In our mind, summertime has always brought images of lazy days on the beach, cold Sweet Tea, and hot days. Meteorologists call this “The Summer Doldrums” and the idea is that we don’t do much in the stagnant heat. While this image is a fantasy for many business owners, as your work does not stop for the weather, it is also not the case for the Supreme Court.
During the summer of 2024, our United States Supreme Court changed a rule relating to buy/ sell agreements that are funded with life insurance. Here is what was ruled:
On June 6, 2024, the U.S. Supreme Court ruled that death benefits payable to a business must be included in the value of the business rather than being offset by a business’s liability to purchase inherited shares.
This caught our attention! Most life insurance policies are for $1 million and frequently much more. If you are thinking of the value of your business, this can have a material effect.
It is critical to take a few moments, pull up your policy, and let us take a look. Here is what we will look for:
- How is the beneficiary listed? And since you bought this policy, have things changed and therefore the beneficiaries should be changed? Does this new ruling affect you?
- Key person insurance can be affected by interest rates, law changes, and policy enhancements. Is your policy the most efficient that it can be?
- Is it appropriate? Have you done a recent valuation?
We believe it is prudent for all business owners, whether they have a buy/ sell agreement or not, to take a look at this rule change and be sure you are up to date with not just the law change, but the opportunity it brings.
It is possible that this could be the most cost-effective use of your time all year!
Since, like you, we are working hard no matter the weather, we would like to schedule a time with you to review your needs regarding your business valuation and how this affects your family. After all, your family is why you bought Key Person Insurance in the first place, right?
With respect to our local Meteorologist, we will continue working hard for you no matter the weather. Give us a call! We will be happy to share some Sweet Tea with you.
Check out our Business Owners Lab Commentary site for more articles and information.