For many closely held businesses, the CFO is one of the few leaders who understands both the company’s financial picture and the owner’s long-term objectives. While estate planning is often viewed as a personal legal matter, finance leaders play an important role in helping business owners execute, monitor and adapt their plans as the business grows.
From maintaining ownership records and supporting business valuations to coordinating with CPAs, attorneys and wealth advisers, CFOs help ensure estate plans remain aligned with business strategy, tax law and succession goals. Their awareness and involvement can reduce operational disruptions, improve governance and help preserve enterprise value for future generations.
Whether your company is preparing for a future ownership transition or simply reviewing an existing plan, understanding what role finance leaders play and where they add value can help avoid costly surprises.
For owners of closely held businesses, estate planning extends far beyond deciding how assets will transfer after death. It also addresses how the business will continue operating, who will make decisions, how ownership will transition and whether sufficient liquidity exists to cover tax and operational needs, helping support the owner’s wishes.
Without proper planning, an unexpected death or incapacity can create uncertainty around business control, ownership and cash flow — potentially disrupting operations during an already difficult time. For CFOs, understanding the business implications of an owner’s estate plan helps ensure financial stability while supporting a smoother transition.
Although attorneys draft estate planning documents and CPAs provide tax guidance, CFOs often become the operational link that keeps the entire planning process functioning. Finance leaders are well positioned to:
Estate planning is most effective when every adviser works from the same information. The CFO is in a good position to make that happen.
One of the most common misconceptions is that estate planning is a one-time project. Business values, family circumstances and tax laws evolve continuously. A plan created 15 or 20 years ago may no longer reflect today’s business realities or provide the flexibility needed under current tax rules.
Finance leaders should encourage business owners to revisit their estate plans after significant events, including:
Even absent a major event, reviewing estate planning documents every five to 10 years can help ensure they continue supporting the owner’s long-term objectives.
One of the most important responsibilities for finance leaders is maintaining an accurate understanding of business ownership. That includes knowing:
These details become especially important during a transition event. Ownership held by a revocable trust, for example, may avoid probate and allow successor trustees to act immediately, while individually owned shares may require additional legal proceedings before business decisions can be made.
Estate planning often creates situations where ownership, taxable income and cash distributions no longer align.
For example, a trust may own business interests while the business owner remains responsible for reporting taxable income. Likewise, distributions may flow to a trust while income is taxed elsewhere. Finance leaders should understand these distinctions to ensure:
These administrative details may seem routine, but they are essential to preserving the integrity of the estate plan.
Although today’s federal estate tax exemption is historically high, many successful businesses continue to appreciate significantly over time. An owner who falls below today’s exemption could exceed it years later simply through business growth. Regularly monitoring enterprise value allows the advisory team to evaluate whether additional planning strategies may be appropriate before tax exposure becomes a concern.
For businesses expected to remain family owned, CFOs should also understand how estate taxes could affect liquidity. In some situations, life insurance or other funding strategies may provide the cash needed to preserve business operations without forcing the sale of company assets.
Even when estate taxes are unlikely, estate planning still offers opportunities to improve tax efficiency. Older trust structures may unintentionally limit valuable income tax basis adjustments or create unnecessary administrative complexity under today’s tax rules.
Regular reviews help ensure ownership structures, trust provisions and beneficiary designations continue supporting both estate tax and income tax objectives.
Even the best-designed estate plan requires ongoing monitoring. Finance leaders should establish processes to periodically:
Consistent oversight helps ensure planning strategies continue functioning as intended and reduces the likelihood of costly administrative errors.
For closely held businesses, estate planning is far more than a personal financial exercise; it is a critical business continuity strategy.
CFOs are uniquely positioned to bridge the gap between business operations and the owner’s long-term vision. By maintaining accurate ownership records, monitoring business value, coordinating advisers and reviewing estate plans on a regular basis, finance leaders help ensure the owner’s wishes can be carried out while protecting enterprise value and supporting a successful ownership transition.
As businesses grow and ownership structures become more complex, proactive estate planning oversight can provide greater confidence for owners, their families and the business itself.
Listen to our webinar: “Understanding the Finance Team’s Role in an Owner’s Estate Plan”
Contact Scott Swain, Tom Kotick or a member of your service team to discuss this topic further.
In this blog Cohen & Co is not rendering legal, accounting, investment, tax or other professional advice. Rather, the information contained in this blog is for general informational purposes only. Any decisions or actions based on the general information contained in this blog should be made or taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.