How to Transfer or Gift a Business with Minimum Taxation




Often using an LLC, a trust or family limited partnership can be a great way for an owner to retain control of a business while distributing shares of the business to his family members and or business partners. 

For various legal alternatives we recommend you use an attorney who specializes in business succession and estate planning.

Larry Scherer of Scherer & Associates, PLLC can assist in the structure and design of the legal documents. He can be reached at 516-747-7007.

Every business should have a buy-sell agreement.  This is the business’ “will or prenup”, so to speak.  All too often we find that the buy-sell agreement is overlooked in our clients’ estate and retirement planning.   A good probing question for an agent could be:




Quite often a business needs a solid valuation to determining the fair market value of what may potentially be our client’s biggest asset.  It is best to think of the buy sell agreement as the key to your client’s exit strategy and is very often the case that the agreement needs to be funded with life insurance and/or buy-sell disability policies.




If it’s a classic case where there are business partners there are multiple ways of funding a buy-sell agreement through cross purchases or corporate ownership.  All of these methods typically get funded with Life Insurance or Disability Buy-Sell Policies.


 What if a business owner is uninsurable?

We recently came across a case with a 78 year young owner who wanted to pass his business to his three children.  He was uninsurable and in addition has a potentially large estate tax as well as a succession issue of transferring his business.  We came up with a solution utilizingPresidential’s *Legacy and Income Annuity*; a Joint annuity product.

Here’s how it works.  For each child Mr. X purchases a million dollar annuity.  Mr. X will receive $56,000 per annuity per year as long as he lives. 

For 20 years after he passes (provided he doesn’t outlive his healthy children) they will receive $56,000 per year.  These income streams by the way are very tax favored.
If Mr. X lives for 10 years he would have received $560,000. Each child would receive $56,000 for 20 $56,000 for 20 years after = $1,120,000. Together $1,680,000 of income.

Moneys continue until both joint annuitants pass.  As you can see there are great possibilities of huge income from this.


 Estate and Gift Taxes

  • Money placed in these annuities is instantly discounted at the first annuitant’s death.
  • Money is equally distributed between his three children by contract not by will.
    If Mr. X. does not have liquid cash, money could be borrowed at historically low rates to accomplish this.

At Main Street Planning Group we have innovative solutions to help you solve your client’s needs.  Let’s discuss a sample case and help you with some solutions.

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