Morris, Hall & Kinghorn attorneys work closely with clients to ensure optimum terms for the transfer of business interests to the next generation, from the tax as well as the non-tax perspective, including consideration of family dynamics and the client’s wish to minimize conflicts among family members and co-owners. We have particular expertise in designing family limited partnerships and limited liability companies, and in utilizing buy-sell agreements, often including life insurance arrangements, in a variety of situations.

Lifetime Transfers

Lifetime estate freezes intended to shift the income or appreciation of the business to younger generation beneficiaries must comply with IRS guidelines in order to avoid adverse gift tax consequences. Our experience in tailoring partnership and operating agreements within such guidelines facilitates tax-advantaged transfers of business interests to our clients’ family members. Gifts of options and of restricted stock, and qualification of trusts as S Corporation shareholders, are other areas in which we have particular expertise.

Testamentary Transfers

Where business interests are to be transferred at death, the terms of that transfer should be integrated with the client’s overall estate plan in order to minimize intra-family disputes. Estate planning for business interests also includes consideration and implementation of special tax provisions intended to reduce or defer estate tax, such as stock redemptions and certain exclusions and extensions available for qualified family owned or closely held business interests.  

Valuation

One of the most critical issues in business succession planning is the process by which an interest in the business will be valued at the time of its subsequent transfer. In evaluating the appropriate method, we consider the specific purpose of the contemplated transfer as well as the future feasibility of the process. We work closely with appraisers and related valuation experts during both the planning stage and after the transfer, and advise our clients in connection with the reporting of their transfers on gift and estate tax returns.