Some Lessons on the SCOTUS decision in Connelly

The Supreme Court of the United States entered a unanimous decision in Connelly v. Commissioner, holding that the estate tax value of shares belonging to the principal shareholder of a C corporation, which received insurance proceeds upon the death of that shareholder and was obligated to redeem the shares of the shareholder, would not be reduced or otherwise affected by an obligation of the corporation to buy out the estate of that shareholder. Advisors and their clients need to rethink the use of redemption agreements and of cross-purchase agreements.

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