Review Buy-Sell Agreements – Connelly Decision
The recent Connelly ruling may cause some business owners to adjust their continuity plan. Prior to this ruling, we used to think any life insurance owned by a company for a stock redemption situation would not add to the passing owner’s gross estate. The recent ruling did not see it that way, and with the pending Sunset many high-net-worth clients may need to adjust their buy-sell planning along with their estate tax planning.
Estate taxes are paid on everything you own, minus what you owe, plus your life insurance. To avoid having corporate owned life insurance included in the taxable estate of the owner, you may need to adjust the buy-sell plan to a cross purchase or partnership style agreement.
Connelly Ruling Details
Transfer for Value Rules
Whenever you are thinking about transferring the ownership of a life insurance policy, a yellow flag is raised. There are legalities to be cautious about. Violation of transfer for value rules could cause your death benefit to become fully taxed. One exception to the transfer for value rule is the ability to transfer the policy to the insured.
Transfer for Value Rules
Transfer for Value FAQ
Do you counsel business owners?
Business owners add another layer to the retirement planning process. They must decide what to do with their business and how they will provide for themselves in retirement. Whether they are closing the doors, selling or gifting the business, they need to prepare. Email [email protected] to learn about Counseling Your Clients from Business to Retirement.
Posted in Uncategorized