Buy-Sell Agreements in a Post-Connelly World

Private Wealth Services attorneys Brent Berselli and Jorge Sagarra co-authored an article for the Portland Business Journal's Money Guide Issue recapping the significant implications of a recent U.S. Supreme Court decision concerning buy-sell agreements in business succession planning. In Estate of Connelly v. United States, the court ruled the death benefit proceeds on a policy owned by a corporation on the life of a shareholder must be included as an asset when valuing the deceased shareholder's interest. As the authors explain, the effects of this decision cannot be overstated. Buy-sell agreements provide a ready market for the sale of a deceased owner's interest in the business as well as liquidity to the owner's estate to fund estate tax obligations; Connelly now calls into question the viability of this long-used approach. In this article, the attorneys break down how the ruling will affect the structure of buy-sell agreements, offering three alternatives for business and owners to consider moving forward.

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