The sale of a family business is a significant financial milestone — often the culmination of decades of work, legacy-building and leadership. For many families, the business represents more than monetary value; it is a source of identity, community impact and intergenerational purpose. A transaction of this magnitude marks both an ending and a beginning, offering the potential to secure wealth and opportunity for generations to come.
However, realizing that full potential requires more than simply closing the deal. It takes proactive planning and careful foresight. Managing tax exposure, preserving wealth through estate and philanthropic planning and preparing for the absence of the operational infrastructure the business once provided are all critical to determining how much value is ultimately retained and how effectively the family is positioned to succeed in the next chapter.
Proactive Tax and Estate Planning
A business sale can trigger a broad array of taxes. Most families are aware of the 20% long-term capital gains tax. Still, other taxes often come as a surprise, such as the net investment income tax (NIIT), ordinary income taxes due to depreciation recapture or inventory and state taxes not only from your state of residence, but also from states where the business operated. In addition, monetizing the business increases the size of the estate, potentially leading to higher estate tax exposure at death. With the correct tax and estate strategies, families can significantly reduce their tax burden, preserve wealth and position themselves for long-term success.
Here are some key considerations for families preparing for a sale of the business:
- Tax Projections: Often overlooked until after the sale, it is critical to work with a CPA beforehand to project the tax consequences. Only with a clear picture of what will be owed can families take deliberate steps to reduce or eliminate some of the tax liabilities.
- Trust Planning: Transferring business interests into trusts ahead of a sale can move future appreciation out of the taxable estate and allow families to take advantage of valuation discounts. When timed effectively, this can result in substantial estate tax savings while preserving control through strategic structuring. Even if the sale is imminent and valuations are set, transferring shares to a grantor trust can allow the sale proceeds to be received outside of the estate. At the same time, taxes on those proceeds are paid from inside the estate, reducing estate tax exposure.
- Charitable Strategies: Donating interests to charitable vehicles, such as donor-advised funds or charitable lead trusts, can reduce or eliminate capital gains tax and unlock immediate deductions, all while advancing philanthropic goals. These strategies can be tailored to meet a range of charitable intentions and tax objectives.
- Tax-Aware Investment Approaches: Families can further reduce tax exposure by using proceeds to employ tax-loss harvesting strategies. These strategies leverage tax losses to offset capital gains. Another option is deferring taxes through investment in a Qualified Opportunity Zone (QOZ) fund. These approaches become even more powerful when paired with trust or charitable structures.
- State Income Tax Considerations: For families in high-tax states, relocating assets or creating non-grantor trusts in tax-friendly jurisdictions can help mitigate state income tax on the sale. These strategies require careful design and coordination, but can yield meaningful savings.
While the most effective outcomes occur when planning starts years in advance, it’s never too late to take action. With experienced guidance, families can still implement high-impact strategies shortly before — or sometimes even after — the sale closes. The key is to ensure each piece fits together as part of a cohesive plan.
Rebuilding Operational Infrastructure
For many families, a privately held business provides more than just income; it often supports much of their day-to-day financial operations. It may coordinate activities with attorneys, CPAs and insurance professionals, manage payments and serve as the hub for financial decision-making. This support system often disappears once the business is sold, leaving families without the structure they’ve long relied on.
This transition can bring unexpected complexity. Without the operational backbone of the business, families may face new challenges: overseeing a broader and more diverse investment portfolio, coordinating multiple advisors and managing their financial lives with an increased need for precision and oversight. Replacing this infrastructure is essential to ensure continuity and efficiency in the post-sale environment.
For many, the solution is a dedicated family office. Whether built internally or accessed through an external provider, a family office becomes the central hub for financial oversight, bringing expertise, structure and long-term coordination to the next chapter.
Core services of a family office may include:
- Investment Oversight: Building and managing a portfolio aligned with the family’s long-term goals and risk profile.
- Integrated Planning: Coordinating estate, tax, insurance and philanthropic strategies across generations.
- Consolidated Reporting: Providing clear, timely insight into the family’s complete financial picture.
- Administrative Support: Managing day-to-day financial operations, including bill payment, recordkeeping and compliance.
- Philanthropic Management: Overseeing charitable activities, including grantmaking, tax planning and reporting.
By proactively establishing this infrastructure, families can avoid disruption, maintain control and focus on what matters most. A well-run family office does more than provide services — it becomes the foundation for long-term success, enabling families to manage complexity with clarity and confidence.
Looking Ahead
A sale marks the end of one entrepreneurial chapter, but the beginning of another. For years, the family’s focus may have been on growing the business, managing operations and navigating day-to-day challenges. Now, freed from those responsibilities and with wealth in hand, there is an opportunity to shift focus to shaping the future.
The future looks different for everyone. Some may choose to dedicate resources to philanthropy or community leadership. Others may invest in the next generation, pursue new ventures or simply enjoy the freedom that comes with financial security. Whatever the path, this is an opportunity to reflect, look inward and consider what would bring meaning and fulfillment in the next chapter of life.
It begins with a strong plan addressing tax strategy, wealth preservation, family governance and operational continuity. With that foundation in place, families can move forward with clarity, purpose and confidence. The goal is not just to manage wealth, but to make the most of it by protecting the family legacy, embracing new opportunities and ensuring the family is positioned for purpose and possibility for generations to come.
For those seeking a deeper understanding of these strategies, Cerity Partners’ Liquidity Event Playbook offers comprehensive insights into navigating liquidity events and ensuring long-term prosperity.