| Course | GF593 Estate Planning |
|---|---|
| Unit | Unit 9 |
| Paper type | Business succession plan |
| Length | About 930 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Finance |
| Updated | October 2026 |
Free sample paper for GF593 Unit 9
Payroll on Monday: A Unit 9 Business Succession Plan for a Three-Branch Tile and Stone Distributor
[Student Name]
Purdue University Global
GF593: Estate Planning
Unit 9 Business Succession Plan
[Instructor Name]
[Date]
The company, the family, the finance chief and every amount are composite and illustrative; the regulation and studies cited are real; this plan is coursework, not legal or tax advice.
The Business and the Family
Victor Varga, 67, founded Brazos Tile and Stone thirty-one years ago. It sells tile, natural stone and installation supplies to contractors from branches in San Antonio, Austin and Waco, and an appraiser values it at $6,400,000. It is an S corporation with Victor as sole shareholder. His daughter, Elena, 41, has run operations for nine years. His son, Paul, 38, teaches high school chemistry and has no interest in the business. Dennis Ward, the chief financial officer, has been with the company fourteen years and is not family. Victor personally guarantees the company's $2,000,000 line of credit.
Family firms that pass control to a family member often perform worse after the handoff than those that bring in outside management, partly because heirs are chosen from a small pool (Bennedsen et al., 2007). Elena's nine years running operations answer much of that concern, but the plan still keeps Dennis and an outside director involved through the transition.
Part One: Management on Day One
1. Board resolution, signed now. It names Elena president on Victor's death or incapacity, effective immediately, and confirms Dennis as treasurer.
2. Bank signatures. Dennis and Elena are added as authorized signers on every operating and payroll account now, so payroll runs the first Monday without waiting for an executor.
3. Retention agreement for Dennis. He receives a bonus equal to one year's salary, paid in two installments twelve and twenty-four months after a succession event, if he remains employed. Losing the person who knows the lender, the vendors and the books in the first year would be the most expensive failure in this plan.
4. Lender conversation. The bank can call or freeze the line of credit when its guarantor dies. Victor and Elena should meet the lender now to agree that Elena's guarantee, or a pledge of company assets, will replace his.
5. An outside director. One experienced industry executive joins a three-person board with Elena and Dennis, to give the transition an independent voice.
A business can survive an unsettled estate for months, but it cannot survive a missed payroll or a frozen credit line for one week, which is why management comes before ownership in this plan.
Part Two: Control
The company recapitalizes into 10 voting shares and 990 nonvoting shares. The single-class rule for S corporations ignores differences in voting alone, so shares identical except for their votes still count as one class, so this recapitalization keeps the S election (Treas. Reg. § 1.1361-1, 2025).
1. Voting shares. Victor keeps all 10 during his life. His revocable trust leaves them to Elena, so she controls the company at his death.
2. Nonvoting shares. Victor moves them to Elena during his life through a mix of annual exclusion gifts and a sale at appraised value for a promissory note. The note pays Victor interest and principal from Elena's salary and distributions over twelve years, giving him retirement income.
3. Valuation. Each transfer uses a qualified appraisal. Nonvoting shares are worth less per share than voting shares because they carry no control, and the appraisal will reflect that.
The sale also matters for fairness. Elena pays for most of what she receives, so the estate Paul shares in grows by the note payments.
Part Three: Fairness to Paul
Paul should not own shares in a company he does not run and cannot control; minority owners in family companies often end up in conflict with the operating sibling. Instead he receives assets of equal value:
1. The real estate LLC, which owns the three branch buildings, $2,100,000. The company leases the buildings at market rent, which gives Paul a steady income. The lease should be renewed for ten years before Victor's death, so Elena's company is secure and Paul's income is predictable.
2. Brokerage accounts, $1,300,000.
3. A $3,000,000 life insurance policy held by an irrevocable trust for Paul, funded by Victor's annual gifts to the trust for the premiums.
Together these equal $6,400,000, the appraised value of the company. Because the insurance is owned by a trust from the start, its proceeds are outside Victor's estate.
Risks and How the Plan Handles Them
1. Victor's incapacity before death. His durable power of attorney names Elena for business matters and Paul for personal finances, and the board resolution already covers management.
2. Elena leaves the business. Under a buy-sell agreement the company may purchase her shares at appraised value, funded partly by key-person insurance.
3. The appraisal rises sharply. The equal-value test is rechecked every three years, and the insurance amount for Paul can be increased.
4. Lease disputes between siblings. The lease includes a fixed rent formula and an outside arbitrator.
Family control works best where the heir has real experience in the business; heirs chosen only by birth tend to do worse (Pérez-González, 2006). The plan relies on Elena's track record and adds Dennis and an outside director as safeguards.
