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B usiness Owner: Passing It On.
The Challenge
You have built a highly successful business and are looking forward to retirement. Two of your four children are actively involved in the business, but you would like all of your children to benefit from the economic success of the business. However, you realize that the children with management responsibility should continue to run the business. You are also concerned about depletion of family wealth by the risk of business liability.
Our Solution
As one step you can take to meet your objective, Hawthorn suggests that you create a family limited partnership to hold all interests in the family business, establishing a corporate general partner to limit liability. By making discounted gifts of minority partnership interests to all of your children over time, you can reduce the transfer tax on the current value of your business and avoid tax on its future appreciation. By giving interests in the general partnership to the children who work in the business, you assure they will continue to control the business, while all of your children participate in its financial success as limited partners.
Customer Benefit
You have passed on a significant portion of your wealth to your children in a tax-efficient manner, while limiting the risk of business liability for family members. You also have responsibly provided for the continuity of your business. |
