What is the best way to transfer the business within the family?
If you just gift it during your lifetime, you face potential tax problems. You are allowed to give up to a total of $12,000 in cash and/or other assets, per person per year without having to report the gift for federal tax purposes. If you’re married and your spouse joins in the gift, the amount increases from $12,000 to $24,000. If you and a spouse make a gift to a child and his spouse, the total you can gift in the year (before having to report it) would be $48,000. To the extent the gift exceeds $12,000 (or $24,000 if married), you must file a gift tax return. But no gift tax is due until your gift is in excess of one million dollars. But if your business is worth more than you’ve given to them over the years, that is probably not a good solution because they may still wind up having to pay substantial taxes. Another option would be to form a partnership with your child. This, too, creates some problems because partnerships automatically end with the death of a partner. If you pass
