Video Discription |
http://www.ValuationPodcast.com (314) 541-8163
Hi Welcome to ValuationPodcast.com - A podcast and video series about all things related to business and valuation. My name is Melissa Gragg, a business valuation expert in St. Louis Missouri.
During this episode we will discuss Collaboration & Exit Planning for Baby Boomers & Financial Planners with a former IRS auditor Mike Gregory. Mike is a mediator in Minneapolis Minnesota, author of 11 books regarding various valuation topics and creator of the collaboration effect ®. He is a frequent speaker at estate planning council events and uses mediation techniques to deescalate situations.
Welcome Mike!!
1. What is the great wealth transfer?
2. What do we know about estate planning or exit planning?
3. What is The Collaboration Effect® and how does it relate to exit planning and estate planning?
4. How does trust factor into strategic planning and what happens when trust breaks down?
5. How can you address trust in business relationships?
6. Do you focus on beliefs or values and why?
7. How does communication, emotional intelligence and conversational intelligence enter into the picture?
8. With your background with over 2,500 mediations and negotiations coupled with your over 450 presentations in the last 9 years, and with your working with neuroscientists for over 5 years, what words of advice do you have regarding listening?
9. Do you have any closing comments you want to make with respect to collaboration and exit planning for baby boomers and financial planners, and do you want to share how to obtain your pocket guide on The Collaboration Effect?
Melissa Gragg
CVA, MAFF, CDFA
Expert testimony for financial and valuation issues
http://www.BridgeValuation.com
Cell: (314) 541-8163
Bridge Valuation Partners, LLC
[email protected]
Michael Gregory Consulting, LLC | The Collaboration Effect
Direct: 651.633-5311
w: mikegreg.com | collabeffect.com
e: [email protected]
Melissa Gragg:
Gifting is a little different because when you gift shares, it's typically to family members. I don't think always that small businesses that are family based or family held businesses always understand the process of gifting and what it means. So maybe you can help us out with that portion.
Mike Gregory:
Well, of course, if you give a gift, you can maintain the control. You can set up a family limited partnership, for example, and you're the general partner. You will always control this. You can have up to 99% of the stock. For example, being the folks who are not general partners are a limited partner. So they have no impact. It could be that you have multiple shares of stock classifications of stock with nonvoting stock going out to two others, so you can still maintain control. There are lots of different ways that you can talk with an exit planner and a estate planner for how you can address whatever your needs are, with what you want to do. You have to think about your family members, who would you like to have active potentially in the business or not have active in the business?
Are you going to sell to management, which that is rare, but it happens. Are you going to sell to a third party? Are you going to set up an employee stock option plan? So when you're thinking about gifting, there are a number of other things to consider in this. Then you also want to think about, you know, if I give a gift or someday I may have an estate, what are the chances of that thing being audited and what may happen with that? So I pulled some stats out that the IRS has an annual data list what they call their data book. The most recent data book came out June 29th of 2020. I spent some time yesterday in anticipation of this to go through and look at some stats. And in looking at what was actually audited in 2019, your other comment as an individual, your chances of being audited overall are about 0.45%.
So less than 1%, 0.4 or five goes up as income goes up, gets up to about 6% for those who are making a million dollars or more. So that's on the income side. So switching gears back to a state's overall, if States are last year were audited at 6.9%. So about 7%, lot higher than individuals. And you look at the categories with the estates of less than 5 million, 2% we're audited from 5 million to 10 million, 9.2% were audited. And from over 10 million, 22% were audited. So that gives you some idea in terms of these audits, approximately 18% were no changes. And about 20% resulted in refunds. In the average additional amount of tax from an audit was about $211,000 from the average audit. And that ranged from a low of 88,000 in the five to $10 million range to 355,000 in the over $10 million range. I'm commenting on that from the perspective, that's what happens potentially in terms of audits.
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