In early August, the Internal Revenue Service released proposed regulations that could have a major impact on the estate plans of many Philadelphia residents. The proposed changes would serve to limit the benefit of certain discounts that are made available through the transfer of interests in certain family-controlled businesses between family members. If the regulations are finalized, many families will need to take a different estate planning approach.
Currently, family members are able to enjoy a number of valuation discounts when transferring interest in a family-controlled business from one person to another. The value of the interests is calculated differently because the recipient will have limited control over the business. The value is also lowered due to the assumption that there is a limited market for selling shares that are limited in nature.