To successfully transfer a closely held business, you need an exact valuation. Relying on outdated formulas exposes your estate to a 40% tax rate. A formal valuation provides a defensible foundation to maximize the $15 million 2026 federal exemption and protect your wealth.
Summer gatherings often prompt families to discuss the future. If you own a closely held business, transitioning that asset is the most critical piece of your estate plan. The CJ Group provides tax optimization for private wealth, trust and estate planning, and family office solutions. We work alongside your existing wealth management advisors to coordinate your estate strategy rather than trying to replace them.
The Risk of Guessing Your Business’s Value
You might know the informal rules of thumb for your industry. Relying on these simplified formulas for estate planning is a mistake. Market conditions shift rapidly. Even formal valuations from a few years ago are likely outdated.
A qualified business valuation professional gives you a reliable understanding of your business’s worth based on current economic realities. Knowing this number determines exactly how many shares you can transfer to loved ones without triggering taxes.
Leveraging the 2026 Gift and Estate Tax Exemption
The federal gift and estate tax exemption is at a historically high level. For 2026, the lifetime exemption is $15 million per individual, or $30 million for married couples. This exemption is indexed annually for inflation.
The One Big Beautiful Bill Act, signed into law on July 4, 2025, made this elevated exemption permanent. Future Congresses can still change tax laws. Depending on the size of your estate, initiating ownership transfers now locks in these exemptions. If you exceed the limits, the gift and estate tax rate hits a costly 40%.
The Annual Gift Tax Exclusion
You can also transfer ownership interests using the annual gift tax exclusion without tapping into your lifetime limit.
For 2026, you can give up to $19,000 per recipient.
You can give up to $38,000 if you split the gift with your spouse.
This exclusion does not carry over. You must complete these transfers before the end of the year.
Over time, these annual gifts of closely held business interests add up to substantial tax-free wealth transfer. You must also check your local state laws, as some states impose inheritance taxes at much lower thresholds than the federal government.
Why You Need a Qualified Business Appraiser
The IRS requires fair market value for gift and estate tax purposes. They strongly discourage do-it-yourself valuations. Hiring a qualified appraiser proves you acted in good faith when filing a gift or estate tax return. Because shares of private businesses are not traded publicly, valuators rely on IRS Revenue Ruling 59-60. This ruling requires analyzing both company-specific details and external market conditions.
Certain ownership interests qualify for valuation discounts due to a lack of control or marketability. Valuation experts use empirical data to support these discounts. Applying these discounts lowers the taxable value of your gifts, allowing you to transfer more shares tax-free under your annual exclusions or lifetime exemption.
Tax-Smart Gifting Strategies for Business Owners
Healthy businesses appreciate over time. Assuming a 5% annual growth rate, a $10 share today will grow to roughly $16.30 in ten years. Gifting shares while the value is relatively low keeps future appreciation out of your taxable estate. IRS regulations prevent these lifetime gifts from being clawed back into your estate later.
We bring large-firm technical strategy delivered with small-firm relationship continuity. The CJ Group treats each client as if they are the only client. If you need clarity on your business’s value and a strategy for generational wealth transfer, we are ready to help. Learn more about our Private Wealth & Estate Planning services to start the conversation.
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