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What pre-sale steps should an owner take in estate and wealth-transfer planning strategies?

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For entrepreneurs considering the sale of their business or businesses, estate-and wealth-transfer planning strategies may not be a top priority. But, to potentially take maximum advantage of certain pre-sale strategies, business owners should be thinking about estate and transfer planning well in advance of the actual event.

Here are five steps that may help those in the pre-sale phase of estate-and wealth-transfer planning.


Before an owner considers any transfers during his or her lifetime, an important question to ask is: How much is needed, post-sale, to live the lifestyle he or she desires? Owners should be careful that transfers do not jeopardize their ability to satisfy their needs. For owners used to receiving income from their businesses, it is important to plan for that sum’s replacement through reinvestment of sales proceeds.


Depending on the ownership and structure of a business, its operating, partnership or shareholders agreement may need to be revised to allow for the transfer of ownership, for gifting purposes. In the event of a sale, if one is imminent, changes in structure may not be permitted, as the buyer (or seller) may not want to risk making any modifications.

Business owners should be thinking about estate-and transfer planning well in advance of the actual event.


Prior to any sale or transfer, a professional, independent valuation of a business by a qualified appraiser should be completed. Timing of the valuation depends on many factors, including whether an owner plans to sell or transfer a business. Once that is determined, a target date for a valuation can be set.


Below are a few of the most common strate- gies that may be considered when making gifts of business interests. While these may be implemented after a business is sold, they may have a significantly greater impact if completed prior to a sale.

Gift of ownership: A gift of shares or business interests will generally use the donor’s lifetime gift tax exemption ($5.45 million in 2016). Such a gift may be made either outright or in trust.

Sale of shares to a trust: Rather than the business owner making a gift of shares, he or she may sell the shares to a trust for the benefit of his or her family.

Grantor retained annuity trust (GRAT): A GRAT allows a business owner to transfer shares to a trust and receive back an annuity payment over time.


Prior to undertaking any strategy, the business owner should coordinate with the appropriate advisors, such as an estate-planning attorney, a tax advisor, financial advisor and business appraiser. Creating a written plan that outlines the strategy, time frame and next steps may prove helpful to ensuring all parties are working together.


Although these strategies focus on pre-sale estate-and wealth-transfer planning, a comprehensive plan should also account for what might happen in the event that a sale does not occur.

That said, as part of both pre-sale considerations and ongoing estate planning, effective business management requires a regular review of business-succession planning and/or the buy-sell agreement.

Bryan Stephens and Kathleen Entwistle are Financial Advisors with UBS Financial Services Inc. a subsidiary of UBS AG. Member FINRA/SIPC at 61 South Paramus Road, Paramus, NJ and 299 Park Avenue, New York, NY 10171. UBS Financial Services Inc. Financial Advisor(s) engage Worth to feature this article. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented
is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc. Neither UBS Financial Services Inc. nor its employees (including its Financial Advisors) provide tax or legal advice.

You should consult with your legal counsel and/or your accountant or tax professional regarding the
legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you invest or implement. In providing wealth management services to clients, we offer both investment advisory and brokerage services which are separate and distinct and differ in material ways. For information, including the different laws and contracts that govern, visit

This article was originally published in the October/November 2016 issue of Worth.

Wealth Management

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