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A Business Succession Planning Case Study
Hypothetical client scenario for illustrative purposes only.
Getting in front of estate taxes
Several years ago, we met with a business owner and talked about the bite that estate taxes would take out of the wealth that he wanted to leave to his children.
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We explained that there was the potential to mitigate estate taxes by transferring shares to his children during his lifetime—and that the sooner he did, the greater the tax savings could be.
He understood the strategy but his main concern was living well in retirement, and he did not want to risk that by giving away property to his kids now. We suggested running some financial projections to get a better idea of how much of an impact transferring shares would have.
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Our analysis showed that he could afford to give away a meaningful amount and still have the lifestyle he wanted in retirement.
We shared these projections with him and recommended that he talk to his attorney about placing some of his non-voting shares in a trust for his children. His other advisors agreed that this made sense and put the plan in place. Today, the business continues to thrive and recently underwent a major liquidity event. Due to the father’s early planning, the family was able to mitigate a meaningful amount of estate taxes.
To learn more about how we can help you reach your goals, take a look at our Succession Planning Process.