Closely Held Business Buy-out Arrangements Should be Reviewed Immediately in Light of the Recent Connelly Case

June 30, 2023

Practitioners should inform clients with buy sell redemption agreements about the recent Connelly v. IRS, No. 21-3683 (8th Cir. 2023) that held that corporate owned life insurance had to be included in the value of the company. This recent case requires that buy-sale agreements, buy-out agreements, ownership of life insurance to be used in buyouts must all be reviewed. The shareholders never had an appraisal done, they merely agreed on a value to use for the buyout. Connelly made clear that that approach won’t work. What can and should be done to set a valuation that the IRS may respect? How should certificates or agreements of stated value be structured to be respected by the IRS? This webinar will discuss the Connelly case, valuation approaches, and how to structure buy-outs. Practical guidance will be provided on reviewing existing arrangements and informing clients of changes to be made.   Speakers: Mary Vandenack, Martin M. Shenkman, and Jonathan G. Blattmachr. Sponsors: Interactive Legal (ILS), Peak Trust Company, Shenkman Law *This may constitute attorney advertising. * No CPE, CLE, etc. is offered but a certificate of attendance will be provided.