Dealing with Toxic Succession Issues
Business valuations often fail to account for potential environmental contamination of real estate owned by the company. This oversight can have serious consequences at the death of a business owner when that deceased owner’s share of the company is transferred to surviving business partners or beneficiaries – along with the deceased owner’s share of liability for any contaminated real estate owned by the company. Corporate law attorneys who provide advice relating to business transfer and succession issues, especially those that regularly draft buy-sell agreements, should be aware of the potentially serious business valuation issues involved in the passing of corporate environmental cleanup liabilities at death (toxic succession).
Chemical contamination of real property can occur from any of numerous commercial, industrial or agricultural sources, including gasoline service stations, dry cleaners, chemical or pesticide storage, and manufacturing operations. The contamination can impact both soil and groundwater, and can lead to liability for potentially catastrophic cleanup costs.
The harsh risks of toxic succession can often be mitigated by considering potential environmental contamination liabilities in every business valuation. By taking a proactive approach, and with some strategic help from toxic succession professionals, corporate attorneys can ensure that their clients are fully informed and not caught off guard by unexpected – and potentially catastrophic – environmental cleanup issues.
Resources:
•Campaign 5000: Toxic Succession Whitepaper
•Planned Giving Today article by Kevin Daehnke
•Contaminated Property: Proactive Planning Strategies to Maximize Estate Value and Avoid Draconian Results
•Environmental Cleanup Costs: Professional Negligence for Failure to Warn Successors and Beneficiaries
