Business Succession Planning
Case Study

Mrs. Baker had successfully started a business with her two best friends after college.  As they started families, the business experienced massive success.  They each worried about the effect of estate taxes on the business, and decided to use their lifetime gift tax exemptions to move some of the business into trusts for their respective families. 

While this was prudent planning at the time, their fortunes continued to grow – along with the estate and gift tax exemption to a point where these taxes were no longer a concern.  Several years later, they found themselves in a situation where the trusts they had created for their families had become inefficient from an income tax perspective – and would become even more inefficient if the business was sold.  If Mrs. Baker is an Alpha Principle client, she might receive an independent review where she might realize that their business succession plan would generate significant income tax to the trusts. 

With the assistance of Alpha Principle, her estate planning attorney, and her business attorney, Mrs. Baker may able to restructure the business ownership to reduce her trust’s ownership of the business in anticipation of a transition to new internal and external owners.  This allowed her to maximize income tax savings opportunities that had been lost in the pursuit of estate tax savings.