August 2015 Newsletter - Click Here to Download Now

Continued from August 2015 Newsletter

What Is Your Interest?

When an estate planning strategy involves a business valuation, you need to be very clear about the business interest being valued. Commissioning a valuation of the entire company, then arbitrarily dividing it into segments, could distort the results and leave heirs facing substantial unplanned consequences.

These consequences can stem from the change in per-share value if a business is divided among several children rather than only one. This is because the value of a minority interest reflects different discounts from the pro rata value of a majority interest.

The potential of a swing vote situation, where a third small shareholder can influence a company’s decisions when two large shareholders disagree, may also affect the value of any shares you are giving to family members. 

An Effective Tool 

A professional valuation can be an effective planning tool for estates that include a business interest -- helping to build a sound financial foundation for you and your heirs.