Are your family business assets shielded from your personal assets so your personal assets are not at risk for business activities? Do you have a clearly drafted, and well thought out, business succession plan? When was the last time you reviewed your succession business plan and its business valuation formula? Doing so may be the difference between continued success and certain failure in order to pay: 1) estate taxes; 2) creditors; or disputes between business partners (or their spouse’s in case of death or disability).

Besides considering gifting business interests to family members this year, you should annually review your business plan, which should include a look at buy-sell provisions and their valuation formulas. Having this information up-to-date is critical in case of a co-owner’s departure from the business, either voluntarily, by death or disability. It also is a good opportunity to integrate business assets into your estate plan using family generational (or dynasty) trusts. While the gift threshold is temporarily high you may put more assets into such trusts for the benefit of your descendants and simultaneously further reduce your taxable estate. In addition, the trusts will provide asset protection for your descendants. A carefully planned integration of the business with your estate plan will prevent the sale of the business to satisfy family disputes or to pay estate taxes.

Remember too, business entities must adhere to the statutory mandates of operating a business. They must keep proper records, timely meetings, minutes, etc. All of these matters should be reviewed to lower taxes, provide a smooth transition of management/ownership and protect assets.

People who have had their estate and business estate planning intentions limited by the previous $1 million gift tax exemption, definitely should consult their estate planning attorney to consider gifting this and soon before these benefits become lost opportunities. People with real estate, business interests and multi-generational gifting desires will benefit the most.