The Supreme Court Decision Overhauls “Buy-Sell” Agreements among business owners
We are writing to inform you about a pivotal Supreme Court ruling that may impact your business strategies. On June 10, 2024, the Court’s decision in Connelly v. United States has introduced significant changes to how life insurance proceeds are treated when calculating the value of a business in the context of stockholder buy-sell redemption agreements.
Here is what you need to know about Connelly v. United States:
- Ruling Overview: Life insurance proceeds designated for stock redemption are now included in the company’s valuation.
- Immediate Recommendations: Review and adjust your succession plan and valuation methods with your tax advisors to ensure compliance with the new ruling.
- Estate Planning and Estate Tax Issues: The case has significant implications for succession and estate planning, taxation, and the management of closely held corporations, especially regarding the use of life insurance as a funding tool.
From a Corporate Financial Perspective:
The decision emphasizes the need to assess the impact of life insurance proceeds on financial statements and bank covenants following a shareholder’s death and the ensuing share purchase.
Small or large, your business is likely a source of great pride. We can offer strategic guidance on how to proceed in light of the new Supreme Court decision. Bacon Wilson can guide you through crucial estate planning, taxation, and corporate management decisions. From navigating valuation rules to optimizing life insurance strategies, we ensure your financial strategies align seamlessly.
Our firm is known for our expertise in various legal areas, including navigating complex legal decisions such as those made by the Supreme Court, especially in the Connelly V. United States case.
Contact Our Specialized Team of Corporate and Commercial Attorney’s today.
– Jeffrey I. Fialky, Esq, Corporate Department Chairperson, Managing Shareholder.