by Ted Beringer
If you're thinking about selling your company or passing it to the next generation, my advice is to start now. We have a little over two years until 2029. That gives you time to decide what you want, prepare the business and work through the family's needs.
Democrats have won control of the House and Senate. If they hold both chambers and win the presidency in 2028, I expect a lower estate tax exemption and higher capital gains taxes as early as 2029. I also believe selling a business could become more difficult. These are my predictions, and tax changes would require new legislation.
The Wall Street Journal has reported on these same tax risks. Clearstead's November outlook also recommends using 2027 and 2028 to review estate plans ahead of possible policy changes.
For families who have most of their wealth in a business, this deserves attention. The federal estate and gift tax exemption is $15 million per person in 2026 and rises to $15.48 million in 2027, with the amount available affected by prior taxable gifts. A lower exemption could leave more of your family's wealth exposed to estate taxes, even when the cash needed to pay them is tied up in the company.
A higher capital gains tax could also change what you take home from a sale. For example, a five-percentage-point increase applied to $10 million of taxable gain would mean another $500,000 in taxes. That's why the conversation needs to include what you keep after taxes, debt and expenses, along with the price a buyer is willing to pay.
The practical reason to begin now is that preparation takes time. J.P. Morgan identifies the 18 to 36 months before an ownership transaction as an important preparation period. Financial records need to be clear. Management needs to be ready to operate without you. Family members need to understand their roles and agree on what they want. Working through those issues early gives you more choices when an opportunity comes along.
For some families, the best answer is to keep the business and prepare the next generation to lead it. For others, it may be a sale or a transition to management. Your age, financial needs and interest in continuing to run the company all matter. So do the company's prospects and the wishes of the other owners. Taxes belong in that discussion, but the decision has to fit your family.
I've spent more than four decades working with business owners and their families. At The Beringer Group, we specialize in helping family-owned businesses make these decisions. We are a family business ourselves, so we understand why questions about ownership, succession and retirement can be personal. A business may represent decades of work, employ relatives and longtime colleagues, and support several branches of a family.
Our work includes helping owners decide whether to keep, grow or sell, understand what the company is worth, and prepare for an ownership transition. When a sale is the right choice, we help owners find suitable buyers and manage the process. We also work alongside the family's legal and tax advisers so the business decision and the family's plans are considered together.
If a sale or succession is already on your mind, let's begin with a practical conversation about your goals and your choices. There is useful work we can do now. Starting while you have time gives you a better chance to make the transition on terms that work for you and your family.
About the Author
Theodore A. Beringer
Ted is a nationally-recognized financial advisor to some of the wealthiest families in the country. He was also the founder and Chairman of The Mid-Atlantic Companies, Ltd., a nationwide, full-service, financial services firm.