Shift your perspective from a year-end tax and financial planning to year-round instead . Start the planning process well in advance and make sure you have the right team in place to ensure the best possible outcome for you , your family , your dealership , and your community .

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EZZO can pass to your heirs without being taxed on it . Even if the current Administration is not successful in this pursuit , the current lifetime exemption is set to expire at the end of 2025 and will be cut in half then .

While $ 25.84 million sounds like a lot of money , it ’ s not as much as it seems when you factor in the value of your business , which is a big part of most dealership owners ’ net worth . Everything over $ 25 million that you own is taxed at the highest marginal ordinary income tax bracket , which is almost 40 % as of 2023 . Now just think about the impact of the exemption getting reduced in half .

Fortunately , there are many ways to shelter and protect your assets without giving up control . The idea is to use up the exemption that ’ s available now and allow those assets to appreciate outside of your estate . That will save your family and heirs many dollars in taxes down the road . But it takes some time to get those strategies in place . Don ’ t wait until 2025 to get your estate plan in order . It ’ s especially important to do so if you ’ re contemplating an exit .

4 . OPTIMIZING YOUR WALK AWAY MONEY

Before starting the sale process , it ’ s very important to huddle with your accountant and financial planner to determine how much income you need to have ( after taxes ) to maintain the lifestyle you want to have post-sale . Knowing that number will help your investment advisor know how aggressively to invest your money to generate the income you need .

By calculating your after-debt , after-tax cash needs , you can back into how much you need to net from the sale of your business . As you start to get letters of intent ( LOIs ) from potential buyers , keep in mind that the highest gross offer is not always what gives you the most net walking away cash . A lot depends on the structure of the offer and what you can negotiate . You want to evaluate each LOI carefully .

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CONCLUSION You ’ ve worked hard to build your dealership . Shift your perspective from a year-end tax and financial planning to year-round instead . Start the planning process well in advance and make sure you have the right team in place to ensure the best possible outcome for you , your family , your dealership , and your community .

Brad Stanek , CFP is an Executive Director and Financial Advisor with The Stanek Group at Morgan Stanley in Chicago , IL brad . stanek @ ms . com .

Paulina Matel , CFP , CEPA is a Financial Advisor with The Stanek Group at Morgan Stanley in Chicago , IL Paulina . Matel @ morganstanley . com .

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