Two Approaches To Insurance-Funded Buy-Sell Agreements Post-Connelly

In Connelly v. United States,¹ the U.S. Supreme Court unanimously held that life insurance proceeds payable to a corporation when a shareholder dies add to the value of the deceased shareholder’s stock for calculating estate tax. The decision undermines conventional life insurance-funded redemption buy-sell agreements, in which insurance proceeds are paid to a corporation to redeem a deceased shareholder’s stock. Clients and their advisors will need to consider amending