Impact of Estate Tax Changes on Small Business Owners

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 again raises the issue of estate tax planning as it reinstates the estate tax and sets it's rate at 35% for estates of decedents dying in 2010 (for estates not electing old rules), 2011, and 2012.

And even though each decedent has an exemption amount of $5 million many small businesses will find that they still will have estate taxes due.

According to an American Family Business Foundation study 67% of all taxable estates will include small business interests. That means up to 22,000 farms, 14,000 real estate partnerships, and 29,000 privately-held corporations will be potentially liable for estate taxes in 2011.

So with these changes it's important that all business owners have their estate plans reviewed now by their tax advisers. Other wise it's quite possible that if the unforeseen happens there may be an unexpected visit by the tax collector that could have been reduced or avoided.

As always to be forewarned is to be prepared!