I'm 64 years old, with two sons, but only one works in the family firm. Should I leave him 70% of the business?

By Quentin Fottrell

'I have some reservations about the long-term stability of my younger son's marriage'

"My retirement is fully funded, and I have sufficient assets to cover long-term care should the need arise." (Photo subject is a model.)

Dear Quentin,

I am 64 years old and financially secure. My retirement is fully funded, and I have sufficient assets to cover long-term care should the need arise. I am widowed and have no intention of remarrying. I own a business that I estimate would be worth $500,000-600,000 if sold today. I have two sons, ages 36 and 32.

My family and business: My older son (Son #1) has worked alongside me for 11 years and has played a significant role in building the business. My younger son (Son #2) is married, lives about an hour away, and works in the computer industry. He has a degree in computer engineering, and his wife has a master's degree in engineering and is also well employed.

My current estate plan: My will currently provides for Son #1 to inherit 60% of the business, with his share increasing by 2% for each additional year he works in the business. He would then buy out his brother's remaining interest. I believe this is fair, given Son #1's years of service and contributions. My other assets, totaling $6 million, are divided equally.

My current thinking: As I approach retirement, I would like to transfer ownership of the business to Son #1. I recognize that transferring it to him would affect the inheritance ultimately received by Son #2. One option I am considering is gifting 70% of the business to Son #1 at its current fair market value, with an agreed-upon price and terms for him to buy out Son #2's 30%. Naturally, I would work with my attorney and CPA to structure any arrangement appropriately.

My main concern: The one complication is that I have some reservations about the long-term stability of my younger son's marriage. They have been married for four years, have no children, and do not intend to have any. I sincerely hope their marriage lasts, but I cannot say I have complete confidence that it will. I would prefer that those funds be protected to the extent legally possible, rather than potentially becoming part of a marital property dispute.

With that in mind, I have wondered whether the buyout could be structured so that payments would not begin for another five or even 10 years.

My Questions:

-- Does gifting 70% of the business to Son #1, while establishing an agreement for him to purchase the remaining 30% from Son #2, seems like a reasonable approach?

-- Could the buyout be structured with deferred payments or other provisions to help protect the funds Son #2 eventually receives in the event of a divorce?

I understand that the details will need to be worked out with my attorney and CPA, but I would appreciate hearing your perspective and ideas before moving forward.

The Father

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

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Equal inheritances, which come with a step-up in basis for tax purposes, are not necessarily equal inheritances.

Dear Father,

It doesn't need to be so complicated.

Fair is not always equal: Your business, while clearly of significance to your life's work, probably because it was something you created from scratch and you would like to see it continue, makes up just 8% of your estate. With that in mind, why not give Son #1 this $500,000 to $600,000 business, when the time comes, and deduct it from the rest of his inheritance so both sons receive equal shares of your estate? That seems like the most straightforward plan.

Of course, equal inheritances, which come with a step-up in basis for tax purposes, are not necessarily equal inheritances. Son #1 has spent 11 years working alongside you and helping to build a business, and you may understandably and rightfully feel that his contributions - how do I put this delicately? - warrant some additional consideration. You may wish to reflect that 70/30 split in your estate plan. That does not seem unreasonable to me.

Marital vs. separate property

Inheritance is separate property, but it may become marital property if it is commingled. Even without a prenuptial or, indeed, a postnuptial agreement, you can set up a trust for your sons. A properly drafted discretionary trust with spendthrift provisions may offer greater protection against a 'y's creditors and marital claims. The trust can specify whether they receive the money as an income rather than a lump sum, for instance.

This may be preferable to a lump sum that could accidentally (or not) be commingled as marital property. Things get more complicated if you give a lump sum to your children during your lifetime. You would have to fill out IRS Form 709 federal gift-tax return, although filing a return does not necessarily mean you owe gift tax. For 2026, the federal lifetime estate and gift tax exemption is $15 million per person, and the annual gift-tax exclusion is $19,000 per recipient.

You want to avoid a Cain and Abel situation. As one member of the Moneyist Facebook Group noted: "As a CPA, I'm glad you're thinking about this proactively. Unfortunately, I often have to deal with the aftermath when these issues haven't been thought through in advance. I think leaving the entire business to Son #1 is a smart move for several reasons. DO NOT PUT PEOPLE INTO A PARTNERSHIP THEY DON'T WANT!" (The all-caps format is his.)

Avoiding family conflict

Your final calculation should account for the business's fair market value. "The goal should be to avoid putting the kids in a business partnership that could lead to conflict, especially if divorce is a possibility," he wrote. "Otherwise, you could inadvertently put Son #1 in business with his ex-sister-in-law. The key is to plan ahead, be intentional about how the assets are distributed, and avoid creating future conflicts in an effort to make everything appear equal."

You also asked whether payments could be deferred for five or even 10 years. An installment sale or promissory note could certainly make that happen, but I'd be wary of stretching payments out that far just to protect Son #2 in case of divorce. A deferred payment obligation doesn't automatically shield the proceeds from marital claims, and the note itself may be treated as an asset in a divorce.

Beneficiaries vs. wills

A lifetime or beneficiary-controlled trust living trust is effective for wealthy individuals with spouses. For families with complex estates, consolidating accounts and assets under one trustee can help everything run more smoothly. Beneficiary designations can become problematic if they contradict what a person has written in their will (a beneficiary designation would take precedence over a will), so make sure your messaging is consistent.

Smith Debnam, a law firm with offices in North and South Carolina, has an opinion on such a predicament. "While you may love your son-in-law or daughter-in-law, you may not necessarily want to pass your assets to them," it says. "Many people have reservations about this scenario. After all, your son-in-law or daughter-in-law could remarry and the assets you worked a lifetime to accumulate could end up benefiting their new spouse."

"A testamentary trust is a trust created in a will. When you die, if the trust is 'triggered,' the trust springs into being," the law firm adds. "A revocable living trust, also simply referred to as a revocable trust, is a separate estate planning document you create and fund during your lifetime. It operates in much the same way as a testamentary trust after your death, but can also be used to control assets during your lifetime."

Consider separate trusts for each of your sons.

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By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.

More columns from Quentin Fottrell:

'I don't want to die on the sales floor': I'm 67 and earn $19.50 an hour at a big-box store. When can I finally retire?

'I'm never selling': I'm 47 and buy bitcoin with every dollar I earn. Am I crazy?

'The house is worth $925,000': My sister moved in with our mother, 78, and says she deserves the family home. Is she right?

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-Quentin Fottrell

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10-15-26 1200ET