Exiting a business is one of the most significant financial events in an entrepreneur’s life. Whether the transition happens through a sale, succession, recapitalization, or liquidation, it can create substantial tax consequences and major estate planning implications. For many owners, the exit is not just a transaction — it is the transfer of a lifetime of work, value, and legacy.
Recent studies reveal that roughly 63% of U.S. entrepreneurs are planning to exit their businesses over the next decade, and 32% of entrepreneurs globally expect to do so within the next five years. As more owners prepare for transition, the need for coordinated tax, succession, and wealth planning has never been greater.
The One Big Beautiful Bill Act (OBBBA) adds another layer of urgency and opportunity for US business owners. Beginning in 2026, the federal estate and gift tax exemption increases to $15 million per person, or $30 million for married couples, and it will continue to be indexed for inflation. For US business owners, that change creates a valuable window to move assets, transfer appreciation, and structure exits more efficiently.
This article highlights 12 important estate planning considerations for exiting business owners in 2026.
- Define Clear Exit Goals:
Before putting any estate plan in place, the owner should define the desired exit outcome. Selling to a third party, transitioning the business to children, transferring ownership to key employees, or liquidating the company each creates different legal and tax consequences.
The exit strategy should drive the estate plan, not the other way around. A clear objective helps determine whether the plan should focus on gifting, trusts, buy-sell agreements, charitable transfers, or liquidity planning.
- Obtain a Current Business Valuation:
A professional business valuation is essential. It establishes fair market value for sale purposes and also serves as the foundation for gift tax, estate tax, and succession planning.
Valuation matters even more when a business is transferred to family members or trusts. An outdated or unsupported value can create tax problems, family conflict, or transaction delays. A current valuation also helps the owner understand how much wealth is tied up in the business and how much liquidity may be needed after the exit.
- Coordinate Income Tax, Estate Tax, and Liquidity Planning:
Many owners focus on estate tax planning and overlook the income tax consequences of a sale, but for most exits, capital gains tax planning will be just as important as estate tax planning.
Owners should consider whether a sale will be structured as an asset sale or equity sale, whether installment payments make sense, and how much cash will be needed to pay taxes, fees, debts, and family buyouts. Liquidity planning is especially important when estate equalization is needed among heirs who are not all involved in the business.
- Use Trusts to Transfer Wealth Efficiently:
Trusts can be powerful tools for business owners exiting a company. Common trust strategies include:
- Grantor Retained Annuity Trusts (GRATs,) which can shift future appreciation out of the taxable estate;
- Irrevocable Life Insurance Trusts (ILITs,) which can provide liquidity to help pay estate taxes; and
- Dynasty trusts, which can preserve wealth for multiple generations and offer asset protection.
Used properly, these structures can help owners move value out of the estate while maintaining flexibility and control over how wealth is distributed.
- Take Advantage of the OBBBA Exemption Increase:
The OBBBA makes 2026 an important planning year. With the federal estate and gift tax exemption rising to $15 million per person, owners with highly appreciated businesses may have a larger opportunity to transfer wealth during life.
That matters because business interests often appreciate significantly after succession planning begins or after a sale process starts. Lifetime gifting, trust funding, and valuation-based transfers may help reduce future estate exposure while the exemption is elevated.
- Address State Tax Exposure:
Federal tax planning is only part of the picture. Depending on where the owner lives or owns property, state estate tax, inheritance tax, income tax, or transfer tax issues may also apply.
A business owner in one state may face a vastly different outcome from an owner in another state. That makes it important to review both residence planning and the location of business assets before the exit is complete.
- Align Succession Planning with Family Dynamics:
If family members will inherit or manage the business, the estate plan should support the succession plan. That means identifying the next leader, setting expectations early, and making sure the transfer is fair even if it is not mathematically equal.
This is especially important when only one child works in the business or when some heirs will receive liquidity while others receive ownership. Clear buy-sell provisions, governance terms, and communication can reduce conflict and preserve family relationships.
- Review Buy-Sell and Governance Agreements:
Many estate plans fail because the business documents are outdated. Operating agreements, shareholder agreements, partnership agreements, and buy-sell arrangements should all be reviewed before the exit.
These documents often determine who can own the business, how interests are valued, and what happens if the owner dies, becomes incapacitated, or decides to sell. If they are inconsistent with the estate plan, the result can mean disputes, delays, and/or unintended transfers.
- Consider Charitable Planning Opportunities:
Charitable planning can reduce tax exposure and create a lasting legacy. A charitable remainder trust, for example, can allow an owner to sell appreciated business interests in a tax-efficient way while generating income, and a donor-advised fund can provide flexibility for ongoing philanthropy.
These tools can be especially effective for owners who want to direct part of the proceeds toward a charitable cause, while also managing estate and income tax outcomes.
- Update All Estate Planning Documents:
A business exit should trigger a full review of estate documents. Wills, trusts, powers of attorney, health care directives, beneficiary designations, and insurance policies should all be updated to reflect the new ownership and liquidity picture.
