Category: Corporate Governance

Estate Planning for Business Owners Before a Liquidity Event

For many business owners, the most significant financial moment of their lives is a liquidity event—such as the sale of a business, a merger, or a public offering.

These events can create substantial wealth very quickly. But they can also create significant tax exposure and estate planning challenges if planning has not been addressed in advance.

The key is that many of the most effective strategies must be implemented before the transaction occurs.

Why Timing Matters

When a business is about to be sold or undergo a major transaction, its value is often expected to increase dramatically.

If planning is done early enough, it may be possible to transfer some of that future growth to the next generation in a tax-efficient way.

Once a transaction is already underway—or once the value has already been realized—the available planning opportunities can become much more limited.

Planning With Grantor Trusts

Many advanced estate planning strategies for business owners involve the use of grantor trusts.

A grantor trust is a trust that is treated as owned by the person who created it for income tax purposes, even though the assets in the trust may be outside the grantor’s taxable estate for estate tax purposes.

This structure can create powerful planning opportunities.

Because the trust is ignored for income tax purposes:

  • Transactions between the grantor and the trust are often not treated as taxable events
  • The grantor continues to pay income tax on the trust’s income
  • The trust assets may grow outside the grantor’s estate

In effect, the grantor’s payment of the income taxes on trust assets can allow the trust to grow more efficiently for the benefit of future generations.

Strategies Often Considered Before a Liquidity Event

Depending on the situation, business owners may explore strategies such as:

  • Grantor Retained Annuity Trusts (GRATs)
  • Sales to intentionally defective grantor trusts
  • Lifetime gifting of business interests
  • Family trust structures designed to hold future appreciation

These strategies are typically designed to shift future growth in the business to trusts for children or other beneficiaries while the owner retains control or economic benefits for a period of time.

The Importance of Valuation

A critical component of planning before a liquidity event is the valuation of the business interest being transferred.

Estate planning techniques often rely on carefully documented valuations that support the value assigned to the transferred interests.

Because transactions can move quickly once negotiations begin, addressing these issues well before a sale process begins is often essential.

Coordinating Estate Planning With Transaction Planning

Estate planning should be coordinated with:

  • business attorneys
  • tax advisors
  • transaction advisors

This ensures that the estate planning strategy works alongside the broader transaction structure.

When these professionals work together early in the process, business owners often have more flexibility in structuring both the transaction and their long-term estate plan.

Planning Ahead Can Make a Meaningful Difference

For business owners and executives, the period before a liquidity event can represent one of the most important windows for estate planning.

By considering planning strategies early—before a transaction is finalized—it may be possible to transfer future growth to the next generation in a thoughtful and tax-efficient way. Reviewing these opportunities well in advance can help ensure that a successful business transition also supports long-term family planning goals.

The Power of Beneficiary Designations: What Every Client Should Know

One of the most overlooked tools in your estate plan are beneficiary designations. Here’s what you need to know about them.

When people think of estate planning, they often picture wills and trusts – but one of the most powerful tools in your estate plan is often overlooked:  beneficiary designations. Those simple designations, tied to retirement accounts, life insurance, and even some bank accounts, can override your will and determine the direct transfer of wealth at death.  From an estate planning perspective, that makes them both incredibly useful – and potentially risky if not managed carefully.

Why Beneficiary Designations Matter So Much?

  1. They Bypass Probate. Assets with named beneficiaries (like IRAs, 401(k)s, and life insurance) typically pass directly to those beneficiaries without going through probate. This means faster access for your loved ones and fewer legal fees.
  2. They supersede your will. Even if your will says one thing, the beneficiary form rules.
  3. They’re critical in tax planning. Designations can also affect how your heirs are taxed. For example, naming individuals as beneficiaries of a retirement account can help stretch the tax impact over 10 years, while naming your estate may accelerate taxes unnecessarily.

Common Mistakes We See:

  • Outdated beneficiaries (especially after divorce, remarriage, or the birth of children)
  • No contingent beneficiaries listed
  • Minor children named directly (can lead to court-appointed guardianship)
  • Mismatched designations and estate planning documents
  • Failure to name a trust when appropriate (especially for special needs beneficiaries or complex family dynamics)

What You Should Do Now?

  1. Review all beneficiary designations annually or after major life events.
  2. Coordinate designations with your overall estate plan.
  3. Consider when to name a trust as a beneficiary – for example, to manage distributions to minors or protect assets from creditors.

Need a Beneficiary Review?

We offer beneficiary audits as part of our estate planning services.  Whether you’re updating your old estate plan or just getting started, we’re here to help ensure your designations reflect your true wishes – and work in harmony with your plan.

About the Author

Hillary E. Mims
NC State Bar Certified Paralegal

Ensuring Your Legacy: The Importance of Takers of Last Resort in Estate Planning

A customized estate plan provides you with peace of mind, knowing your legacy will be preserved and your beneficiaries will be cared for.

As estate attorneys, one of the most valuable skills you can offer your clients is custom drafting that meet their unique needs and goals. In our initial planning conferences, we take the time to thoroughly discuss a variety of provisions that may be essential for your estate plan, including the inclusion of “takers of last resort.” These are individuals, organizations, or entities designated to inherit assets if no primary or secondary beneficiaries can be located. This provision is critical for clients who have complex family structures, multiple beneficiaries, or uncertain future circumstances.

