You started with a $1M company and a handshake agreement. Today the business is worth $50M. The policy written to fund that agreement may still be sized for the company you started, not the one you own.
Request a Buy-Sell ReviewMost partnerships sign a buy-sell agreement at formation and fund it with a modest life insurance policy. Then the business grows, the valuation compounds, and the policy stays where it was. When a partner dies or becomes disabled, the survivor has to buy that share at today's value, not the value from 20 years ago.
An agreement with no money behind it does not prevent any of this. It just decides who has to deal with it.
Raising capital on a deadline
Buying out the estate on credit
The heirs come with the shares
Decades of work, settled by others
What We Do for Business Owners
A complete buy-sell insurance review, starting with a current business valuation, followed by a gap analysis, and ending with a properly funded agreement.
| Founded, Year 1 | $1M | policy coverage: $500K |
| Year 5 | $5M | policy coverage: $500K |
| Year 15 | $20M | policy coverage: $500K |
| Year 22 | $35M | policy coverage: $500K |
| Today, Year 30 | $50M | unfunded gap: $49.5M |
Illustrative. Two partners, one company, a policy that never kept pace with the valuation.
The company owns the policies. After the Connelly decision, those proceeds can raise the value of the business for estate tax purposes, which can add a surprise tax bill on top of the buyout itself.
Each partner owns a policy on the other. The proceeds stay outside the company and out of the business valuation. For many partnerships, getting this structure right is the single most important fix.
In a unanimous 9-0 ruling, the Supreme Court held that life insurance proceeds held by a corporation to fund a buy-sell agreement are included in the business valuation for estate tax purposes. If your plan is entity-owned, it should be reviewed now.
If any of these apply, it is time to look at your agreement:
Compare the coverage on each partner to what that partner's share is worth today. If the policy was written at formation and the business has grown since, there is almost always a gap. A current valuation tells you exactly how big it is.
In 2024 the Supreme Court ruled that life insurance a corporation holds to fund a buyout counts toward the value of the business for estate tax purposes. For entity-owned plans, that can create an estate tax bill on the very dollars meant to fund the buyout.
Often, but not always. It depends on the number of owners, their ages, and how the agreement is written. We review the structure with your attorney and CPA and model both before anything changes.
It should. A partner who can no longer work but still owns half the company creates many of the same problems as a death. A disability buyout provision, funded properly, closes that gap.
Every year, and any time the valuation moves meaningfully. The review is built in, so coverage keeps pace with the business instead of falling behind it.
A confidential, no-obligation discovery conversation. We educate first. We advise always. We never pressure.
Schedule a Discovery Conversation