It is also important to confirm that account titles, entity records, and transfer documents are aligned with the overall estate plan. Even a well-drafted estate plan can fail if the supporting documents are inconsistent.
- Plan for Retirement and Personal Cash Flow:
After the exit, the owner’s financial life changes dramatically. The estate plan should reflect how the owner will support personal spending needs, taxes, charitable giving, and future medical or long-term care costs.
This is especially important when business proceeds are intended to support retirement. Owners should coordinate investment strategy, withdrawal planning, insurance coverage, and estate transfers so that wealth remains sustainable over time.
- Work with a Multidisciplinary Team:
Business exits are too complex to manage alone. The best outcomes almost always come from a team that includes an exit advisor, estate planning attorney, CPA, wealth advisor, valuation professional, and, when appropriate, a charitable planning specialist.
These professionals can help align tax planning, wealth transfer, family goals, and transaction strategy. With the OBBBA changing the planning landscape, coordination among advisors is more important than ever.
Final Thoughts:
Exiting a business is not just a financial event — it is a legacy decision. For business owners, estate planning should be part of the exit conversation from the very beginning, not an afterthought at the closing table.
The OBBBA has created new opportunities for lifetime transfers and tax-efficient planning, but it also makes timing more important. With a thoughtful strategy, business owners can reduce tax burdens, protect family harmony, and leave behind a plan that reflects both their financial goals and personal legacy.
Did you like the content in this article ? For more information about business exit and succession planning, the author has posted his entire series of business exit and succession planning articles on the media page of his website at www.greaterprairiebusinessconsulting.com.
About Greater Prairie Business Consulting, Inc.:
Greater Prairie Business Consulting, Inc. is an award-winning, national consulting practice serving entrepreneurs, small to mid-sized privately held and family-owned businesses and middle-market companies of any type with revenues between $1 million and $250 million. The firm helps small, mid-sized and middle market companies maximize their performance and exit.
Greater Prairie Business Consulting, Inc. can be reached by calling 1-800-828-7585 or emailing info@gpbusinesssolutions.com.
About the Author:
James J. Talerico, Jr. is an award-winning author, speaker, and a nationally recognized small to mid-sized (SMB) business expert.
With more than thirty- (30) years of diversified business experience, Jim has a solid track record and an A+ BBB rating helping thousands of business owners across the US and in Canada tackle tough business problems to improve the performance of their organizations.
His client success stories have been highlighted in the Wall St. Journal, Dallas Business Journal, Chicago Daily Herald, and on MSNBC’s Your Business. He was named “Texas Business Consulting CEO of the Year,” by CEO Today Magazine, identified as a “Top 10 Management Consulting Entrepreneur to Watch in 2023” by Entrepreneur Magazine, was listed among the “10 Most Visionary Companies to Watch in 2023” by Inc. Magazine, and has also been ranked among the “Top Small Business Consultants” followed on Twitter.
For more than half a decade, Jim was a regular guest on “The Price of Business,” a nationally syndicated radio program on Bloomberg Talk Radio and has also appeared as a subject matter expert on many FOX Radio interviews. He is a regular contributor to several blog sites and has frequently been quoted in publications like the New York Times, Dallas Morning News, Philadelphia Inquirer, The Entrepreneur’s Review, and on INC.com, in addition to numerous, other industry publications, radio broadcasts, business books, and Internet media.
Jim received a Gold “Stevie Award” for “Thought Leader of the Year,” a Gold “Stevie Award” for “Media Hero of the Year During Covid” and a Bronze “Stevie Award” for “Best Entrepreneur” in the Category of “Business and Professional Services” at the American Business Awards ® in New York City. The competition received more than 3,700 nominations and is the premier accolade for business excellence in the US honoring organizations of all sizes and industries. Jim also received an “Outstanding Leadership Award” at the Money 2.0 Conference for his contributions to the financial services industry.
Jim is the author of “8 Steps to Becoming an ETHICS FOCUSED ORGANIZATION,™” a small business certification program that utilizes a unique eight – (8) step approach for strengthening ethics in any organization. The certification program won the Better Business Bureau’s “Torch Award for Ethics” for the North – Central Texas Region, the International Better Business Bureau’s “ Torch Award for Ethics,” and a Gold “Stevie Award” for “Ethics in Sales” at the International Sales & Customer Service Stevie Awards ®. Participants who complete this certification program are eligible to receive eight – (8) continuing education units from the University of Texas’ Division of Enterprise Development.
Jim received his Certified Business Exit Consultant (CBEC)® designation from The International Exit Planning Association (IEPA) to help entrepreneurs, small business owners, family businesses, and middle market companies maximize their business exit, and he received his certification in succession planning from the ASPE. Jim currently co-chairs the IEPAs Education Committee.
Jim is also a Certified Management Consultant (CMC)® and an active member of the Institute of Management Consultants. The Certified Management Consultant ® mark is awarded by the Institute of Management Consultants USA (IMC USA) and represents evidence of the highest standards of consulting, a commitment to continuous development, and an adherence to the ethical canons of the profession. Less than 1% of all consultants in the world are Certified Management Consultants (CMC.)®
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