Saving a family business for future generations

The greatest threats to the continuing family ownership of privately held companies are usually bad family dynamics and taxes. But a creative use of trusts can significantly reduce those risks. This article looks at a classic family situation with and without the trusts. The incorporation of trusts...

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Bibliographic Details
Published inTrusts & Estates Vol. 141; no. 12; p. 41
Main Author Pelt, Bill Van
Format Trade Publication Article
LanguageEnglish
Published New York Informa 01.12.2002
Subjects
Agreements
Children & youth
Equity financing
Estate planning
Estate taxes
Families & family life
Family owned businesses
Generation skipping tax
Generation skipping trusts
Income taxes
Management decisions
Planning
Sales
Stockholders
Succession planning
Transfer taxes
Trusts
Valuation
United States > US
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Summary:The greatest threats to the continuing family ownership of privately held companies are usually bad family dynamics and taxes. But a creative use of trusts can significantly reduce those risks. This article looks at a classic family situation with and without the trusts. The incorporation of trusts into a business succession plan can greatly increase future generation's planning flexibility for and economic value. Designing trustee provisions with an eye towards the family and business life cycles, one can accommodate the changing involvement of the family-owners. Maximizing the use of the generation-skipping exemption and utilizing limited powers of appointment, the family can be given significant latitude to reshuffle their holdings within the extended family with little or no income or estate tax consequences.
ISSN:0041-3682