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The closely-held, family business often is the most significant asset of the business owner’s estate, both from the point of view of valuation for transfer tax purposes as well as for family business succession.
Closely-held, family businesses represent a significant contribution to the Nation’s gross national product and job creation. However, less than one (1) in three (3) closely-held, family businesses survive to the second generation and only twelve (12%) percent survive from the first to the third generation.
Valuation of the closely-held, family business is often an estate planning issue but valuation issues can arise in a number of legal settings, including shareholder litigation, divorce and legal separation, contributions to qualified retirement plans including ESOP’s, transfers to charitable and non-charitable unitrusts, estate partitions, etc.
Valuation of a closely-held, family business is, at best, an inexact science, and can be a daunting challenge to the estate planner and family advisor.
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