By now, everyone knows that 2012 represents an unprecedented opportunity to transfer substantial wealth through gifting. GBQ and countless others have written pieces encouraging wealthy taxpayers to consider this strategy.
What hasn’t been mentioned often is that to support any transfer, business owners will require a comprehensive valuation analysis and report that meets the IRS’ adequate disclosure documentation requirements. Here’s the catch. High quality valuations typically require 30 to 60 days to complete. And even for valuation practices with substantial resources to accommodate high volume, there is likely to be capacity constraints in the 4th quarter.
The bottom line: if you are counting on being able to procure a high-quality valuation from a reputable valuation practice in the November-December 2012 timeframe, you may encounter major issues due to the extremely high volume of valuations being requested, coupled with holiday and vacation schedules.
A prudent solution that many of our clients have been employing is to procure a valuation ASAP, and update that valuation to a more current date closer to an actual transfer if needed (since updates require much less time than full initial valuations). This approach is also helpful because your planning will be much easier when you have a good feel for value of company stock.
Similarly, high quality estate planning attorneys and advisors will be in high demand near year-end as well, so beginning the planning process early will be critical in ensuring that you can implement a timely and effective gifting strategy in 2012!