Post-Connelly Buy-Sell Review
Your succession plan may still work exactly as written.
That could be the problem.
In Connelly v. United States, 602 U.S. 257 (2024), the Supreme Court clarified that corporate-owned life insurance proceeds used in a stock-redemption arrangement can increase the corporation's value for federal estate-tax purposes — and that the redemption obligation does not automatically offset those proceeds in the valuation.
You may want a review if
These five indicators are the most common characteristics of arrangements that may warrant a post-2024 review.
Your company owns life insurance on one or more owners.
The insurance is intended to fund a buy-sell agreement, stock redemption, or purchase of an owner's shares at death.
The arrangement was established or last reviewed before June 2024.
Your business has materially increased in value.
No attorney, CPA, valuation professional, or insurance advisor has reviewed the structure specifically in light of the 2024 Supreme Court decision.
What Changed
The Assumption
Insurance funds the redemption.
The company receives the death benefit and uses it to purchase the deceased owner's shares. This has long been the foundational premise of corporate-owned life insurance in buy-sell planning.
The Connelly Concern
The proceeds may also affect value.
Under the facts addressed by the Supreme Court, the insurance proceeds increased the corporation's value for estate-tax purposes without an equal offset for the redemption obligation — a result that may not have been anticipated when the arrangement was established.
That does not mean every corporate-owned policy or redemption agreement is defective, illegal, or non-compliant. It means certain structures deserve a fresh review.
The COLIFIX Check
60-Second Screening
Answer five questions to assess whether your structure may warrant a post-Connelly review. Results are a screening signal only — not a professional assessment.
Five questions. No personal information required. Results are a screening signal only — not a professional assessment of your specific arrangement.
Why Review Now?
Ownership
Who owns the policies, who receives the proceeds, and how does that align with the agreement?
Valuation
Has enterprise value changed materially since the agreement and insurance amounts were established?
Funding
Will the existing coverage fund the intended transaction without creating an unintended economic result?
Execution
Do the buy-sell agreement, insurance design, valuation method, and advisor recommendations actually work together?
Don't replace the plan before you understand the plan.
ARX Legacy Partners works alongside business owners and their legal, tax, valuation, and insurance professionals to pressure-test existing succession structures and identify questions requiring professional attention.
ARX Legacy Partners
Request a Confidential Review
Complete the form below or reach out directly. All inquiries are handled with strict confidentiality.