A recent ruling from the U.S. Supreme Court (Connelly v. United States, U.S., No. 23-146, 6/6/24) stated that the value of a family company, Crown C Supply Co., must include the life insurance payment made to the company even though the payment was used to redeem the shares of the deceased shareholder. The inclusion of the life insurance in the valuation caused the company shares to increase pushing the valuation beyond the $13.6 million estate exemption threshold, incurring a 40 percent tax.
UHY LLP, Certified Public Accountants’ Post
More Relevant Posts
-
This term, the Supreme Court will answer the questions regarding the estate tax treatment of life insurance proceeds received by a closely held business and its shareholder redemption obligations. This may be interesting to watch. DeHoek & Company, PLLC | 616-456-5530 #taxplanning #businessadvisors
Supreme Court to decide estate tax impact of life insurance in closely held businesses
journalofaccountancy.com
To view or add a comment, sign in
-
In a recent Supreme Court case, the debate over whether the proceeds from a life insurance policy should be considered a corporate asset for estate tax calculation is heating up. The case of Connolly vs. U.S. delves into complex issues regarding valuation and taxation following the death of a shareholder. Dive into this article for an intriguing exploration of legal arguments and the potential impact on small businesses. #SupremeCourt #EstateTax #LifeInsurance #CorporateAssets #SmallBusinesses.
Supreme Court takes on life insurance as a corporate asset
https://insurancenewsnet.com
To view or add a comment, sign in
-
In a recent article for WealthManagement.com, Morgan Scott, VP, Head of Advanced Planning & Design, and Charles Ratner discuss crucial planning steps for clients in anticipation of the 2025 tax law sunset. They highlight the importance of evaluating life insurance ownership and irrevocable life insurance trusts (ILITs). For high net-worth individuals, staying informed and adaptable is essential. Whether considering outright policy ownership or an ILIT, weighing control, tax implications, and estate planning goals is key. Read the full article: https://lnkd.in/dmgxQRBc #EstatePlanning #LifeInsurance #ILIT #TaxPlanning #MFinancial 6662596.1
Life Insurance Planning When the Sunset’s in Doubt
wealthmanagement.com
To view or add a comment, sign in
-
TEP CLU CHS CEA CCS EPC CPCA MFA-P Help individuals, families and businesses structure their finances to transition wealth, create a lasting legacy and have peace of mind...
Professional tax advice is always advisable when structuring corporately owned permanent life insurance policies. #advocis #corporateinsurance #permanentlifeinsurance
Earlier this year, the Federal Court of Appeal (the “FCA”) handed down its judgment in Gestion M.- A. Roy Inc. v. Canada. In their latest eFORUM article, Jamie Golombek and Debbie Pearl-Weinberg share how the Gestion Roy FCA decision illustrates some of the tax risks in separating ownership and payment of premiums among different corporate entities. Their recommendation? Professional tax advice is always advisable when structuring corporately owned permanent life insurance policies. Read the full article here: https://bit.ly/3wQsMwg CC: Kevin Wark
Shareholder benefits on corporately-owned life insurance - Decision in Gestion Roy upheld by Federal Court of Appeal - Advocis
https://www.advocis.ca
To view or add a comment, sign in
-
The Eighth Circuit Court of Appeals issued a decision in Connelly v. United States (No. 21-3683) that has significant implications for business owners who utilize buy-sell arrangements for their private companies. As was the intended purpose in Connelly, cash value life insurance plays a pivotal role in compliant buy-sell arrangements. It offers a means to fund the buyout of a retiring business owner (via its cash surrender value) or the purchase of a deceased owner's share of the business (via its death benefit), ensuring a smooth transition and financial stability. It is critical that life insurance be incorporated correctly into Entity Purchase Plans and Cross-Purchase Plans. Read our latest article or contact us to learn more. https://lnkd.in/exkARwnc #lifeinsurance #lifeinsurancepolicy #mitigatetaxes #taxsavings #protectwealth #retirementsavings #retirementplan #estateplanning #buysellarrangements #businessowner #cashvaluelifeinsurance #businesssuccession #cashvaluelifeinsurance
Learn from Others’ Mistakes: Navigating Buy-Sell Arrangements After Connelly v. United States (2023)
cedarpointfinancial.com
To view or add a comment, sign in
-
