Planning before a liquidity event.

Reviewed by Elizabeth A. Tresp, JD, LL.M., trust & probate litigator · Updated August 2026

Why before is so much better than after

• Valuation. A minority interest in a private company, subject to transfer restrictions and lacking a market, is valued very differently from the cash it becomes. That difference has real consequences for transfer-tax planning done at the same time.
• Timing and the record. Structuring while a transaction is speculative and no dispute exists produces a clean record. Structuring after a deal is signed, and certainly after any friction with the buyer, does not.
• Seasoning. Every state and foreign seasoning clock starts on funding. Starting it a year before closing rather than a year after is a year of protection you cannot buy later.
• Range of options. Before closing, the full toolkit is available. After, the practical choices narrow considerably.

The exposures a liquidity event creates

Sales generate their own litigation. Representations and warranties survive closing. Indemnification obligations and escrow claw-backs can reach back years. Disputes with minority holders, earn-out disagreements, and employment claims from departing staff all cluster around transactions. And the wealth itself becomes visible, which changes your risk profile permanently.

The real deadline

It is not the closing date. It is the point at which a transaction becomes reasonably foreseeable and, later, the point at which any dispute with a counterparty becomes foreseeable. A letter of intent is a meaningful marker. Once indemnification claims are in view, restructuring around them is a fraudulent transfer problem.

What planning typically involves

Some combination of: an asset protection trust funded with a portion of the equity before sale; entity restructuring to separate what is being sold from what is not; charitable planning where philanthropy is already part of the picture; and coordinated estate planning, because the transfer-tax opportunity and the asset protection opportunity share the same window.

See also asset protection for business owners and business succession planning.

Next step

If a transaction is anywhere on your horizon, the conversation is worth having now rather than at signing. To review your exposure with an attorney who both builds these structures and litigates trust disputes, call (858) 755-6672 or request a risk audit.