Journey to an ESOP & Beyond EP 28 - Estate Planning and ESOPs: Interview with Agnes Gregory (Tax Partner) and Justin Stemple (ESOP Attorney)
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Oct 11, 2024 Agnes Gregory, a Tax Partner specializing in estate tax at Berman Hopkins CPA, and Justin Stemple, an ESOP attorney with decades of experience at Warner Norcross + Judd, dive deep into estate planning for ESOP transactions. They discuss the urgency of creating an Estate/Gift Tax plan amidst potential estate tax changes. Key topics include the significance of strategic gifting, trusts, and the need for professional guidance to avoid probate issues. They emphasize proactive collaboration with advisors for a smoother business transition and optimized asset management.
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Valuation Purpose Changes Value
- Estate/gift valuations differ from ESOP valuations because of discounts for minority, lack-of-marketability, and purpose.
- Using the wrong valuation for gifting near a sale invites IRS hindsight scrutiny and possible challenges.
Keep A Multi-Year Gap For Gifting
- Avoid gifting business interests within a short window before an ESOP sale; allow time between gifting and transaction.
- Aim for roughly a three-year gap to reduce IRS challenges and hindsight revaluation.
Begin With Your CPA
- Do start the conversation with a trusted CPA to compile a personal balance sheet and identify assets and titling.
- Then engage an estate attorney to draft trusts and documents based on tax and succession goals.