Don owns 100% of D&B, an incorporated cattle feeder. He has two children, Chet and Sandy. Chet is a full-time teacher at the local high school, and Sandy works in the operation (with no ownership).

Don wants to make sure that Sandy has every opportunity to own the operation at some point in the future. Though he’d like to retire soon, he needs the income from the business to ensure his financial security.

Don’s balance sheet includes:

At first blush, it seems Don could gift D&B stock to Sandy. But with inadequate retirement resources, this is not a wise decision. A better option would be for Don to allow Sandy to purchase the operation on an installment note. The note payments will provide income to supplement Don’s retirement while allowing for an equitable distribution in regard to Chet.

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