For business owners, estate planning isn’t just about writing a will. Your business — its structure, ownership, value, and transferability — is often the largest asset in your estate. Without deliberate planning, that asset can be subject to significant estate taxes, forced liquidation, partnership disputes, or costly probate proceedings when you die, become incapacitated, or simply decide to step away.
FJ & Associates, PLLC works with Utah business owners on the financial and tax dimensions of estate planning — business valuation, entity structure for succession, buy-sell agreements, gifting strategies, and trust coordination — integrated with your overall business tax strategy.
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Why Business Owners Need a Different Kind of Estate Plan
A standard estate plan covers personal assets — real estate, retirement accounts, life insurance, investment portfolios. A business owner’s estate plan must also address:
- Business continuity: Who runs the business if you can’t?
- Ownership transfer: Who owns your interest, and how does the transfer happen?
- Valuation: What is your business worth for estate tax purposes?
- Liquidity: Does your estate have enough cash to pay estate taxes without selling the business?
- Tax efficiency: How do you transfer value to the next generation while minimizing transfer taxes?
Without addressing these questions deliberately, the default answers — state intestacy law, IRS valuation, forced sale — are rarely the ones you would have chosen.
Business Succession Options
Family Succession
Transferring the business to family members can be done during your lifetime (gifting), at death (inheritance), or through a sale on favorable terms. Each approach has different gift, estate, and income tax implications.
Lifetime gifting: The 2024 annual gift tax exclusion allows you to transfer $18,000 per recipient per year without using your lifetime exemption. Business interests — especially in LLCs and family limited partnerships — can sometimes be transferred at discounted values (minority interest and marketability discounts), reducing the taxable value of the gift.
The lifetime estate and gift tax exemption: In 2024, each individual can transfer up to $13.61 million during life or at death without federal estate or gift tax. This exemption is currently scheduled to be cut approximately in half in 2026 when the Tax Cuts and Jobs Act provisions expire — creating a planning window for high-value business owners right now.
Employee or Management Buyout
Selling the business to key employees or management can preserve the business culture and relationships while providing the owner with an exit. Structures include installment sales (seller financing), Employee Stock Ownership Plans (ESOPs), and earnouts. Each has distinct tax consequences for both parties.
Third-Party Sale
A third-party sale — strategic or financial buyer — typically maximizes sale price but requires careful structuring of asset vs. stock deal terms, installment sale elections, and allocation of purchase price to minimize the seller’s total tax cost. See our advanced tax planning guide for context on exit planning within the broader tax strategy.
Buy-Sell Agreements
A buy-sell agreement is a legally binding contract that specifies what happens to business interests when an owner dies, becomes disabled, retires, divorces, or wants to exit. Without one, the remaining owners may be forced into a business partnership with the deceased owner’s spouse, adult children, or estate — without any of the parties having wanted that outcome.
Key provisions in a buy-sell agreement:
- Triggering events (death, disability, retirement, voluntary exit, divorce)
- Valuation method (fixed price, formula, or appraisal)
- Funding mechanism (life insurance, sinking fund, installment payments)
- Right of first refusal for remaining owners
The buy-sell agreement and its funding method must be aligned — a common mistake is having an agreement but no practical means to fund the buyout when a trigger event occurs. We coordinate the financial analysis and work with your attorney to ensure the agreement is workable.
Trusts in Business Estate Planning
- Irrevocable Life Insurance Trust (ILIT): Holds a life insurance policy outside the taxable estate. The death benefit provides liquidity to pay estate taxes or fund a buyout without being included in the estate.
- Grantor Retained Annuity Trust (GRAT): Transfers appreciation on business interests out of the estate while retaining an annuity stream. Highly effective when interest rates are low and the business is expected to grow rapidly.
- Charitable Remainder Trust (CRT): Transfers appreciated business interests or real estate to a trust, avoiding immediate capital gains tax on the sale. Provides an income stream to the donor and a charitable deduction.
- Family Limited Partnership (FLP) / Family LLC: Centralizes management of family assets, allows valuation discounts for minority interests, and facilitates systematic gifting to the next generation.
Utah Estate Planning Considerations
Utah does not impose a state estate or inheritance tax — making it one of the more estate-tax-friendly states. Federal estate tax applies to estates above the exemption threshold ($13.61 million per individual in 2024). However, the upcoming 2026 exemption reduction makes current planning especially valuable for business owners whose estates approach $7–$13 million in value.
Utah’s Uniform Trust Code governs trust administration. Utah also allows Domestic Asset Protection Trusts (DAPTs) — also called self-settled trusts — which can provide asset protection while retaining certain beneficial interests. We coordinate with estate planning attorneys on the legal structure; our role is the financial analysis, tax optimization, and integration with your business structure.
Estate Planning FAQs for Business Owners
Do I need an estate plan if my business is worth less than the federal exemption?
Yes. The federal estate tax exemption is scheduled to drop significantly in 2026 — and Utah business values have risen substantially in recent years. More importantly, the non-tax issues (business continuity, buyout funding, family conflict prevention) are valuable regardless of estate tax exposure.
What is the best structure for transferring my Utah business to my children?
It depends on whether you want to make a lifetime gift, a sale at market value, a below-market sale, or a deferred transfer. Each approach has distinct gift, estate, and income tax consequences for both you and your children. We model the scenarios and show you the projected tax cost of each option.
How do I fund a buy-sell agreement for my Utah business?
Life insurance — owned by the business or by a trust — is the most common funding mechanism for buyouts triggered by death. For disability or retirement, a sinking fund (accumulated cash reserves) or installment payments are more common. We advise on the appropriate funding strategy based on your business value and cash position.
What happens to my business if I die without a buy-sell agreement or succession plan?
Your business interest passes to your heirs under your will or Utah’s intestacy laws. If the heirs include minor children or individuals who don’t work in the business, the result is often conflict, forced sale, or dissolution. A buy-sell agreement prevents the default outcome from becoming your actual outcome.
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See also: Advanced Tax Planning | Utah Business Consulting | Compensation Planning
Author Bio | Missy Dennis, CPA | Partner | FJ & Associates, PLLC | Kaysville, Utah
Missy holds a Master of Accounting degree from the University of Utah and is a licensed Certified Public Accountant. She is committed to providing clear, accurate, and actionable guidance so clients can navigate complex financial decisions with confidence. With more than twenty years of public accounting experience, Missy Dennis specializes in: Tax preparation and tax advisory; Bookkeeping strategy alignment; Estate and trust taxation; Audit and consulting services; Low-income housing tax credits; Non-profit accounting; Small- and mid-sized business advisory.
