Business & tax
For many business owners, the business is the largest part of what they will leave behind. This service focuses on two questions: who will own and run the business next, and how that transfer fits with estate and gift tax planning.
What this service covers
This page focuses on planning the transfer of ownership, whether to family, to partners or to key employees, and coordinating that plan with estate and gift tax. Day-to-day business issues, disputes and return preparation may call for separate advisors.
Ownership succession questions
- Who should own the business after you, and who should run it? These are not always the same people
- How to treat children who work in the business and children who do not
- Whether a transfer should happen gradually during life or at death
- What happens to your interest if you become disabled
- How an existing partner or co-owner fits into the plan
- Whether existing agreements among owners match your estate plan
Estate and gift tax coordination
A business can be hard to value, and its value can change quickly. That affects both lifetime gifts of ownership and the size of an estate at death.
- Gifts of ownership interests during life, and how they are documented
- Valuation of a closely held company for planning purposes
- Liquidity: whether the estate will have enough cash without having to sell the business
- The use of trusts to hold business interests
- Coordinating insurance used to fund a transfer or to provide liquidity
Documents that need to line up
Succession plans fail when documents contradict each other. Your will, any trust, and the agreements that govern the business should work together. Part of our work is reading them side by side and noting where they conflict.
Working with your other advisors
Your accountant and financial advisor know your business. We are happy to coordinate with them so that the estate plan reflects how the business really operates.
How to prepare
- Describe the business: its structure, owners and rough size
- Gather operating agreements, shareholder or partnership agreements and buy-sell documents
- Write down who you hope will own and run the business, and your concerns about that
- Collect any recent valuations or financial summaries
- Bring your existing estate planning documents and insurance policies
Common questions
Do I need to decide on a successor before I meet with you?
No. Many owners come with a list of possibilities and open questions. Talking it through is part of the process.
Can you handle my business's tax returns or day-to-day legal needs?
This service page focuses on ownership succession and estate and gift tax coordination. For tax return preparation or day-to-day business issues, ask how to work with your accountant or other advisors.
Will planning reduce the tax on my business?
Some approaches can affect tax exposure, but no outcome is guaranteed. We explain the options and trade-offs for your facts.
Can someone inherit ownership without taking over management?
Yes, ownership and management can be separated, depending on the business structure and governing documents. A plan should identify who receives the economic interest, who has decision-making authority and how those people will work together.
How can I treat children fairly if only one works in the business?
Fair treatment does not always mean giving each child the same ownership interest. Other assets, different economic rights or a carefully structured transfer may be considered. Compare those options with the business's cash needs and your family's circumstances.
Can I transfer business ownership gradually during my lifetime?
A gradual transfer may be possible, but ownership restrictions, valuation, tax reporting and control all need review. Gifts and sales have different consequences. The transfer should also leave you with the income and authority you still need.
Do I need a professional valuation of the business?
A professional valuation may be important for a gift, sale, estate tax return or agreement among owners. Financial statements alone may not establish the appropriate value. The purpose of the transfer helps determine what valuation support is needed.
How does a buy-sell agreement fit into my estate plan?
A buy-sell agreement can determine what happens to an owner's interest after death, disability or another event. Its transfer terms, valuation method and funding should be reviewed alongside your will and trust so the documents do not create conflicting obligations.
What should happen if I become unable to run the business?
The plan should address both operational leadership and authority over your ownership interest. Governing documents, powers of attorney and trust terms may each play a role. Make sure the people expected to act have appropriate authority before a crisis occurs.
How can the estate cover expenses without selling the business?
Planning may consider available cash, insurance, reserves or an orderly purchase arrangement. Each option has costs and limitations, and funding should match the obligations it is meant to cover. No approach guarantees that a sale will be unnecessary.
Talk with us
The first consultation is free. Call (208) 586-3266, email ajj@andrewjohnson.law, or use the contact page to request a consultation.
Contact the practiceThis page offers general information, not legal advice for your situation. Laws change and individual facts matter.
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