Depending on your other assets, a business worth more than about $1.7 million could generate an estate tax of 40 percent of its value above $1.7 million when you die. A business worth more than about $2.7 million could generate a tax of 50 percent of its value above $2.7 million. The complaint that a family business has to be sold to pay the taxes is a common one, and there is no happy solution for owners of family businesses who want to pass the business on to their children. This chapter examines some of the mistakes that business owners make that exacerbate this problem.
The federal estate tax starts at 18 percent on a "taxable estate" of $10,000 or less. It doesn't stay there very long. It climbs to 30 percent once the taxable estate exceeds $100,000, to 37 percent once the taxable estate exceeds $500,000, to 41 percent once the