2022

Retention bonuses are a valuable tool in ensuring that key employees stay employed, focused, and are committed to your company’s success after a business sale. Those employees may help seller achieve additional payouts that are earned based upon the sold company's performance.

Of the various charitable planning techniques that people use either before or after an exit, one of the most popular techniques - particularly as interest rates rise - is known as the charitable remainder trust (CRT). In a CRT, you’re giving a portion of your business interest to a trust that ultimately, at the end of the term or your life expectancy, will be paid out to the charity.

Your MSP should contain a short-term component that outlines what would happen if you died or became disabled tomorrow. It also will include your longer-term strategy if the unexpected happens, which will vary depending on where your business falls within the three frameworks described in the next section.

An irrevocable life insurance trust (ILIT) is an effective estate planning tool designed to collect the proceeds of your life insurance from a term insurance, permanent insurance, or second-to-die policy for the benefit of your family or other heirs without incurring federal or state income taxes or transfer (i.e., estate or generation-skipping transfer tax) taxes.

Bloomberg Tax projects that the basic exclusion amount for decedents dying in 2023 and the generation-skipping transfer tax exemption amount for 2023 will be $12,920,000 (up from $12,060,000 in 2022). The annual exclusion amount for gifts made in 2023 is projected to be $17,000 (up from $16,000 in 2022).

You’re probably familiar with the role of a board of directors (BoD). A board of advisors (BoA) usually is formed by informal action. The advisors don’t have the fiduciary duties or potential liabilities inherent in a board of directors. A CEO can handpick who serves, and no shareholder or board of directors’ approval is required. The advisors are governed by contract with the business.

An Intentionally Defective Grantor Trust (IDGT) is a type of grantor trust, which means the grantor pays the income tax earned by the trust. When you hear the term “intentionally defective,” you may think the trust is broken or somehow ineffective. An IDGT is a trust that is “defective” only because it is ignored for income tax purposes. The IDGT is very effective by helping beneficiaries avoid gift and estate taxes.

For anybody starting a business, the choice of entity is a crucial initial decision. A sole proprietorship is perhaps the most straightforward and least complex business entity, and it’s important to understand what a sole proprietorship is and why it may or may not be an appropriate choice for your new venture.