In an article published recently in Accounting Today, Jeff Call provides insight on the relationship between tax reform and business entity, he reflects on the long-term effect that entity choice may have on succession planning. Entity choice may have a huge impact on succession planning, particularly in smaller businesses, because they have a greater challenge Call explains. “More often than not, the issue is passing a firm down to generation two or three,” he says. “The key is finding a way to do this effectively from an estate tax standpoint. Many times the owner wants financial remuneration.”
Call also says that if the estate tax goes away, the necessity of using a trust is less of an issue. “The business owners may make direct gifts to the children without a trust structure unless they are concerned about asset protection and other benefits of a trust. It may be less costly to transition the business if there is no estate tax.”
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