Why Estate Planning Requires Business Valuation Services

Business valuation services are a critical part of estate planning when a privately held company is part of the assets being passed down. Whether a business interest is being gifted during someone’s lifetime or included in a final estate tax return, the IRS requires that a valuation be conducted — and that it follows specific guidelines.

Many estate plans focus on real property, cash assets, or securities, but closely held businesses often make up a significant portion of a family’s wealth. Assigning value to business ownership isn’t as straightforward as checking an account balance. It requires expertise, documentation, and alignment with IRS standards that govern how business interests are assessed for tax and reporting purposes.

When is a business valuation required in estate planning?

Business valuation services come into play anytime business ownership is part of an estate or trust. This includes:

• Estate tax returns after the death of a business owner
• Gifting business interests to heirs or into a trust
• Transferring ownership into an estate for future distribution

In each of these situations, the IRS requires a defensible fair market value for the business interest. That valuation must be conducted by a qualified appraiser and documented in a report that aligns with IRS Revenue Ruling 59-60 and other applicable guidance.

An inaccurate or unsupported valuation can lead to IRS audits, disputes with beneficiaries, and fiduciary liability for estate planners or executors. This is why engaging a certified valuation analyst is critical. 

What makes estate-related valuation unique?

Business valuation services for estate or trust purposes aren’t the same as those prepared for a potential sale or internal planning. In estate settings, the focus is on what the interest would be worth to a hypothetical buyer, not what the owner believes it’s worth or what it might sell for in a competitive transaction.

Additional factors like lack of control and lack of marketability are also taken into account. If the business interest being transferred is a minority share, it may be subject to a discount. 

Similarly, if the interest cannot be easily sold or transferred, that affects value. These aren’t decisions that a tax preparer or estate attorney can — or should — make alone. They require financial modeling and professional judgment.

Why Early Coordination Matters

One of the most common mistakes in estate planning involving a business is waiting too long to start the valuation process. By the time the estate return is due, advisors may be scrambling to collect documents, review business performance, or calculate appropriate discounts. A rushed valuation creates risk, not just with the IRS, but also with beneficiaries or trustees who may question the results.

Working with a business valuation services professional early allows for collaboration among attorneys, CPAs, and other advisors. It also ensures the valuation report is aligned with the estate’s broader goals. This is especially important when gifting strategies are being used or when trust structures include long-term transfers.

Early coordination also gives your team time to address special circumstances, such as business restructuring, incomplete records, or unusual financial periods. If the company experienced recent volatility, growth, or leadership change, those factors need to be understood and documented appropriately. Giving the valuation expert time to ask the right questions and request supporting materials can make a major difference in quality and defensibility.

What to Look for in a Valuation Partner

The IRS expects valuation reports to be prepared by a qualified appraiser. That’s why working with a certified valuation analyst is important. Beyond credentials, though, estate professionals should look for someone who:

• Understands estate planning strategies and tax deadlines
• Communicates clearly with legal and financial teams
• Documents assumptions thoroughly
• Delivers on time and provides follow-up support if questions arise

A strong business valuation services partner doesn’t just produce numbers — they help the estate team move forward with confidence and compliance.

Talk to a Certified Valuation Analyst

Estate planning often involves complex decisions, but valuation doesn’t have to be one of them. By treating it as a proactive part of the process — and engaging the right expertise —  attorneys, fiduciaries, and families can avoid missteps and ensure smooth transfers of business interests.

Business valuation services play a foundational role in this process, especially when estates include privately held companies. Whether you’re planning a trust transfer or preparing a final return, getting the valuation right is critical.

At McEntire Advisory, we provide IRS-ready business valuation services that attorneys, advisors, and families trust. Our work is tailored to your timeline, the estate’s needs, and the expectations of all parties involved. From detailed reports to clear communication with legal and financial professionals, we bring depth, discretion, and structure to every engagement.

Let’s make sure your valuation supports your plan and holds up wherever it’s needed.

Contact Us to schedule a consultation or learn more about how we can help.