Next Ninety Days
1. Adopt the board resolution and add bank signers.
2. Sign Dennis's retention agreement.
3. Meet the lender about the guarantee.
4. Engage an appraiser and draft the recapitalization.
5. Apply for the life insurance and form the irrevocable trust.
References
Bennedsen, M., Nielsen, K. M., Pérez-González, F., & Wolfenzon, D. (2007). Inside the family firm: The role of families in succession decisions and performance. The Quarterly Journal of Economics, 122(2), 647-691. https://doi.org/10.1162/qjec.122.2.647
Pérez-González, F. (2006). Inherited control and firm performance. American Economic Review, 96(5), 1559-1588. https://doi.org/10.1257/aer.96.5.1559
Treas. Reg. § 1.1361-1 (2025).
GF593 Unit 9 instructions, in plain terms
GF593's ninth unit asks for a succession plan that a family could follow on the day the owner dies or becomes unable to work. Describe the business, the owner and each family member's role, including key employees who are not family. Then organize the plan by urgency. Start with management: who runs the company, who signs checks and what the lender will do when a guarantor dies. Move to control: how ownership passes to the successor, using a structure that keeps the company's tax status intact. End with fairness to children who will not run the business, matching value without forcing shared ownership. Identify the main risks, such as incapacity, the successor leaving or a change in value, and say how the plan responds to each. Close with steps for the next ninety days. Cite the Treasury regulation on S corporation stock and research on family firm succession in APA 7.
Inside the GF593 Unit 9 example
The opening section describes the company, the founder's $2,000,000 guarantee and the three people involved. Bennedsen and colleagues' finding on family successions is addressed with Elena's nine years of experience and two safeguards. Part one lists five management steps: a board resolution, added bank signers, a retention bonus for Dennis, a lender meeting and an outside director. The highlighted sentence explains why payroll comes before ownership. Part two recapitalizes into 10 voting and 990 nonvoting shares, citing Treas. Reg. § 1.1361-1, and moves nonvoting shares to Elena by gift and a twelve-year note. Part three gives Paul the $2,100,000 real estate LLC with a ten-year lease, $1,300,000 of brokerage and a $3,000,000 policy in an irrevocable trust, together $6,400,000. Four risks are matched with responses, and Pérez-González's study supports the reliance on experience. Five ninety-day steps close the plan.
Where the points sit in the GF593 Unit 9 rubric
The rubric for this GF593 plan rewards correct priorities as much as correct mechanics. Instructors look for management continuity at the front, because a business can fail in the weeks before an estate is settled. The lender's reaction to a guarantor's death is a common test point that many plans miss. The control section is graded on whether the structure works for the entity type; for an S corporation, voting and nonvoting shares must stay within the one-class rule. Transfers to the successor should be at appraised value, with the gift and sale mechanics explained. Fairness to the non-business child earns credit when value is matched without giving that child shares in a company he cannot influence. A risk section with specific responses shows the plan was tested. The Treasury regulation and two studies on family firm succession, cited in APA 7, support the choices made.
Common GF593 Unit 9 mistakes, and how to avoid them
Many GF593 Unit 9 plans begin with valuation and ownership and never say who will run the business on the first day. Others assume the bank will continue a credit line after the guarantor dies, which is far from certain. In S corporations, students sometimes propose preferred shares or other structures that would break the single-class rule. Equal division of shares among all children is common, and it often leaves a non-working child with a stake he cannot use and a working sibling with a partner who wants different things. Some plans give the non-business child less without saying so. Key employees are frequently ignored, though losing a finance chief in the first year can be costly. Risks are listed without responses. Keep the plan in the order the problems arrive, match values with figures, and end with steps that can be completed within ninety days.
Get a GF593 Unit 9 example written to your instructions
Describe the Unit 9 company, who owns it and which relatives work there, or let a composite distributor stand in, and attach the rubric. Management continuity leads the plan, followed by control and a fair split of value, each tied to a named document. Your first custom sample is free, delivered within 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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GF593 Unit 9 questions, answered
Why not leave the company to both children equally?
Because one works in it and one does not, and equal shares would give the son a stake he cannot influence and the daughter a partner with different goals. The sample equalizes by value instead, giving the son real estate, investments and insurance of the same worth. Equal treatment and identical assets are different things, and the paper explains the difference.
Where can I find a free GF593 Unit 9 sample paper?
This page carries a full GF593 Unit 9 business succession plan for a three-branch tile and stone distributor, covering management on day one, an S corporation recapitalization, equal value for the non-business child and APA 7 references.
Why does the plan start with payroll instead of ownership?
A company can operate for months while an estate is settled, but a missed payroll or a frozen credit line can damage it within a week. Naming the president, adding bank signers and meeting the lender now keep the business running from the first day.
How is Paul treated equally without owning shares?
He receives assets of the same value as the company: the $2,100,000 real estate LLC that leases the branches to the business, $1,300,000 of brokerage and a $3,000,000 policy held in an irrevocable trust, for $6,400,000 in total.
What happens if the founder's guarantee ends at his death?
The bank may freeze or call the $2,000,000 line of credit. The plan has Victor and Elena meet the lender now to agree that Elena's guarantee or a pledge of company assets will replace his, so the credit line continues.