But take note: Each of these options can carry a heavy tax price.
Strategy: Establish a “stock bonus plan,” instead. As the name implies, your company issues shares of stock to the intended successors as bonuses paid in partial compensation for working for the company. Done right, this is a tax-favored way to transfer full or partial ownership of the company.
With a stock bonus plan, you generally don’t transfer the business overnight.
For example, say your corporation gives out annual $200,000 stock bonuses to each of your two children. It would take five years to transfer stock worth $2 million to them, which may comprise a majority ownership interest, depending on how much stock you still own. So, if this type of...(register to read more)
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