Personal Planner- Family Business: Sell and Retire

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Personal Planner (Family Business-Sell and Retire)Bill and Alice started their family business many years ago. The early years were very challenging. Both worked without salary and it was a great struggle to finally get the business on a solid financial base. But after three decades of building the business, it now runs very well with an excellent cash flow.

They are now nearing retirement and enjoying this phase of life. Bill and Alice have their home, two IRAs and savings. But a major part of their net worth is the value of the family business. When they retire, they would like to sell part or all of the business.

Like many business owners, they face two major decisions. First, will they sell to family members or to an outside party? Second, should they sell for cash and pay a very large capital gains tax or should they use a tax-free sale through a special charitable trust to reduce or eliminate their tax?

In the case of Bill and Alice, they have decided that it will be appropriate to sell to a third party, and have had offers from two larger companies. After considering the offers, Bill stated, “I am a loyal American and I support my government. However, I have fully supported the government through taxes these past years! If there is a way to sell and reduce tax, I am very open to learning about that.”

In summary, Bill and Alice have two major goals for the sale – they would like to have a very good retirement income and reduce their taxes.

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