“The federal estate tax exemption sunsets after 2025 — reverting from $14M to approximately $7M per person. Pest control owners with large estates should act before year-end 2025 to lock in the higher exemption through gifting or trust strategies.”
Why Estate Planning and Business Sale Planning Must Be Coordinated
Selling a pest control business and estate planning are not independent activities — they are deeply intertwined. A business sale creates a large liquid estate: proceeds that are now subject to estate tax at the owner's death. The timing of the sale, the structure of the sale, and the pre-sale use of estate planning techniques all affect the total wealth transferred to heirs vs. paid to the federal government. For pest control business owners with businesses worth $3M+ and total estates above the federal exemption threshold, coordinating business sale planning with an estate planning attorney is among the highest-value professional services available.
The Federal Estate Tax Exemption: 2025 Sunset
The Tax Cuts and Jobs Act of 2017 doubled the federal estate tax exemption to approximately $13.99M per individual ($27.98M per married couple) in 2025. This elevated exemption is scheduled to sunset on December 31, 2025, reverting to the pre-TCJA baseline (approximately $7M per individual, adjusted for inflation). If the sunset occurs as scheduled, a pest control business owner with a $12M estate would have $5M above the post-sunset exemption — resulting in approximately $2M in federal estate tax that would not be owed under the current 2025 rules. Owners with estates near or above the post-sunset threshold should act before the end of 2025 to lock in the higher exemption through gifting or trust strategies.
Gifting Business Interests Before Sale
One of the most powerful pre-sale estate planning strategies: gift interests in the pest control business to heirs or trusts before the business is sold, while the business interests can be valued at a discount to full fair market value. Business interests in a closely held company are typically valued at a 20–40% discount for lack of marketability and lack of control (a minority interest in a private business is worth less per dollar of enterprise value than a marketable share of a public company). Gifting a 40% minority interest in your pest control business worth $5M enterprise value — valuing the 40% interest at a 35% discount — removes approximately $1.3M from your taxable estate using only $1.3M of your gift tax exemption, while the underlying value transferred is $2M.
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Intentionally Defective Grantor Trusts (IDGTs)
An Intentionally Defective Grantor Trust (IDGT) is an estate planning technique where the business owner sells business interests to a trust in exchange for a promissory note — removing the business value from the taxable estate at today's valuation while retaining income tax obligations. For a pest control business owner planning a sale in 3–5 years: (1) create an IDGT and fund it with a small gift; (2) sell a minority interest in the business to the IDGT for a promissory note at the applicable federal rate; (3) when the business is sold, the IDGT receives a proportionate share of the proceeds; (4) those proceeds are outside the owner's taxable estate. The strategy requires careful valuation, note terms, and trust structure — work with an experienced estate planning attorney.
Charitable Strategies Coordinated with Sale
For owners with philanthropic intent: a Charitable Remainder Trust (CRT) or Donor Advised Fund (DAF) can reduce both estate and income tax when coordinated with a business sale. Contributing appreciated business interests to a CRT or DAF before the sale (and before any binding sale agreement) eliminates capital gains tax on the contributed portion, generates a charitable deduction, and removes the contributed value from the taxable estate. These strategies require advance planning — they cannot be implemented after the sale closes. For pest control business owners with estates above the exemption threshold and philanthropic goals, the combined income and estate tax savings can be substantial.
Jason Taken
Pest Control Business Broker · HedgeStone Business Advisors
Jason specializes exclusively in pest control company acquisitions and sales. He works with sellers across 34 states and buyers ranging from owner-operators to private equity platforms.