The COVID-19 Pandemic has dramatically impacted life as we know it. Asset prices have declined and market volatility has increased tremendously due to the high degree of uncertainty. The U.S. Securities and Exchange Commission, major accounting firms and many others have noted the severe impact of the crisis on the business environment and outlook.

Despite the current challenges, estate planning continues to be an important consideration for many. Temporary adverse developments in the general economy and markets, an industry, or at an individual firm often create excellent opportunities to make tax efficient transfers of assets. The current global market turmoil due to COVID-19 represents one of these opportunities.

Temporary reductions in asset values reduce tax liabilities associated with gift strategies. For smaller transfers that are not taxable, lower asset values allow gifting of a larger amount of one’s assets without incurring a gift tax liability. Factors leading to reduced asset valuations include increases in operating and financing risks, earnings declines, reductions in economic activity due to social distancing requirements, reduced activity of individuals and businesses due to health and safety concerns, and supply chain disruptions to name a few.

Estate planning strategies often include transfers of interests in investment entities (family limited partnerships or “FLPs”) as well as privately held operating companies. Valuation discounts for the lack of control and limited marketability of interests in privately held entities are important considerations that reduce the fair market value of assets. Supportable discounts for control and marketability have increased. Key reasons include increased risk as reflected in higher market volatility, expected delays in time until an exit events, reductions in M&A activity and availability of financing among other factors.

Our Globalview Advisors’ professionals have decades of experience performing and defending valuations prepared for estate and gift tax reporting and other tax reporting purposes. Given this experience, we bring deep knowledge of the valuation requirements and strategies for tax reporting. We also have a deep knowledge of the valuation review process.

About Globalview Advisors

Globalview Advisors offers financial valuations and transaction advisory services for publicly listed and privately owned/unquoted companies in the U.S., the U.K., Europe, Asia, and other locations globally.

The firm’s services encompass valuations of businesses, intangible assets, debt, equity, and derivative instruments for:

The firm’s transaction advisory services are primarily rendered for:

Contact Information

For more information, please contact Michael Haghighat, ASA at +1 (949) 475-2801 or mhaghighat@globalviewadvisors.com or Raymond Rath, ASA, CEIV™, CFA®  at +1 (949) 475-2808 or rrath@globalviewadvisors.com.