a family business that you would like to transfer to your children this year, call me at (760) 448-2220 or email me at firstname.lastname@example.org as soon as possible. We have many clients that are taking advantage of these opportunities and it will take some time to get this all accomplished.