Family Transfers

Transferring a business to the succeeding generation is the realization of an American dream. Family transfers, more than any other type, require a long‐term perspective on the part of the transferors, usually the parents, and the transferees, typically the children. The transfer methods are categorized as estate freezing techniques, which remove an asset from an estate and allow the beneficiary to realize the appreciation in the asset. This chapter explores into numerous transfer methods, many of which are highly regulated, technically complex, and subject to frequent changes by taxing authorities and the courts. The chapter also describes a handful of advanced estate planning techniques that enable private business owners to transfer their business to family members yet minimize taxes due on the sale. Family transfers are valued in the world of fair market value. This world and its trusts are highly regulated. Trusts are engineered techniques that create a buyer, usually the trust, to facilitate a transfer. In several cases, such as SCINs and GRATs, the transfer method becomes the capital for the transfer. This enables equity to transfer without any cash changing hands.