Business Succession Attorney · Nashville
The company keeps running.
The family ends up with what it was worth.
Buy-sells, family transfers, and inside sales drafted alongside the tax work.
By Knight Lancaster, JD, CPA · Last reviewed May 2026
Two outcomes, one bridge between them.
Most owners of a closely held Tennessee business want the same two things at the end. The company keeps running. The family ends up with what the company was worth. The bridge between those two outcomes is a real business succession plan: drafted, funded, and tied to the owner's tax picture before the trigger fires.
Knight Lancaster is a Tennessee attorney and a licensed CPA. The Lancaster CPA Firm prepares the corporate, partnership, trust, and gift returns that come out of the succession work. The legal documents and the resulting filings get drafted by the same hand, so the entity restructure, the gifting plan, and the tax filings agree at the line.
The five D's a real plan covers.
Most owners come to us in one of five moments. A real plan handles all five. A template plan handles death and retirement, leaving the business exposed on the rest.
Death
The interest moves where the paper says it moves.
The owner dies and the business interest moves through a will, a trust, or by entity documents to the named successor. If the paper is silent or confusing, the court decides.
Disability
Authority to sign payroll, much less close a sale.
A stroke, an accident, or a slow decline takes the owner off the job. Without a plan, the partner you trusted to run the business may not have the legal authority to act.
Divorce
The marital settlement that touches equity.
A marital settlement that touches business equity is a succession event whether you call it that or not. A buy-sell that addresses the divorcing spouse keeps the company from being co-owned by an ex.
Disagreement
Ends a partner deadlock cleanly.
Two or three partners who agreed when the company was small don't always agree on a sale price, a hire, or a distribution policy ten years later. The buy-sell ends the deadlock cleanly instead of in litigation.
Distress
Options on the desk, or whatever offer is on the desk.
A health scare, a lawsuit, a banking event, or a personal bankruptcy that forces a fast exit. Owners with a plan in the file cabinet have options. Owners without one take whatever offer is on the desk.
Family, outside, or inside.
The plan splits along the next owner. For deal-side mechanics, see the M&A practice page. For document mechanics on the buy-sell at the center of every plan, see the buy-sell page.
| Family transfer | A multi-year combination of annual gifts to the gift-tax exclusion, a family limited liability company that holds the business and supports valuation discounts, an operating agreement that governs the kid coming in alongside the partners who stay, and a buy-sell on the part of the equity not gifted. The Form 709 gift returns get prepared in the same firm that drafted the documents. |
| Outside sale | Pre-sale planning. The diligence file gets cleaned up. The minute book gets caught up. Contracts get reviewed for assignment language. The structure decisions (asset, stock, F-reorg, rollover) get modeled against the tax math before the LOI is signed. Hand-off to the M&A practice when the deal moves to definitive. |
| Inside sale | When the buyer is already inside the company, the deal usually combines several pieces. A non-qualified deferred compensation arrangement that pays the seller over time. An installment note for the cash portion. A redemption funded by company cash. Sometimes an ESOP for a tax-advantaged exit when the math works. |
| Buy-sell at the center | The buy-sell is the foundational document for any business with more than one owner. It covers the triggers, sets a valuation method that holds up, and identifies how the buyout actually gets paid for. The cross-purchase / redemption / hybrid choice drives the basis the surviving owners hold and the cash mechanics at funding. |
"Most owners want two things at the end: the business keeps running, and the family ends up with what it was worth."
Step-up, exemption, valuation discounts.
Business succession is a tax problem with a legal structure attached. Most decisions on this page have a tax answer, and getting the tax answer wrong can cost a successful exit a meaningful percentage of the proceeds.
The provision
Federal exemption sunset
What it does
Federal exposure on a business ownership transfer is timing-sensitive. An owner who plans a transfer in a year when the exemption is high may pay no gift tax on a transfer that, three years later, would have generated meaningful tax. SLATs, GRATs, and lifetime gifts of business interests are the documents that capture that timing.
The provision
Step-up in basis at death
What it does
A business interest that passes through the owner's estate at death gets a step-up in basis to fair market value. A business interest gifted during life carries the donor's original basis. The choice between gifting now and holding until death runs as math, not default behavior.
The provision
§1202 QSBS on a third-party sale
What it does
A C corporation that meets the qualifying small business stock rules of IRC §1202 lets the founder exclude the greater of $10M or 10x basis of capital gain on a third-party sale, federally tax-free. The §1202 question has to be analyzed before any restructuring; some moves disqualify QSBS retroactively.
The provision
Valuation discounts on a family LLC
What it does
A non-controlling, non-marketable interest in a family LLC supports valuation discounts (typically 20–35%) for lack of control and lack of marketability. The IRS scrutinizes the structure, so the entity has to be respected: capitalized, formal, and supported by a real non-tax purpose.
Tennessee succession law that shapes the plan.
