Transitioning a business is about more than finding the right successor—it’s also about preserving its value. Taxes can significantly impact how much you, your family, or a buyer retains during the transfer.
Here are three key strategies to consider:
1. Gifting vs. Selling the Business
Gifting a business to family members can reduce estate size, but may trigger gift taxes. Selling, meanwhile, can create capital gains tax. The best option depends on your goals and timeline.
2. Trusts and Other Planning Vehicles
Trusts such as a Grantor Retained Annuity Trust (GRAT) or Intentionally Defective Grantor Trust (IDGT) can help remove appreciating assets from your estate and reduce future tax exposure.
3. Start Early
According to the PwC 2023 Family Business Survey, only 34% of U.S. family businesses have a robust, documented succession plan in place. Starting now gives you more control and flexibility in structuring a tax-smart exit.
The Bottom Line:
A clear, well-structured succession plan helps protect your business value and legacy.
👉 Have questions? Let’s schedule a conversation about your transition goals.
Source: https://www.pwc.com/us/en/services/audit-assurance/private-company-services/library/family-business-survey.html
