With the federal income tax filing deadline coming this week, it is a good time to talk about taxes and how they may apply to estates. While federal estate tax applies to few estates (i.e. those valued at more than $3.5 million), it continues to be a controversial assessment. Further, it has been so unpopular that it would be very surprising if it were not part of the upcoming tax reform package Congress will vote on.
But in the meantime, the estate tax is probably the most disliked among all taxes. A Gallup poll, found that more than half people surveyed indicated that they hated the estate tax. As the old adage goes, “you can’t take it with you.” So why is there so much hatred and disdain for this tax?
It is probably because most would not want to give it to the federal government if they couldn’t take it with them. They would rather give it to people who would benefit from their legacy. Because of this, it is important for business owners with considerable interests to have not only an estate plan to provide direction for the distribution of one’s personal effects, but also to provide important details about how the business will be managed.
Such a plan is especially important if there are several people (i.e. children, siblings or business associates) who believe they have the right to take over the business, or liquidate it for their own personal gains. Because of this, business owners should understand that succession planning is just as important as estate planning.