An estate planning business valuation for privately-held businesses is essential when considering gifting, estate settlement, and Internal Revenue Service (IRS) reporting of an estate or gift transaction.
The goal of estate tax planning is to provide liquidity and continuity of the business. Throughout the process, it is essential to document the market value of the assets. While this is fairly straightforward to marketable or publicly traded securities, a thorough and well-documented analysis is required for illiquid or closely held assets.
The following are examples of the type of entities, interests, and situations where a business appraisal may be needed:
- Family limited partnership and limited liability companies, including entities holding real estate, marketable securities, or closely held common stock
- Gifting of closely-held stock and partnership/LLC interests
- Buy-sell and shareholder agreements
- Life insurance planning and funding
- Creation of non-voting stock for gifting purposes
- Trusts and LLCs