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MANAGEMENT two years of a contemplated sale), it again is critical to pull together your advisory team. Your trusted tax advisor/accountant (who knows you and your family and understands your ultimate goals) and legal team are obvious inclusions. In addition, at this point one should seriously consider adding an industry-spe- cific investment banker to the mix. While an investment bank will charge a fee based on a percent- age of the sale price, the services it provides – helping to create a mar- ket of interested buyers for your business and driving the process toward a deal that returns the high- est possible price – will maximize your return after the fee. If the transition will take place within the family, estate tax must be paid. This will likely be incredibly expensive and cause problems for future generations. For example, let's say a winery valued at $10 million is passed to the next gen- eration upon death and without any prior transfers of ownership. With- out including gift tax exemptions, a transfer of this size could trigger almost $3.5 million in taxes owed. Absent a plan or another source of cash to pay this bill, the estate would likely be forced to sell assets or liquidate the business, irrespec- tive of the decedent's desires or market conditions. REDUCING YOUR TAX BILL You can use any of a number of methods to reduce your tax bill while transferring assets or owner- ship. There are several points that bear recognition here: 1. In addition to a tax on transfers at death (estate tax), there is also a tax on transfers during one's lifetime (gift tax). These taxes are generally unified under the same system. 2. Transfers by way of gift are more tax-efficient than transfers at death. 3. The government provides oppor- tunities to transfer a certain level of assets without the imposition of these wealth transfer taxes. For example, there is an annual gift tax exclusion of $13,000 per person per donee. A husband and wife with three children could, over 10 years, transfer $780,000 completely tax-free, by making three gifts of $13,000 each ($13,000 x 3 kids x 2 par- ents = $78,000 combined) a year for 10 years. These gifts can be in the form of cash, securities or ownership of your business. 4. These taxes are based on value, which often can be transformed with thoughtful upfront plan- ning. WWW.VWM-ONLINE.COM SEPT - OCT 2012 VINEYARD & WINERY MANAGEMENT 59