Tennessee statute and Tennessee tax law shape the answer for any plan involving a Tennessee-headquartered business.
| Tennessee Revised LLC Act | Tenn. Code Ann. § 48-249. Gives the operating agreement broad authority to control how member interests transfer at death, withdrawal, or sale. A silent operating agreement defaults to statute, which is rarely what the owner intended. |
| Tennessee Business Corporation Act | Corporate succession typically runs through a shareholder agreement that controls share transfers at death, retirement, divorce, and disability. |
| Franchise & excise tax | Tennessee imposes a franchise tax (0.25% of net worth, post-reform) and an excise tax (6.5% of net earnings). Knight serves on the Tennessee Society of CPAs State and Local Tax Committee. |
| No state-level death tax | Tennessee repealed the inheritance tax in 2016 and has never imposed a separate estate tax. Tennessee is a friendly ownership-transfer jurisdiction relative to states that impose their own. |
| Tennessee Community Property Trust | A business interest transferred into a TCPT receives a full step-up in basis at the death of the first spouse, not just a half step-up. For appreciated equity, that can save real capital-gains tax on a later sale. |
| Remote online notarization | Lancaster Law executes operating-agreement amendments, buy-sells, equity transfers, and signing-day documents using Tennessee Remote Online Notarization. Owners across the state close without a trip to Nashville. |
Every succession decision has a money side. Whether the equity gets gifted now or held until death changes the basis the next owner inherits by hundreds of thousands of dollars. Whether the company qualifies for §1202 changes the federal capital-gains exposure on a third-party sale by an order of magnitude. Whether the family LLC supports a valuation discount changes the reported value of the gift on Form 709. As a CPA, Knight sees the money side and the legal side at the same time, so the documents he drafts and the returns the firm files agree at the line. Tennessee bar admitted, dually licensed as a Certified Public Accountant, recognized in Best Lawyers in America.
The succession plan and the gift return, drafted by the same hand.
Succession, answered.
What is business succession planning?
Business succession planning is the legal and tax work that decides who owns and runs a business after the current owner leaves it, by retirement, sale, gift, illness, divorce, or death. A real plan typically combines a buy-sell agreement, updates to the operating or shareholder agreement, an estate-planning instrument, funding for the buyout, and a coordinated tax strategy.
What are the 5 D's of succession planning?
The 5 D's are death, disability, divorce, disagreement, and distress. They are the five common events that trigger a succession transition. A real buy-sell covers all five. Many template buy-sells cover only death and retirement, which leaves the company exposed on the other three.
How much does a business succession attorney cost in Nashville?
A buy-sell agreement for an existing two-owner Tennessee LLC is typically a defined flat fee. A multi-year family-business succession plan with entity restructuring, a family LLC, gifting strategy, and trust drafting runs higher. Lancaster Law works flat-fee where the scope is defined and hourly where it is not, with a specific dollar quote after the first conversation. Hourly rates for Nashville business succession counsel typically run $300 to $500.
When should I start business succession planning?
Five to ten years before exit is the comfortable window. Three years is workable. One year is reactive. Less than one year, typically a health event, a partner dispute, or an unsolicited offer, is the situation we get hired into most often. The earlier the plan, the more levers an owner has on valuation discounts, gifting strategy, and the §1202 holding period.
Do I need a buy-sell agreement if I'm the only owner?
A traditional buy-sell requires more than one owner. For a sole-owner business, the equivalent documents are a comprehensive operating or shareholder agreement that addresses death and incapacity, plus a personal estate plan that names who inherits or buys the interest. A key-person policy and a designated successor manager named in the operating agreement complete the package.
Can the same firm handle the legal and the tax filings?
Yes. The Lancaster CPA Firm prepares the corporate, partnership, trust, and gift returns that come out of the legal work. Owners who hire one firm for the document and the resulting filings tend to find the math comes out tighter than splitting the work across two firms.
Reviewed by Knight Lancaster, JD, CPA, MBA
Knight Lancaster is the founder of Lancaster Law, P.C. and The Lancaster CPA Firm, P.C. in Nashville, Tennessee. He is one of a small number of attorneys in Tennessee who is also a licensed CPA, giving him a dual perspective on the legal documents and the tax returns that follow them. Knight has been recognized in Best Lawyers in America, Ones to Watch (Corporate Law), in 2023 and 2024, and serves on the Board of Directors of the American Academy of Attorney-CPAs. He earned his JD and MBA from Belmont University (the first graduate of Belmont's joint JD/MBA program) and a BS in Accounting from the University of Tennessee. Before founding Lancaster Law, Knight practiced at Bone McAllester Norton (now Spencer Fane), where his work focused on mergers, acquisitions, dispositions, and securities matters.
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This article is for educational purposes only and is not legal advice. Reading it does not create an attorney-client relationship. For advice specific to your situation, contact Lancaster Law directly.
Tennessee Bar
Practicing since 2019
Triple credential
JD · CPA · MBA
Peer-reviewed
Best Lawyers, Ones to Watch, 2023 + 2024
National board
American Academy of Attorney-CPAs, Director
Succession counsel across Tennessee.
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