New Ruling Puts Redemption Agreements at Risk

Client Alert: Connelly v. United States

Corporate redemption agreements funded with life insurance are significantly impacted by the recent United States Supreme Court decision Connelly v. United States.

In the Connelly case, the Court unanimously held that the estate tax value of shares of stock in a closely-held corporation owned by the estate of a decedent shareholder includes the value of life insurance payable to the corporation to fund the redemption of the shares, and that the obligation to redeem the shares cannot be treated as a liability of the corporation to offset the value of the life insurance proceeds.

Read the full Client Alert here.