Navigating Valuation and Tax Planning for Closely Held Business Ownership Interests

The upcoming changes to estate and gift tax laws in 2026 are causing many family business owners and wealthy individuals to rethink their estate planning strategies. With the potential decrease in the annual exemption limit, many are looking to take advantage of the current favorable tax environment before it’s too late.

One common strategy being utilized is gifting ownership of a closely held business to family members during the owner’s lifetime. By doing so, business owners can take advantage of discounts for lack of control and lack of marketability, reducing the value of the gift for estate and gift tax purposes.

The discount for lack of control reflects the fact that non-controlling owners have limited influence over the management and operations of the business, while the discount for lack of marketability accounts for the difficulty in converting ownership of a closely held company into cash quickly and easily.

Despite the potential changes on the horizon, there is still time to plan for wealth transfer and minimize future estate taxes. By working with estate planning professionals and taking advantage of the current tax laws, individuals can ensure that their assets are transferred efficiently and effectively to the next generation. Now is the time to start planning for the future and securing your family’s financial legacy.