Case Summaries Connelly v. United States (U.S. Supreme Court June 6, 2024)

Stephen R. Akers

Jun 06, 2024
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U.S. Supreme Court Resolves Tax Uncertainty About Life Insurance Funded Redemption Agreements

A corporation funded its obligation to purchase shares at a shareholder’s death with life insurance. The Eleventh Circuit almost 20 years ago decided (Estate of Blount v. Commissioner) that the life insurance proceeds paid to the corporation did not have to be considered in valuing the decedent’s shares for estate tax purposes. The Supreme Court changes that result in Connelly (affirming the district court and Eighth Circuit decisions in this case). This important case will have significant implications for planning and funding buy-sell agreements.

Steve Akers
Senior Fiduciary Counsel