Business Planning

Supreme Court Ruling in Connelly v. U.S.

During the month of July, we are focusing on business planning in the wake of the Supreme Court ruling in Connelly v. U.S.  On June 6, 2024, the U.S. Supreme Court affirmed the 8th U.S. Circuit Court of Appeals’ decision in Connelly v. United States.  This ruling determines that the value of the business at a shareholder’s death will be increased by any life insurance proceeds that are received without an offsetting reduction for the amount of the stock redemption liability.

Whether the business is operated as a ‘C’ or an ‘S’ corporation, an LLC or as a partnership, all buy-sell agreements (redemption as well as cross-purchase) and business-owned life insurance coverage should be reviewed in light of the Code Sec. 2703(b) exceptions, existing case law requirements, and, with respect to redemption agreements, the Connelly Supreme Court decision.  Buy-sell planning remains a critical component of any business owner’s overall plan. Successful business owners should work closely with qualified advisors to address the Connelly holding and to ensure that their plan is compliant with Code Sec. 2703 and existing case law.

Click here to read more about the nuances and effects of the Supreme Court Ruling in Connelly v. U.S.

Contact us with any questions or opportunities to help you or your clients achieve identified goals.  This is what we enjoy doing for only a select number of families, businesses, and charitable institutions each year, and we look forward to hearing from you.