There are additional estate planning tools available to the owner of a closely held business. Many advantages of these tools are related to the income tax structure of the business. Some that may be beneficial in estate planning, may have income tax disadvantages. Their use may also be contingent upon the relationship of the business estate to the personal estate. The following is a brief discussion of some of the tools available for the business owner.
Many people own and operate small businesses, and family members are often involved.
The incorporation of the business, combined with a program to make annual gifts of closely held corporation stock, may have excellent estate planning results. These include the tax-free transfer of future appreciation to family members, while maintaining income and voting control. This is a very complex area of planning. You should work with your tax and legal counsel to determine whether or not incorporation of your business is advisable. Incorporation may have drawbacks from income tax, workmen's compensation and unemployment insurance standpoints.