Client Success Stories
The "Unnecessary" Legal Waiver Saves Client’s Estate Tax Planning
The Challenge
AVGI was engaged to perform an estate valuation for estate and gift tax planning purposes. While reviewing the relevant legal documents, AVGI valuators discovered that there was a spoken agreement about splitting a piece of real estate that was part of the estate. However, there was no legal waiver documenting the spoken agreement.
The client did not feel compelled to pursue the documentation, as they felt the word was enough for them. However, lacking the waiver of partition of the property would inflate the estate’s value by several million dollars, making a large difference in the Client’s estate and gift tax obligations. That single missing document could potentially implode years of meticulous tax planning for the client.
The Solution
AVGI valuation experts impressed upon the client the importance and valuation implications of the missing legal waiver and strongly encouraged the client to obtain the necessary document.
Missing this crucial legal waiver would mean that although there was a spoken agreement to split a piece of real estate, the full value of the real estate’s ownership would still be assigned to the Client’s estate, increasing the estate value and tax obligation.
The missing waiver would document the estate’s reduced value, thereby enabling a lower estate valuation and reduced estate tax obligation for the Client.
The Result
The Client obtained the missing legal waiver to document the spoken agreement. With this documentation, AVGI experts accurately valued the estate at a much lower value than would have been possible without the legal waiver. This single document had a huge impact on the estate’s value and ultimately saved the Client millions of dollars in estate and gift taxes.
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We’ve compiled a list of the most common questions our customers ask. If you can’t find the answer you’re looking for here, please don’t hesitate to contact our customer support team, and we’ll be happy to assist you.
A business evaluation is not necessarily the same as a business valuation. Business evaluation is a much broader term that can refer to auditing any aspect of a business, such as business processes, phone systems, or overall efficiency, but does not explicitly refer to evaluating the monetary value of the business.
In contrast, business valuation refers exclusively to establishing the firm’s monetary value. Colloquially, people often use the two terms interchangeably, so someone looking for a business valuation may search online for business evaluation services.
Although colloquially, the two terms are often used interchangeably, business appraisal and valuation refer to the same industry but two separate service tiers, translating into different fees and scopes of valuation work.
A business valuation, also called “Calculation” (American Society of Appraisers-ASA) or “Calculation Engagement” (AICPA, IBA, NACVA), is a lower-level analysis generally intended for a client to use for internal planning purposes.
A business appraisal (ASA) or valuation engagement (AICPA, IBA, NACVA) is a much more complex and in-depth analysis process of determining the firm’s economic value, often based on deeper market research and more meticulous documentation. Appraisals are better suited for external purposes such as tax, litigation, and financial reporting, as the extensive documentation can withstand intense scrutiny.
Need help determining which level of valuation service your client needs? Give us a call so we can help you determine the tier of business valuation service that best suits your client’s case.
The cost of a business valuation depends heavily on the purpose and scope of the valuation (see previous FAQ), the complexity of the assignment, and the level of financial and legal risk to the client.
There is no “one size fits all” solution in valuation, and it is impossible to provide a meaningful quote that fits the wide variety of needs of different clients. Contact us for a free consultation about your valuation needs. We’ll get back to you with a quote by the next business day.
Our valuation assignments begin when we have a signed engagement letter, a retainer, and the information we need to perform our work. For a small-to-mid-size project, a comfortable schedule is six weeks to deliver a draft report.
If you require faster delivery, we can usually accommodate you. Large or very complex projects can take 3 to 8 months. Please contact us to discuss the timing of your valuation project.
AVGI has valued thousands of companies across many specialized industries. In our experience, business valuation know-how is more important than specific industry knowledge in producing an accurate valuation and favorable outcome for the client.
When we work on a valuation assignment in an unfamiliar industry, our team collaborates extensively with industry experts to get the necessary information to complete a thorough valuation analysis. We have never encountered a valuation assignment that we could not perform due to a lack of industry knowledge.
Some accountants also provide valuation services, often on a part-time basis during their slow season. But while it is difficult enough to keep up with all the changes in tax law, financial reporting requirements, and other changes dictated by the AICPA and FASB, it is virtually impossible to also keep up with the valuation literature and changes mandated by the appraisal organizations. Even accomplished professionals cannot be the best at everything.
Part-time valuators may be adequate for valuing small businesses where the consequences of error or imprecision are minor. Still, it is risky to engage a part-time valuator in more complex situations or when the stakes are high.