A Case of Unequal Transfer to Active and Inactive Children
Jun 29, 2010
John S. owns 100% of a C corporation that operates a very successful farming operation. John is a widower with four children. His oldest son, Jason, is a full-time employee of the operation. His other three children, Jane, Ken, and Julie, work outside the operation and are not involved in the business. John would like Jason to receive his full interest in the business, and he wants to provide each of his children with an equal share of his estate.
His assets consist of the following:
|
Cash
|
$ 300,000
|
|
Investment in business
|
2,500,000
|
|
Other investments
|
900,000
|
|
Total assets
|
$ 3,700,000
|
A review of John’s assets shows it will be difficult to accomplish both of his goals. Not considering estate taxes, Jason would receive assets with a fair market value of $2.5 million, while the other children would split $1.2 million (or receive only $400,000 in cash and other investments each).
Sound familiar? This is the crux of equal versus fair succession conundrum. Most farmers and agribusiness owners struggle with this planning puzzle. There are options available and tools to help you work through this issue.
Watch for constructive settlement methods in coming Legacy Moments.
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