Tax Blog

The 32-item List for valuation and estate/succession planning: Part 1 of 2.

The estate planning professionals at The Center for Financial, Legal and Tax Planning have perfected the 32-item list for valuation, estate and succession planning purposes. The list encompasses all aspects to ensure your valuation, estate or succession plan accounts for all relevant items. More specifically, the list seeks information necessary to understand the full picture of your business, as the importance of ensuring all proposals whether it be a business valuation, estate/succession plan, strategic plan, etc., all coincide with another. For example, the list requests personal tax returns. You may wonder why personal tax returns matter when you’ve engaged your advisor for a business succession plan. Well, personal tax returns will tell us if you own other entities. Other entities that potentially have losses to pass through to you personally. If that’s the case, we’ll know we have flow-through losses to offset taxable gains in your succession plan allowing you to reduce taxes and net more cash.

This list has been modified after countless, successful transaction, succession and estate plans and is an ever-evolving list anticipating new items as modern law develops. For example, the 32-item list was very recently the 31-item list, but after discovering a new opportunity due to developing laws a new item was added. We will discuss item 32 shortly.

The 32-item list is broken down into 7 categories:

  1. Background Data

  2. Financial Data

  3. Supplemental Data

  4. Operational Data

  5. Market Data

  6. Intellectual Property

  7. Investment Opportunities/Incentives

If you or your client owns or has an interest in a business, the importance of keeping the items on this 32-item list up to date and accurate is vitally important. The information will not only provide the financial position of the business, but the intricacies of ownership, previous estate or succession plan documents, and most importantly, the ability for your advisor to take into account all aspects affecting the tax, law and accounting aspects of a transaction, estate or succession plan.

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