I may be a recovering attorney, but that doesn't mean I don't get excited when my old life in the law and new life in life insurance cross paths. Like when a class action is filed against a major life insurance carrier. You can read the entire complaint at the link below, but in short, Lincoln is being accused of making material misrepresentations and omissions that led investors to purchase shares of the company. When the truth came out, the value of those shares fell precipitously. Specifically, the case involves issues with Lincoln's VUL business. The key language from the complaint: "Defendants failed to disclose to investors: (1) that the Company was experiencing a decline in its VUL business; (2) that, as a result, the goodwill associated with the life insurance business was overstated; (3) that, as a result, the Company’s policy lapse assumptions were outdated; (4) that, as a result, the Company’s reserves were overstated; (5) that, as a result, the Company’s reported financial results and financial statements were misstated..." #LincolnLawsuit #lifeinsurance https://lnkd.in/eUkzpAkb
To view or add a comment, sign in
-
-
On June 6, the U.S. Supreme Court affirmed the 8th U.S. Circuit Court of Appeals’ decision in Connelly v. United States. This decision has introduced significant changes in the estate planning and life insurance landscape. It emphasizes the need for careful planning to mitigate potential estate tax burdens, as a business’s obligation to buy a deceased owner’s interest will no longer offset the increase in business value from life insurance proceeds. In light of the decision, a July 2023 article by Morgan Scott, VP and Head of Advanced Planning & Design at M, and Charles Ratner has renewed importance. It is a guide to mapping out the route from a life insurance-funded redemption buy-sell arrangement to a cross-purchase arrangement. Read the article here: https://lnkd.in/gTuPypfJ #ConnellyDecision #BuySellAgreements #LifeInsurance #EstatePlanning #MFinancial 6692913.1
Buy-Sell Planning after Connelly
wealthmanagement.com
To view or add a comment, sign in
-
In a landmark decision, the Supreme Court ruled in Connelly v. U.S. that life insurance proceeds must be included in a company's valuation upon an owner's death, significantly impacting estate tax obligations and redemption liabilities. This ruling upends long-standing practices and could impose substantial financial burdens on companies. Our own Jeffrey G. Lewis, CPA, Anthony Duffy, and Michael Binz recommend reviewing your life insurance policies and ownership agreements to mitigate potential risks. Learn more about this new precedent: https://ow.ly/IA3T50Si4zq #advisory #consulting #valuation #lifeinsurance #estatetax If you’d like support developing a proactive plan that aligns with the new legal requirements, don’t hesitate to reach out to our Corporate Finance unit!
Breaking News: Life Insurance Proceeds Now Impact Company Valuation and Estate Tax Obligations
https://www.bonadio.com
To view or add a comment, sign in
-
Interesting article regarding changes in the valuation landscape for entities with corporate-owned life insurance.
In a landmark decision, the Supreme Court ruled in Connelly v. U.S. that life insurance proceeds must be included in a company's valuation upon an owner's death, significantly impacting estate tax obligations and redemption liabilities. This ruling upends long-standing practices and could impose substantial financial burdens on companies. Our own Jeffrey G. Lewis, CPA, Anthony Duffy, and Michael Binz recommend reviewing your life insurance policies and ownership agreements to mitigate potential risks. Learn more about this new precedent: https://ow.ly/IA3T50Si4zq #advisory #consulting #valuation #lifeinsurance #estatetax If you’d like support developing a proactive plan that aligns with the new legal requirements, don’t hesitate to reach out to our Corporate Finance unit!
Breaking News: Life Insurance Proceeds Now Impact Company Valuation and Estate Tax Obligations
https://www.bonadio.com
To view or add a comment, sign in
-
What is a split dollar arrangement? A private split dollar arrangement is an estate planning strategy using an Irrevocable Life Insurance Trust (ILIT) to provide for heirs while minimizing gift and estate taxes. This tool helps wealthy individuals support future generations tax-efficiently. Visit our latest blog to learn more about split dollar arrangements, how they work, the benefits of a split dollar arrangement, and more: https://lnkd.in/e-9c9QrU #splitdollar #estateplanning #estatetax
Is A Split Dollar Arrangement Worth It? - Smith Legacy Law
https://smithlegacylaw.com
To view or add a comment, sign in