PLANNING AHEAD FOR STARTUP FOUNDERS
Startup founders often build their wealth through equity in their companies. While this equity may prove highly valuable, it is typically illiquid and volatile. As a business grows—whether through funding rounds, an IPO, or an acquisition—its valuation can rise sharply, bringing with it significant tax implications and estate planning challenges.
Without careful preparation, both a founder’s long-term vision for the company and their family’s financial future can be at risk. Trust structures offer a strategic way to manage, transfer, and protect equity, though their effectiveness depends on proper timing and design. For founders operating internationally, additional consideration must be given to mobility and cross-border tax issues to ensure their planning aligns with a global footprint.
ESTATE PLANNING CONSIDERATIONS FOR STARTUP FOUNDERS
Startup founders face unique estate planning challenges given the unpredictable nature of valuations, rapid growth potential, and the often illiquid nature of company equity. Without proactive planning, founders risk:
Significant estate and gift tax exposure
Loss of control over equity and company direction
Public probate proceedings
Family disputes and mismanagement of assets
Insufficient liquidity for heirs during transitions or tax obligations
Thoughtful structures can help protect equity, preserve control, and ensure a smoother transfer of wealth across generations.
HOW CMG SUPPORTS STARTUP FOUNDERS
Cone Marshall Group (CMG) specializes in designing tailored trust structures and global estate planning solutions to meet the unique needs of startup founders. Our strategies address both immediate planning concerns and long-term legacy goals:
Establish Trusts Early: Create and fund trusts before valuation spikes to maximize tax efficiency and preserve equity for future generations.
Advanced Structures: Implement strategies such as GRATs, irrevocable trusts, and charitable trusts to reduce estate and gift tax liabilities while ensuring smooth wealth transfer.
Asset Protection: Safeguard founder equity from lawsuits, creditors, and intra-family disputes through carefully structured protections and trustee oversight.
Global Mobility & Compliance: Coordinate cross-border trust planning that aligns with international tax and residency rules to ensure compliance and optimal structuring.
Privacy & Succession: Avoid probate, maintain confidentiality, and protect business continuity through trustee provisions and voting control mechanisms.
Liquidity & Legacy Planning: Incorporate liquidity strategies (e.g., life insurance) and establish incentive-based or spendthrift trusts to support heirs and strengthen long-term legacy planning.