The Role of Business Valuation for Gift and Estate Planning
Gift and estate planning is essential to secure your assets with minimal tax burden. Proper gift and estate planning also ensures the efficient transfer of assets to any beneficiaries. One of the most important steps during this process is conducting a business valuation for gift and estate planning. Understanding the value of your business allows you to make more informed decisions for the future.
In this article, we explain how business valuations support smart gift and estate planning. In addition, we share why professional valuation services are essential for your long-term success.
If you want to ensure effective planning for the future of your estate, obtain a gift and estate tax valuation now. Peak Business Valuation is a trusted business appraiser in the United States. Schedule a free consultation below and speak with one of our expert business appraisers.
What Is a Gift and Estate Tax Valuation?
A business valuation is the process of determining a company’s fair market value. It involves analyzing a range of factors like financial history, risks, and income potential. Business appraisers also focus on market conditions and tangible or intangible assets. Compared to calculation reports or online valuation tools, business valuations have higher accuracy and relevance in formal settings.
Professional business valuations are generally conducted by qualified professionals using recognized valuation approaches. These valuation approaches focus on different aspects of a business’s value, enabling appraisers to tailor the business valuation accordingly. The three valuation approaches are:
- Income Approach: The income approach is used to estimate future income. This involves assessing revenue and profit trends over time to determine potential growth or decline in future earnings.
- Market Approach: To determine the value of a business in comparison to others on the market, business appraisers use the market approach. This estimate is calculated using market multiples. You can learn more about market multiples at What is a Valuation Multiple?
- Asset Approach: An asset approach calculates a business’s value based on total assets. These assets can be tangible items like equipment or machinery, or intangible items like patents or trademarks. If you need to understand the value of your equipment or machinery, read What is a Machinery and Equipment Appraisal?
Why Business Valuations Matter in Gift and Estate Planning
Gifting part of your business can be a smart way to transfer wealth while minimizing taxes. Many business owners choose this option to prepare family or other beneficiaries before their passing. It also helps avoid higher tax payments and retain value in the business. To gift a business, the IRS requires that the company’s value be properly documented.
A gift and estate tax valuation allows you to:
1. Determine Gift Tax Liabilities
When you gift a business interest, the IRS expects you to file Form 709, the Gift Tax Return. An accurate gift tax valuation ensures you report the correct value and avoid potential penalties. To learn more, see About Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
2. Maximize Tax Exemptions
As of 2025, individuals can gift up to $19,000 per recipient per year without paying federal gift tax. Larger gifts apply toward a lifetime gift and estate tax exemption of $13.99 million. Understanding your business’s value helps you structure gifts to fully utilize these exemptions.
3. Use Valuation Discounts
Qualified appraisers can apply discounts to reduce the reported value of the gift. Two common discounts are the Discount for Lack of Control and the Discount for Lack of Marketability. Peak Business Valuation may use these two discounts while conducting a business valuation. These discounts can lower the taxable value of a gift, allowing you to transfer more wealth to recipients.
At Peak Business Valuation, we specialize in business valuations for gift and estate planning. We strive to help business owners leverage these planning strategies while ensuring full compliance with IRS standards. Schedule a free consultation today to begin the valuation process!
How Business Valuation Supports Estate Planning
If you own a business, it is likely one of your most valuable assets. Estate planning allows you to organize your assets to pass on wealth in a clear, tax-efficient manner. A business valuation for gift and estate planning helps you:
Calculate Estate Taxes
The value of your business is included in your taxable estate. An accurate estate tax valuation helps determine your estate tax liability and plan strategies to minimize it.
Ensure Fair Distribution Among Heirs
If you plan to divide your business among multiple heirs, a fair estate planning valuation avoids confusion or disputes. It also facilitates buy-sell agreements or the transfer of shares through a family trust.
Avoid Legal Disputes
When the business value is unclear or disputed, family members may have legal disputes. A defensible estate planning valuation conducted before or after death helps reduce emotional and financial conflict.
By partnering with Peak Business Valuation, families receive clear and professional estate tax valuations that ensure a smooth execution of their estate plans. Schedule a free consultation to speak with a trusted business appraiser!
Working with Professionals for Peace of Mind
Valuing a business is complex, especially with gift and estate planning. Market conditions, legal considerations, and IRS rules play a significant role. In addition, preparing for future heirs and ensuring assets are properly taken care of can be tedious and complicated. Working with an experienced team like Peak Business Valuation is very important to ensure you make the most of your gift and estate planning.
Peak Business Valuation provides:
- Accurate, IRS-compliant estate planning valuations from certified business appraisers.
- Valuation discounts to reduce tax burdens where appropriate.
- A comprehensive valuation report to support your estate or gift filings.
- A free consultation before valuing the business to discuss your goals and how a gift and estate tax valuation fits into your larger plan.
Whether you are preparing to gift shares now or plan to pass on your business in the future, our team is here to guide you every step of the way. We provide comprehensive business valuations for gift and estate planning.
Conclusion
Business valuations play a central role in effective gift and estate planning. Professional estate planning valuations minimize tax exposure and ensure fair distribution among heirs. A business valuation for gift and estate planning also lays the groundwork for a well-executed financial legacy.
At Peak Business Valuation, we help business owners understand and maximize the value of their companies. Our team provides accurate and IRS-compliant estate planning valuations tailored to your needs. Speak with a trusted valuation expert at Peak Business Valuation by scheduling a free consultation below.
