How to Benefit from Creative Use of an ESOP

An employee stock ownership plan is not just a way to reward longstanding, loyal employees with a stake in the business. Creatively employed, it can bring significant tax benefits to owners and employees alike.

Let's take the case of a fictional couple, Jim and Dolores Becker, who, like the heads of many family businesses, think of their employees as part of an extended family. The Beckers, who started their company 25 years ago, are now well off. They own 100 percent of the stock in the company, which represents virtually their total assets. While they plan to remain active in the management of the business, they want to transfer most of their holdings to their six children and ten grandchildren, and to their extended family — the employees — through an ESOP.

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