Business Valuations for Estate Planning
An independent valuation gives an owner and their advisers a documented value for a trade business to use when planning how it will pass on or be dealt with in an estate.
Why an independent valuation
For many trade-business owners the business is the largest asset in the estate, and it cannot easily be divided. A plan that treats the business as worth a guessed amount can leave beneficiaries with very different outcomes: one child who runs the business, another who receives cash, and a surviving spouse who needs income. A valuation puts a reasoned number on it.
Value also changes. A business worth one amount when the plan is written can be worth much more or less when it is needed, depending on its team, its customers and the owner’s role. Valuations at intervals help advisers keep the plan realistic and check that any funding arrangements still match the business.
When an owner dies, the estate, the surviving owners and the family may all need a value, quickly and for a date in the past. A valuation is easier to prepare when the information is current and the owner is available to answer questions. Where an earlier date such as a date of death is needed, we can value as at that date where the engagement permits it.
When owners and advisers ask for one
- An owner updating a will or testamentary trust who wants a current value for the business
- A family with several children, only some of whom work in the business, planning how to divide the estate fairly
- An owner who holds business assets through a family trust and wants to understand what the trust’s interest is worth
- Partners or shareholders with a buy-sell agreement who want a value to check it against
- The executor of a deceased owner’s estate who needs a value for the business at the date of death
- A surviving owner who will buy out the deceased owner’s family and needs an agreed value
- An owner whose accountant or lawyer has asked for a business value before preparing succession and estate documents
What the valuation needs to address
Settled in the engagement letter before work starts, so the report answers the question it is being used for.
Valuation date
An estate plan wants a current value, while an estate being administered may need a value at an earlier date such as the date of death. We state the date in the report. An additional historical valuation date is from $495 + GST where the engagement permits it, and it depends on the information being available for that date.
Standard of value
Market value, the price between a willing buyer and a willing seller, is the usual starting point. Wills, trust deeds and buy-sell agreements may use their own definitions, and where your advisers tell us what they are, we use the one that applies.
The interest and the entity
The business may be held through a company, a trust, a partnership or a sole trader, and the interest may be controlling or minority. We value the interest your adviser identifies and say whether any discount or premium applies under the governing documents.
Owner dependency
If the business relies on the owner’s licence, hours and relationships, the family inherits a smaller asset than the accounts suggest. We assess how much of the earnings would remain without the owner and explain how we reached that view.
Buy-sell and funding arrangements
Where owners have a buy-sell agreement, a current valuation can be compared with its price formula or the funding set aside for it. We do not advise on insurance or funding, but a current value shows whether the existing arrangements still look sensible.
Who relies on the report
The owner, the family, executors and advisers may all read it, and we name those it is prepared for. A valuation prepared for planning is not necessarily suited to a later estate matter such as a disagreement between beneficiaries, which may need its own scope.
How it runs
Intake starts online at /start. We confirm in writing the entity and interest being valued, the date, the purpose and who will rely on the report, and documents are uploaded through the secure client portal. Estate matters often involve an accountant and a lawyer, and we work from their instructions where they give them.
A draft report is provided before the report is finalised, so the owner or executor and their advisers can check the facts. Typical turnaround is 3 to 7 business days once all required information has been received. That is typical rather than promised, and complex matters can take longer.
The Independent Business Valuation is a fixed fee of $1,995 + GST. A business with several entities, divisions, unusual ownership or a historical valuation date is a complex valuation, quoted in writing from $2,995 + GST before work starts. See pricing.
- Tell us about the business. Complete a short valuation intake.
- Upload your information. Financial statements and supporting information are securely uploaded through the client portal.
- We analyse the business. We review earnings, operating structure, industry characteristics, risks, assets and transferable goodwill.
- Valuation prepared. Appropriate valuation methodologies are applied and the evidence is documented.
- Draft and final report. You receive a draft before the report is finalised.
Important
We do not give legal, tax or financial advice. How a business interest is dealt with in a will, trust or estate, and any tax consequences, are matters for your lawyer, accountant and financial adviser.
Information on this website is general in nature and does not constitute legal, taxation or financial advice. The appropriate valuation approach depends on the circumstances and purpose of each engagement.
Common questions
Do I need a valuation for my estate plan?
Not every owner does. A valuation is most useful where the business is a large part of the estate, where it cannot easily be divided, or where beneficiaries are treated differently. Your lawyer or accountant can tell you whether one is needed, and we can prepare it if they ask for it.
Can you value a business as at a date of death?
Yes, where the engagement permits it and the information for that date is available. We state the date, the standard of value and the information relied on. An additional historical valuation date is from $495 + GST, and a matter that depends on a historical date may be quoted as a complex valuation from $2,995 + GST.
How often should the business be revalued for estate planning?
There is no fixed interval. A new valuation is worth considering when the business changes materially, such as a new division, the loss of a major customer or a change in the owner’s role, or when the estate plan is reviewed. Your advisers can help you decide on timing.
Will the valuation set what each beneficiary receives?
No. A valuation gives an opinion of what the business or interest is worth at a date. How that value is divided between beneficiaries is a matter for the will or trust deed and for your lawyer, and we do not give legal advice.
Related
Start with a short intake. We confirm the fee and scope in writing.
An Independent Business Valuation is $1,995 + GST, with a draft before the report is finalised. Typical turnaround is 3 to 7 business days once all required information has been received.