TAG

Business succession

Ownership transition after death, disability, or exit.

EST-01 · 01

Buy-Sell Agreements and Business Succession After Death or Disability

8 MIN · EST

A buy-sell agreement decides who buys a departing owner's interest, at what price, and with whose money. Those three answers must work together, because they fail together.

Structure, valuation, and funding are one system. A well-drafted price clause with no funding produces a lawsuit, not a purchase.
Cross-purchase gives the surviving buyers a cost basis in what they acquire; a redemption by the company does not.
In 2024 the Supreme Court held in Connelly that insurance proceeds funding a redemption obligation count in valuing the company for estate tax.

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EST-05 · 02

Family Limited Partnerships and Valuation Discounts: Where They Hold and Where They Break

7 MIN · EST

A discount on a family entity interest is an appraisal conclusion the government tests against how the entity was actually run. This brief separates the facts that support it from the facts that destroy it.

Discounts rest on two economic facts: a minority holder cannot control the entity, and no ready market exists for the interest.
The main federal attack is IRC section 2036, which pulls transferred assets back into the estate where the transferor kept enjoyment or control.
The statutory escape is a bona fide sale for full consideration, which courts read to require a legitimate and significant non-tax purpose.

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EST-09 · 03

Succession for Farms and Illiquid Real Property: Keeping the Land Out of a Forced Sale

8 MIN · EST

Land is worth a great deal and produces very little cash. This brief sets out the federal relief provisions and the state title problems that decide whether a farm survives a generation.

Succession for land is state property and probate law with a federal tax overlay; the title problem is usually older and harder than the tax problem.
Special use valuation lets qualifying farm and business real property be valued at its actual use, subject to a long recapture period.
Where a closely held business is a large enough share of the estate, the tax on that interest can be paid in installments over many years.

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