Tax Changes in 2013 Spark More Concise Business Succession Planning

By Frank L. Brunetti

Uncertainty surrounding possible changes to estate and gift tax law in 2013 is prompting many business owners to reevaluate their succession strategies. Essentially, business owners are considering trying to maximize the value of their gifting now, rather than run the risk that taxes on such transfers will be higher in 2013.

The current $5.12 million gift tax exemption will expire at the end of the year and revert to $1 million in 2013, giving business owners a small time frame in which to pass on assets that are expected to appreciate in value before the changes go into effect. In addition, the 35 percent tax rate attached to federal estate, gift and generation-skipping taxes is expected to rise to the top rate of 55 percent.