New proposed estate tax regulations by the U.S. government could have significant consequences for some taxpayers. According to a recent article in The Miami Herald, “the U.S. government is now proposing new estate tax regulations that will make transferring assets without paying hefty estate taxes much more difficult.” This means those who own family businesses or closely held businesses that are owned and controlled by the taxpayer could be in trouble.
What kind of trouble do we refer to if you are in one of these groups? Your children, descendants or beneficiaries could face paying a large sum for the estate tax upon one’s passing. Traditionally, there have been ways to mitigate paying large sums. One of the most common methods is by transferring a minority interest. Of a closely held business to a child or descendant during the owner’s lifetime. Others include structuring entities as family limited partnerships.
These methods ultimately prove beneficial for those facing the possibility of large estate taxes since estate tax regulations require changes. Because the government expects payment nine months after the date of death. In some cases, beneficiaries of the estate have had to sell a business or other assets in order to cover the estate tax.