Importance of equalization in estate planning and succession

There are many family-run businesses in California and throughout the nation. Astute business owners understand the importance of thorough estate planning, especially when it comes to executing business succession plans. This can be a tricky process because many family-run businesses include several adult children who may not agree on or be capable of managing the company in question.

Let's say there are two siblings who are very good with finances and business management and another sibling who doesn't really have a head for business but desires to obtain his or her share of inheritance. An estate owner can use the equalization process to ensure that assets (including those associated with the family business) will be distributed fairly and equitably when the time comes to administer his or her estate. However, it may not be necessary to transfer specific ownership of the business to the adult child who is not capable of running it and may not even want anything to do with the business in the future.

An estate owner can use estate equalization techniques to set up a solid business succession plan while providing for the financial security of loved ones' futures, even those who do not intend to participate in owning or running the business. A key factor in knowing what assets are available in a business succession and equalization plan is to first seek a valuation of the business in question. It's always good to keep in mind that the sentimental value of a business may be quite different from its monetary value, and it is the latter that matters most when developing an estate plan.

The good thing is that the estate planning process is customizable. It can also be changed, as needed, while an estate owner is still alive and of sound mind. A California estate probate and administration attorney can review a prospective plan and can help to overcome any legal obstacles that arise.

Source:, "Table of Experts: Succession Planning", Accessed on Dec. 12, 2017

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