The last several posts on this blog have discussed the valuation of stock or other types of interest in a business within the context of probate litigation. Although valuing an interest in a business is simple enough for stocks that are traded on the open market, it can be very difficult to value a family-owned business or farm.
As some Minnesotans may be aware because of their personal experiences, the value of a family business or farm can lead to probate disputes. Differences of opinion on the value of a business can lead to profound disagreement between heirs as to the value of the entire estate, which can in turn lead to some heirs feeling cheated or shortchanged during the probate process.
Valuing a private business is tricky, and doing so usually involves both experienced probate litigation attorneys as well as experts in business valuation. It is difficult enough to settle on a precise value of a single share of stock for a closely held corporation; the fact that not all shares of stock are created equally makes the job even more difficult.
Residents of Saint Paul who own small businesses themselves probably realize how important good leadership is for the future of that business. When the business is organized as a separate entity, like a corporation, then who runs the business is determined by who owns the most stock in it. Those shares of stock that give a person or group control over the direction of the business are called control stock, and they have a higher value than the other shares of stock.
Valuing a small business for inheritance purposes can be difficult and can require technical knowledge. Minnesotans who are trying to protect the legacy of loved ones may be well-served to seek out professional legal help when doing so.