Protect your business with a stronger succession plan

In major Arizona metros like Tucson and Phoenix, more than 30% of businesses are family-owned — reflecting a sector that generates more than half of U.S. GDP.

The challenge: Less than a third of those businesses will survive into the second generation of family ownership.

• 12% will survive into the third.
• Only 3–5% will make it to four generations.

Okay, but: Estate planning often lags behind business growth.

• As ownership structures, valuations, and leadership change, outdated documents can create uncertainty at critical moments.

Why it's important: A well-aligned estate plan does more than transfer ownership after death — it helps protect continuity, preserve a business's value, and provides clarity during unpredictable and challenging moments.

• And even with the U.S.'s record-high estate tax exemption, many Arizona business owners still have taxable estates, and most of their wealth is tied up in the company.

The solution: Midyear is a natural checkpoint to reassess estate, tax, and succession plans before misalignment creates bigger challenges.

• Fennemore, one of the nation's fastest-growing law firms, works with Arizona business owners to navigate these reviews and align plans with how their companies operate today.

What you need to know: Katie Callaway, chair of Fennemore's Trusts & Estates group, says these six practical questions should be a part of every business owner's mid-year estate plan review.

Is your ownership structure aligned with your estate documents?

• Entity structures, trusts, and operating agreements should work together to support clarity during transitional moments.

Are there enough assets outside the business to cover the estate tax?

• Although the estate tax exemption is higher than ever, if the estate exceeds the exemption and there aren't sufficient liquid assets outside the business to cover the estate tax, the family may be forced to sell the business to cover the estate tax – likely not what the owner intended.

Have valuations been updated recently?

• Outdated valuations can create inequities and tax inefficiencies while leaving your hard work on the table.

Have you granted someone the legal authority to manage or transfer your business if you are incapacitated or upon your death?

• A Trusts and Estates lawyer with Fennemore can assist you with creating estate planning documents by which you can designate a trusted family member, business partner, or friend to manage or transfer your business for you in the event you are unable to do so.

How will business interests be divided among family members?

• Your succession plan, estate structure, and beneficiary designations should all be aligned, especially when some beneficiaries are involved in the business and others aren't.

Have you accounted for digital and intangible assets?

• Don't forget your business' intellectual property, data, and AI tools that may be central to its value.

Plus, plus, plus: Trends across Arizona are changing how business owners approach estate planning.

• Businesses are structuring succession plans that balance fairness and control to reduce conflict.
• Owners are trying to fund estate taxes without disrupting operations, including by establishing irrevocable life insurance trusts.
• State-specific considerations, like Arizona's community property rules and probate thresholds, require more proactive planning.

The takeaway: Succession should evolve with your business, and even a brief review with a Fennemore estate planner can uncover gaps that are easier to address now than later.

Review your plan with a Fennemore attorney.