Blog Post

Estate Planning for the Business Owner Series, Part 3: Examples of Business Transfers and Valuations

Future Wealth Navigator

The purpose of this post, part three of our “Estate Planning for the Business Owner” series, is to provide a sample using real numbers showing the impact and benefit of using closely held business interests in lifetime gifting. Assume a new business-owner client comes in and says that he or she has never had his or her business valued, but based on the earnings and the industry he or she is in, he or she is confident that a third party would buy 100 percent of the business for $100 million. Let’s further assume that the effective income tax rate on the sale of the business is 30 percent, and the client has $13 million of gift/estate tax exemption available.

Option 1: No planning

Assuming the client is able to sell the business for $100 million, and keeps the net sale proceeds at a constant value until death.

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