For those who may not have clear successors or wish to ensure their estate plan remains relevant as family dynamics shift, a taker of last resort provision is especially important. It allows you to have peace of mind, knowing that, in the event your intended heirs are unavailable or cannot be found, the estate will still be distributed in accordance with your wishes—rather than subject to the state’s default laws, which may not reflect your desires or intentions. By proactively including this safeguard in the trust, we can prevent the estate from becoming entangled in lengthy probate proceedings or being distributed to unintended parties. This provision ensures that the assets go where you want, even as your personal circumstances and family structure evolve over time.

Additionally, the ability to craft specific gifts—whether monetary, real property, or sentimental items—is a crucial element of thoughtful estate planning. Many clients have particular wishes when it comes to leaving real property, businesses, or financial assets to specific individuals, whether it’s family land passed down through generations, a business venture, or a certain sum of money designated for a loved one or charitable cause. A well-drafted trust can clearly outline these specific gifts, ensuring that the client’s intent is carried out exactly as envisioned. Without clear documentation, these gifts could potentially cause confusion, disputes, or even litigation among heirs, leading to unnecessary delays, emotional stress, and financial burdens.

When an estate plan includes well-defined specific gifts, it allows for a smoother, more organized distribution of assets. You benefit from an estate plan that not only safeguards your legacy but also reduces the potential for disagreements among heirs. This level of specialization provides a sense of security, knowing your wishes are clearly understood and your beneficiaries will receive what you intended. Ultimately, a tailored estate plan that incorporates specific gifts ensures a streamlined administration process, protecting both your desires and the interests of your beneficiaries.

In summary, specialized estate planning, including provisions for “takers of last resort” and specific gifts, ensures that your assets are distributed according to your wishes, even in the face of changing family dynamics or unforeseen circumstances. By clearly outlining these provisions, we can help clients avoid potential disputes, reduce confusion, and streamline the estate administration process. Ultimately, a customized estate plan provides you with peace of mind, knowing your legacy will be preserved and your beneficiaries will be cared for.

About the Author


Emily B. Johnson
Legal Assistant

Estate Planning in the New Year: Ensuring a Secure Future

Estate planning is a critical element in this process, providing the tools and strategies necessary to protect your assets, ensure your wishes are carried out, and reduce the burden on your family.

As we step into the new year, it’s an ideal time to reflect on the state of our personal finances and take proactive steps toward securing the future for ourselves and our loved ones. Estate planning is a critical element in this process, providing the tools and strategies necessary to protect your assets, ensure your wishes are carried out, and reduce the burden on your family. In 2025, with evolving laws, emerging technologies, and societal shifts, estate planning takes on new importance, offering a chance to adapt and refine your approach to wealth preservation.

Why Estate Planning Matters

Estate planning is not just for the wealthy. Everyone, regardless of the size of their estate, can benefit from having a plan in place. At its core, estate planning is about ensuring that your assets are distributed according to your wishes, minimizing taxes, and avoiding conflicts among family members after your death. It also includes making provisions for your care in case of incapacity, ensuring your healthcare wishes are honored, and naming trusted individuals to manage your affairs.

Adapting to Change in 2025

The landscape of estate planning is evolving. With ongoing changes in tax laws, especially those related to estate and gift taxes, it’s essential to stay informed about new rules that may impact your planning strategies. For instance, the 2025 expiration of certain tax provisions, including higher estate tax exemptions, is creating urgency for many to reassess their plans. Actively working with an estate planning attorney can help you take advantage of tax-saving strategies before potential changes take effect.

Digital Assets and Technology

Another trend to consider in the new year is the rise of digital assets. In today’s digital world, many individuals hold valuable online accounts, cryptocurrency, digital art, and social media profiles. These digital assets require specific attention in your estate plan to ensure they’re properly managed and passed on to your beneficiaries. Make sure to review and update any digital accounts, passwords, and other online assets.

Additionally, technology continues to influence estate planning tools. Online platforms such as blockchain technology used for securely transferring assets, are becoming increasingly popular. These innovations make the estate planning process more accessible and efficient, ensuring your wishes are securely documented.

Healthcare and Long-Term Care

As the population ages and life expectancy increases, long-term care and healthcare planning become even more crucial. Whether it’s creating healthcare directives, selecting a healthcare proxy, or securing long-term care insurance, preparing for medical needs in later life is an essential part of a comprehensive estate plan. With the rising costs of healthcare, planning ahead for these potential expenses can safeguard your wealth and provide peace of mind.

Estate planning in the new year offers a fresh opportunity to review and refine your plans. Whether you are addressing new tax laws, digital assets, charitable giving, or healthcare concerns, the time to act is now. By taking a thoughtful, proactive approach to estate planning, you ensure that your wishes are respected, your loved ones are cared for, and your legacy endures for generations to come. Don’t wait for the unexpected; start the year off with a clear, updated estate plan that will guide you through the future with confidence.

