In past articles we covered investments to have your business pass to second, third and possibly even fourth generations. As you may recall, very few businesses are able to arrange such successions. One alternative might be to gift your business to a willing, capable person(s). Let’s go over some basics.
It should come as no surprise to you that there is a Tax to gift property. It’s simply called a Gift Tax. Each year you are able to Gift property up to $14,000 without facing this tax. This applies to each individual. So if you have two children, for example, then you are free to gift up to $28,000. In addition, if your spouse consents, you can gift $28,000 per person. Again using the above example, two children with spousal consent gives you $56,000 Gift Tax free each year. There is nothing that prevents you each year gifting above that amount. However, remember amounts above that simply reduces your federal and New York State Estate tax exemptions.
In closing, we will deal with that area in our next post. So please stay tuned.