Financial Advisors Want to Know: Key Insights on Buy-Sell Agreements and Succession Planning Ep. 83 Paul Hood, Jr.

Welcome to the Financial Advisors Want to Know Podcast, I’m Catherine Tindall a CPA with Dominion where our focus is helping financial advisors navigate income tax planning and compliance for their firms.

Paul Hood Jr., JD, LLM, is a nationally recognized estate and tax planning attorney, author, and speaker with decades of experience helping families and advisors navigate complex legal and financial matters. He has written over 500 professional articles and several books, including Yours, Mine & Ours: Estate Planning for People in Blended or Step-Families. Known for combining deep technical expertise with practical insights, Paul is a sought-after thought leader in the fields of estate planning, tax law, and family governance.

Key Takeaways:
Buy-Sell Agreement Pitfalls: Over 90% of the buy-sell agreements reviewed by Paul are defective in some form, often due to unclear language or lack of consideration for real-world scenarios.

Importance of Regular Review: Many advisors fail to revisit and test their buy-sell agreements regularly, often leaving critical aspects like triggering events, valuations, and payouts unaddressed.

Fire Drill Method: Paul recommends doing a "fire drill" by walking through your buy-sell agreement as if a triggering event has just occurred. This exercise will highlight potential gaps or issues in your agreement that need to be addressed.

The Role of CPAs in Succession Planning: CPAs play a crucial role in ensuring that a buy-sell agreement aligns with tax considerations, especially for closely held businesses, S Corps, or LLCs, to avoid unnecessary tax consequences like wasted basis.

Client Education and Value: Using tools like the Buy-Sell Options Grid can add immense value to your clients by giving them a clear understanding of their buy-sell agreement and facilitating better planning and communication.

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