Keeping the Family Business in the Family

Keeping the Family
Business in the Family

By Gary Pendleton, CFC, Safran Law Offices, Raleigh, NO
Many owners of architectural and engineer¬
ing firms have not been made aware of the
impact that a premature death or disability
could have on their company.
The current estate and inheritance taxes
only occur after both spouses are deceased.
Many professional advisors say, “we will
assume that Mr. Smith will live
to age 75 and Mrs. Smith to age 81,
which is normal life expectancy.”
But suppose both Mr. and Mrs.
Smith die unexpectedly in an
accident. At that point, there is
a $600,000 exemption on their
estate (net worth plus all life
insurance owned by them or
their estates.) The portion of
the estate in excess of $600,000 incurs federal estate
taxes running up to a rate of 55%.
This could be a big problem for anyone, but espe¬
cially for the owner of an A/E firm who wants his or her
child or children to own the company upon their death.
Normally, the business comprises 75% to
80% of the owner’s total estate and would
have to be sold (often at a “fire sale”
price) to pay the death taxes.
The government demands that the
taxes be paid in cash or check within
nine months of the death(s). With
some legal work, the $600,000
exemption can be doubled to
$1.2 million. Usually for a suc¬
cessful business owner, there is
still a serious shortfall in liquid
cash to pay the government.
Second-to-die life or survivor
life insurance is an inexpensive
way to pre-purchase those need¬
ed dollars to pay Uncle Sam. A
50-year-old couple would pay 8 cents on the dollar.
Few people ever do any estate planning and fewer
still do their planning sufficiently. Take a look at your
business today to plan for the future!
Georgia Amends State Energy Codes
continued from page 21 .
affecting not only cooling costs, but increasing problems
associated with air quality.
According to Patrick Downey, (a member of the
Atlanta Cool Community Steering Committee and a Reg¬
istered Roof Consultant with RCI), high albedo roofs
can be effective in areas where the air conditioning
expense is greater than the cost of heating. (Cool Com¬
munities is a program of American Forests. It has chap¬
ters in eight cities and encourages the use of strategical¬
ly-planted shade trees and light-colored building sur¬
faces to reduce the urban heat island.) A combination of
insulation and materials with high albedo appear to be
the recommended treatment throughout the Sun Belt.
Insulation materials slow the transfer of heat into and
out of the structure, particularly important during
cloudy days and cool nights. High albedo treatments are
better at reducing the heat island effect because they
can reflect most of the sun’s energy away from a materi¬
al’s surface before it is converted into heat. This bene¬
fits the building occupants by lowering air conditioning
bills and the rest of the neighborhood by reducing the
heat island effect.
Copies of the Georgia amendment are available from
the Georgia Department of Community Affairs (DCA),
Codes and Industrial Buildings Section, or the Southern
Building Codes Congress International (SBCCI).
(See a related article, “Cool Construction Materials, ” by
Patrick L. Downey in the September 1996 issue of Interface .)
22 • Interface May 1997