FIXING THE VALUE OF YOUR BUSINESS FOR ESTATE TAX PURPOSES
What Conditions Must Be Met to Fix the Value of Your Business for Estate Tax Purposes?
If certain conditions are met, a binding buy-sell agreement may fix the value of a business interest for estate tax purposes. The purchase price, whether a fixed amount or one determined by a formula, can be accepted as the estate tax valuation if these conditions are met:
The buy-sell agreement must create an enforceable obligation on the part of the estate of the deceased owner to sell and the buyer to purchase the business interest.
The buy-sell agreement must prohibit the owner from disposing of his or her business interest during lifetime without first offering it to the other parties to the agreement at a price not higher than the price (fixed or formula) specified in the agreement.
The buy-sell agreement must be the result of an “arm’s length” transaction, meaning that the price must be fair and adequate at the time of the agreement or any subsequent reevaluation.
Without a binding buy-sell agreement, there can be a great deal of additional detail and uncertainty as to the valuation of a business interest at the owner’s death, adding to the time and expense required to settle the estate, as well as making it difficult to predict and plan for any estate taxes that may become payable.
from the Masters…
SUCCESS IS EASY, BUT SO IS NEGLECT
by Jim Rohn
People often ask me how I became successful in that six-year period of time while many of the people I knew did not. The answer is simple: The things I found to be easy to do, they found to be easy not to do. I found it easy to set the goals that could change my life. They found it easy not to. I found it easy to read the books that could affect my thinking and my ideas. They found that easy not to. I found it easy to attend the classes and the seminars, and to get around other successful people. They said it probably really wouldn’t matter. If I had to sum it up, I would say what I found to be easy to do, they found to be easy not to do. Six years later, I’m a millionaire and they are all still blaming the economy, the government, and company policies, yet they neglected to do the basic, easy things.
In fact, the primary reason most people are not doing as well as they could and should, can be summed up in a single word: neglect.
It is not the lack of money – banks are full of money. It is not the lack of opportunity – America, and much of the Free World, continues to offer the most unprecedented and abundant opportunities in the last six thousand years of recorded history. It is not the lack of books – libraries are full of books – and they are free! It is not the schools – the classrooms are full of good teachers. We have plenty of ministers, leaders, counselors and advisors.
Everything we would ever need to become rich and powerful and sophisticated is within our reach. The major reason that so few take advantage of all that we have is, simply, neglect.
Neglect is like an infection. Left unchecked it will spread throughout our entire system of disciplines and eventually lead to a complete breakdown of a potentially joy-filled and prosperous human life.
Not doing the things we know we should do causes us to feel guilty and guilt leads to an erosion of self-confidence. As our self-confidence diminishes, so does the level of our activity. And as our activity diminishes, our results inevitably decline. And as our results suffer, our attitude begins to weaken. And as our attitude begins the slow shift from positive to negative, our self-confidence diminishes even more…and on and on it goes.
So my suggestion is that when given the choice of “easy to” and “easy not to,” you do not neglect to do the simple, basic, “easy,” but potentially life-changing activities and disciplines.