About the Author

Todd A. Stewart, JD
Founding Partner

It’s Almost Election Time: How this could affect your estate plan and some proactive solutions

With the upcoming election, it’s important to proactively plan for potential shifts in tax laws and regulations that may impact your estate plan.

In the context of the current election, it’s important to proactively plan for potential shifts in tax laws and regulations that could significantly impact your estate planning. Elections often result in changes to fiscal policies, tax exemptions, and regulations that directly affect estate planning strategies. Here are some key areas you should be focusing on right now:

1.   Estate and Gift Tax Exemptions

  • Federal estate and gift tax exemptions are a significant area to watch. As of 2024, the exemption is historically high ($13.61 million per individual), but this amount could be lowered, especially if there’s a shift in political power toward more tax-heavy policies. Even now, unless Congress acts, this amount is scheduled to expire on December 31, 2025, to about $6-7 million range per person beginning on January 1, 2026.
  • Proactive Strategy: Consider making large gifts or transferring assets now under the current high exemptions. You can use strategies like spousal lifetime access trusts (SLATs), irrevocable children’s trusts, or dynasty trusts to lock in the current exemption for your heirs.

2.   Charitable Giving and Deductions

  • Charitable giving could be impacted by changes to deductions or incentives. Certain platforms propose reducing the deductions available to high-income earners, which could lessen the tax benefits of charitable contributions.
  • Proactive Strategy: If you’re planning to make significant charitable gifts, it may be better to do so before any deduction limits are imposed. Setting up a donor-advised fund (DAF) or charitable remainder trust (CRT) now could lock in current tax benefits.

3.   Trust and Estate Structures

  • Depending on your estate size and family situation, you may want to reassess the types of trusts or estate structures you use. A revocable trust provides flexibility and avoids probate, but tax-driven structures like irrevocable trusts (e.g., Grantor Retained Annuity Trusts (GRATs) or Qualified Personal Residence Trusts (QPRTs)) may need adjustment based on new rules or limits.
  • Proactive Strategy: If you have existing trusts, it’s worth reviewing whether these are still effective given potential policy changes.

4.   Review Your Estate Plan Regularly

  • With elections comes uncertainty, and legislation can move quickly after new officials take office. It’s crucial to keep your estate plan flexible and updated regularly to reflect changing laws.
  • Proactive Strategy: Work closely with your team (ie financial advisors, accountants, and your estate planning attorney) to ensure your plan is ready to adapt to any changes resulting from the election. Regularly reviewing and updating your will, trusts, and overall strategy is key.

Being proactive with your estate planning ahead of a current election can help mitigate potential negative impacts from policy changes while maximizing the use of current tax benefits and exemptions. It’s a good idea to have a firm understanding of your plan so that you can be prepared for any shifts that come after the election.

 

About the Author


Hillary E. Mims
Paralegal

45th Annual Kiawah Estate Planning Conference Review

Kiawah Island, South Carolina hosts an important Estate Planning continuing education conference in July of each year.

Kiawah Island, South Carolina hosts an Estate Planning continuing education conference in July of every year. It’s an important event in our legal community and one that all of Stewart Law’s attorneys attended this year. Todd has attended most of these conferences since the early 2000s.

Understanding the Softer Side of Estate Planning

Estate planning is often perceived as a technical and legal process, primarily focused on control and tax strategies. However, one theme we found at Kiawah this year is an emphasis on the softer, more human side to estate planning. This article aims to shed light on these softer issues, which can significantly impact the effectiveness of your estate plan.

Emotional Preparedness 

We all want to do what we can to promote long-term harmony among our family members. One of the most critical aspects of estate planning is emotional preparedness. It’s beneficial to have open and honest conversations with your loved ones about your wishes and intentions. This can help prevent misunderstandings and conflicts that may arise after you’re gone. Discussing your plans with your family can also provide them with a sense of security and clarity, knowing that your wishes are well-documented and understood. It’s not always best to share dollar values early in the process but reinforcing that you have a plan, and the reasons for your major decisions, is often very helpful.

Family Dynamics 

Every family is unique, and understanding the dynamics within your family is crucial for effective estate planning. Consider the relationships between your family members and how they might be affected by your decisions. For instance, if you have a blended family, you may need to take extra steps to ensure that everyone feels included and valued. Different family members may have skill sets that you would value for service in particular roles. Knowing this may help others understand your selections.

Legacy and Values 

Estate planning is not just about distributing assets; it’s also about preserving your legacy and values. Leaving your descendants financial assets can be very beneficial to them, but there are probably skills and values that you hope to pass to them that are even more important for their long-term happiness. Think about the principles and beliefs that are important to you and how you can promote them in future generations. This might include setting up charitable trusts, creating educational funds, or writing a letter of wishes to accompany your other planning documents. By incorporating your values into your estate plan, you can leave a lasting impact that goes beyond material wealth.

By focusing on these softer issues, you will create a more comprehensive and emotionally fulfilling estate plan that truly reflects your wishes and values.

Interested in planning a family meeting to discuss your Estate Plan? Contact our team to discuss the best way to review or create an Estate Plan that works for your family.

About the Author

Todd A. Stewart, JD
Managing Partner