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- Title
Another Chapter on Corporate-Owned Life Insurance.
- Authors
Reardon, Dennis C.
- Abstract
In Estate of Blount, the 11th Circuit Court of Appeals held that life insurance proceeds used to redeem a shareholder's shares are not counted in the fair market value of the company when valuing those shares. Given the very different conclusions reached by the 11th Circuit in the Blount case and the 8th Circuit in the case of Connelly v. United States, if it is not feasible for shareholders to have a cross-purchase agreement, having an insurance-funded stock-redemption agreement may present a valuation challenge. The larger exemptions now applicable under the estate tax law may insulate many owners of closely held businesses from valuation concerns. However, those owners of corporations who are concerned about estate tax planning should seek the advice of qualified appraisers and attorneys to structure a buy-sell agreement and a business appraisal that takes into account insurance funding if a stock-redemption format is the owners' preference.
- Subjects
STOCK purchase agreements (Close corporations); LIFE insurance; VALUATION of corporations; FAIR value; MARKET value; BUSINESS valuation
- Publication
Journal of Financial Service Professionals, 2023, Vol 77, Issue 5, p25
- ISSN
1537-1816
- Publication type
Article