Forming an LLC can leave you in control as you transfer assets to heirs

If you own a small, closely-held company and want your heirs to inherit it with a minimal tax exposure, consider a limited liability corporation structure. You can continue to control the assets and run the firm while gradually transferring assets to your heirs.

I recommend: Find out about LLCs and business estate planning at CPA Journal and get a sample LLC form at Legal Survival or a customized one at LegalZoom.

Consider a life insurance trust

You may want to set up an irrevocable life insurance trust (ILIT) if your designated successors might not have the funds to buy your business after you're gone. An ILIT allows the proceeds from the insurance to be used by the successors to purchase the business.

I recommend: Estate planning information on ILITs and other planning procedures is available from Scroggin & Co.

An installment sale can help with taxes

An installment plan allows you to sell your company to a family member over time through a manageable payment arrangement. It can also decrease the amount of taxable income created by the transaction.

I recommend: Get information on installment sales at Financial Planning magazine.

Build flexibility into your plan

With changes in tax rates, both federal and state, occurring with regularity, it's best to build a plan with flexibility in it and to adapt that plan as tax laws and rates change.

I recommend: LegalZoom offers tips on adding flexibility to your plan.

Bone up on the ins and outs of estate plans for business

Do your homework before consulting an attorney or a financial planner about setting up an estate plan for your business.

I recommend: Learn more about taxes and small businesses at www.nolo.com