Family Buyout

Many family members often assume that parents pass their shares to children for free or for nominal value. Not only is this usually not permitted for tax purposes, it may also deprive parents of their retirement “nest egg”. In fact, for most owners of mid-sized companies, the equity in their company is the majority of their retirement fund. It is often necessary to have a gradual transfer of ownership, sometimes with the parents offering some kind of financing (with or without security) and/or using outside sources of capital. Even something as simple as “giving” the company to your children can be much more complex than business owners first imagine. Balancing an estate amongst children not involved in the business has the potential to poison family relations.

The Voice of Authority Since 1974