When families talk about dividing an estate, the starting point often sounds simple: “Just split it three ways.” That might work for cash, or a brokerage account, or even a house. You can see the balance. You can get an appraisal. You can draw a line.
What happens when one of your biggest assets is a privately held business?
The answer is rarely straightforward, because business value is variable. It changes with the market, the management, the margins, and the moment. Add in family members with different levels of involvement, and the idea of splitting it evenly can quickly turn into a source of tension, confusion, or regret.
Why Business Value Is Hard to Nail Down
We’ve never met a business owner who views their company as just another line on the balance sheet. It is your livelihood, your legacy, and often your largest single asset. Unlike a bank account, a business has no fixed value. Its worth can depend on timing, revenue trends, leadership roles, and who is doing the buying.
Some families make things even more complex by keeping the valuation informal. “Let’s just use last year’s profits,” or “I’ll let the kids figure it out.” When you say it out loud, is this how you want to plan around your most important asset? Also, when the IRS is involved (especially with gifting strategies), formal valuations are a requirement, not an option.
If a family member is already involved in the business, there may be opportunities to transfer shares in advance. In those situations, valuation becomes a tool—not just for estate planning, but for tax planning as well.
Techniques like gifting minority interests, freezing future appreciation, or using trusts to hold the transferred equity can create meaningful long-term advantages.
Equal Doesn’t Always Mean Identical
What if only one of your children is active in the business? What if one is semi-involved, and another is not at all? These are common dynamics, and they call for more than spreadsheets. They call for intentional decision-making.
In many cases, we help families equalize the estate by reallocating other assets. The child who’s receiving the business interest may get less of the investment portfolio or may forgo life insurance proceeds that instead go to siblings. When the estate is not large enough to balance those tradeoffs with existing assets, planning tools—like life insurance, GRATs, or intrafamily loans—can help round out the picture.
No one wants to leave behind a puzzle. Clear allocation now helps prevent resentment later.
What If There’s a Sale?
We have seen clients structure sales of the business to family members before death—especially when gifting the business outright would compromise their own financial independence.
These transactions often involve promissory notes, installment plans, or valuation discounts to account for family dynamics. In those cases, clear documentation is critical: sale agreements, payment history, and written rationale all help avoid confusion or dispute.
What often goes wrong is not the math. It’s the assumptions.
A child who was not part of the transaction may assume the business was gifted. They may not know there was an actual sale or understand the value that changed hands. If that’s not communicated clearly—if the documents stay in a drawer or the advisors never meet—surprise turns into suspicion.
Communication Is a Planning Tool
If you take one thing from this, let it be this: handshake deals and verbal explanations are not enough.
We recommend documenting every step—valuation methods, transaction terms, promissory notes, and the logic behind major decisions. Then we recommend talking about it.
Family meetings do not need to go into every detail, but they should surface the core decisions, outline the structure, and help each family member understand what has been done and why.
That conversation, when facilitated well, can be the difference between a plan that works and a plan that fractures the family.
Final Thought
Estate planning for business owners is not about perfection. It is about alignment. That includes legal documents, financial strategy, family dynamics, and expectations across generations.
If you are thinking about how your business fits into your estate plan—or how to handle differences between your kids—we are doing this work every day and would be glad to help you map it out.
