Sprinkled among the political thunder and lightning we’ve tried to escape this year is a proposal to change tax rules affecting transfers of ownership of family businesses. There’s a lot of hype, panic, outrage and confusion over proposed changes to Internal Revenue Code (“IRC”) Section 2704. If your family owns a business and has been advised to plan ahead to reduce potential estate tax, these changes are targeted at you.
What is changing? Frankly, we’re not entirely sure. The only thing top estate planning lawyers and business valuation experts across the country agree on is the proposal is indecipherable as written. But to sort through some of the implications, let’s start with understanding where we are now.