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Family Business Insurance
What About a Family Business?
When 50 percent or more
of a business is owned by individuals who are members of the decedents
family, or if they are natural objects of his or her bounty, the buy-sell
agreement will be disregarded for federal estate tax purposes, unless the
agreement (1) has a bona fide business purpose, (2) is not a testamentary
device to transfer property to family members for less that fair market
value, and (3) has terms comparable to those entered into by parties in an
arms' length transaction.
Expert testimony is required to show that non related persons in the same
business would have entered a similar agreement. The expert must consider:
(1) the fair market value of the business when the agreement was made, (2)
the expected duration of the agreement, (3) the anticipated changes in vale
during the term of the agreement, and (4) the manner in which such
businesses are commonly valued. |
