Donor-Advised Fund (DAF). It may be possible to gift a portion or all of the business prior to the sale to a donor-advised fund and allow the DAF to sell the donated asset without triggering a taxable event. The tax savings on the gift to the Donor Advised Fund may offset the tax due on any portion sold outside the fund.

Private Foundation. While donors get a deduction for basis (or fair market value, if less), a foundation does work to offset the gain once a taxable event, like a business sale, has already occurred. Aside from the income, gift, and estate tax benefits derived from charitable giving, a private foundation provides more control over the funds and property gifted annually to a charity.

Because of the complexity of the law and regulations governing all of these strategies, individuals considering utilizing any of these are strongly advised to consult with an attorney, CPA, IRS enrolled agent, or other competent financial professional. In addition, many charitable organizations have professionals on staff that can provide insight and guidance in designing and implementing charitable remainder trust planning.

A wealth management advisor should also be part of your inner circle of trusted advisors, joining your attorney and CPA in addressing your business sale and succession planning. A trusted advisory relationship begins with an initial review to understand the business and the owner’s personal needs, resources, and financial goals. Next, it identifies gaps and concerns that may impede achievement of desired financial goals. Finally, a customized financial roadmap is created with input from other advisors, such as a CPA and attorney, to provide a comprehensive business exit plan that ensures the sale proceeds go to your family’s financial future and your legacy.

Charles Claver is a Wealth Management Advisor for First Bank Wealth Management. Possessing 17 years of experience in the financial services field, his expertise includes private wealth, investment/retirement/estate, commercial/ personal lines of insurance, and private banking. Wealth Management products and services are provided through First Bank, and its affiliates and subsidiaries. Investment and insurance products are offered through INFINEX INVESTMENTS, INC., Member FINRA/SIPC. First Bank Wealth Management is a trade name of First Bank. Infinex and First Bank are not affiliated. Infinex does insurance business in California as Infinex Insurance Agency, CA Agency License #0H30186. Products and investment advisory services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. Infinex does not offer legal or tax advice. Consult your legal and/or tax advisor for more details.

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