“Don’t forget that succession planning is subject to statutory and regulatory changes, so family firms have to keep an eye on that,” Tigani notes. If the family is too busy managing the day-to-day operations of the business, it may be wise to retain a lawyer to watch for ongoing regulation changes as they arise.
Succession planning is an area the IRS has hammered away at for years, arguing that it is just a tax avoidance technique, according to Tigani. In fact, there was a hearing at the D.C. Treasury on December 1 on a new rule that would do away with valuation discounts in succession planning. The measure has not yet been approved.
“There was significant opposition voiced by attorneys’ groups, CPAs and valuation experts, as well as business owners themselves, and we will know more as we enter 2017 whether Treasury and the IRS will heed the testimony and temper their approach to the problem as they perceive it,” Tigani says.
With a Trump administration in the White House, it now appears less likely that stricter rules on limiting discounts on family transactions would be adapted, according to Hoppe.
“Conventional wisdom among practitioners now sees President-elect Trump’s administration as not as aggressive in this area,” Tigani adds.