How can a small business owner pass an interest to heirs without triggering a significant estate tax bill? Despite generous tax breaks, there still may be obstacles to overcome, especially with the estate tax exemption scheduled to be cut in half in a few years.
Fortunately, business owners may rely on an ace in the hole: the special use valuation method. This election by an executor can save a family thousands in estate tax.
But the tax payoff isn’t automatic. The election is allowed only for real estate property used in a closely-held business or a farm meeting certain requirements.