Business Planning Needed Now More Than Ever
Episode 377 – Due to the One Big Beautiful Bill Act, the U.S. Supreme Court and current employment conditions, there’s never been a more important time for business owners to review their business succession and employee benefits plans.
More SML Planning Minute Podcast Episodes Transcript of Podcast Episode 377Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode: business planning needed now more than ever.
There’s never been a more important time for business owners to review their business succession and employee benefits plans. That’s due to the confluence of several recent events including the One Big Beautiful Bill Act (OBBBA) signed by President Trump on July 4, 2025, and the U.S. Supreme Court decision on June 6, 2024, in the case Connelly v. United States.[i] The other factor is the general job market today and economic realities.
OBBBA “permanently” increased the federal estate tax exemption amount to $15 million indexed for inflation. Even in 2019, when the exemption amount was “only” $11.4 million, only 0.07% of decedents paid an estate tax.[ii] So, many small business owners may no longer need estate tax planning services unless they live in one of the twelve states and the District of Columbia that still has a state estate and/or inheritance tax with exemption amounts significantly lower than the federal amount. Note that general estate planning is still recommended for all!
According to the U.S. Small Business Administration, there are over 36.2 million small businesses in the U.S.[iii] “Small businesses fuel economic growth, job creation, and supply chain resiliency across the country.”[iv] Obviously, keeping small businesses primed for success today and for tomorrow through proper planning in the areas of business succession, executive benefits, retirement, employee benefits, estate and family protection, and more, is vitally important.
The Connelly case makes business succession planning even more urgent for business owners. The Supreme Court reversed generally accepted principles long held by the insurance and legal communities and addressed the narrow question of whether a corporation’s fair market value is impacted by life insurance proceeds received by the corporation and committed to funding the redemption of a decedent owner’s shares for estate tax purposes. The Supreme Court unanimously held that the corporation’s redemption obligation is not a liability that reduces the estate tax value of the decedent’s shares. The Supreme Court also specifically referenced cross purchase buy-sell arrangements that could have avoided this result.
Although not mentioned in the Connelly case, the other implication is that business-owned life insurance on the life of the business owner, solely for key person insurance purposes or other non-succession planning reasons, may also impact the business valuation and accordingly, that business owner’s estate plan.
Every business owner should work with their life insurance agents and tax and legal advisors to determine if their existing business continuation and estate plan is affected by this decision. Buy-sell agreements may need to be revised and amended, particularly if the agreements call for the business to buy back the ownership interest of a deceased owner and the business purchases life insurance on the owner to do that. If business owners don’t have a plan, they should design and implement a plan immediately!
Of course, if there is an estate tax issue as a result of business-owned life insurance, then the business succession plan should be coordinated with the business owner’s estate plan.
Executive benefits planning, such as split-dollar, executive and retention bonus, and nonqualified deferred compensation plans, all funded with cash value life insurance, are also topics that business owners should consider. Several surveys reinforce the urgency created by the current labor market for businesses to retain their best and brightest employees.[v] Even the creative use of qualified retirement plans, such as profit-sharing plans, fully insured defined benefit plans and cash balance plans should be considered because more benefits can be steered toward the owners and highly compensated, and presumably the most valuable, employees. All of these plans can also hold life insurance as an asset for family financial protection.
Business owners need to contact their financial services professionals, tax and legal advisors immediately. There’s much planning to be done for personal and business success!
Important Notice: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products.
[i] Connelly v. United States, 144 S.Ct. 1406 (2024).
[ii] U.S. Congress. “The Estate and Gift Tax: An Overview.” Congress.gov. https://www.congress.gov/crs-product/R48183 (accessed 1/30/2026).
[iii] U.S. Small Business Administration Office of Advocacy. “New Advocacy Report Shows the Number of Small Businesses in the U.S. Exceeds 36 million.” Advocacy.sba.gov.
https://advocacy.sba.gov/2025/06/30/new-advocacy-report-shows-the-number-of-small-businesses-in-the-u-s-exceeds-36-million/ (accessed 1/30/2026).
[iv] Id.
[v] Craver, Henry. “Employee retention ranks as top HR priority.” Benefitspro.com. https://www.benefitspro.com/2025/10/31/employee-retention-ranks-as-top-hr-priority (accessed 1/30/2026);
Finnegan, Richard. “Gallagher Report: Why Turnover is Still #1 Concern in 2025.” C-suiteanalytics.com. https://c-suiteanalytics.com/gallagher-turnover-is-1-concern-2025/ (accessed 1/30/2026);
Yahoo Finance. “New Report Shows Employee Retention Outranks Almost Everything Else as U.S. Employers Tackle Burnout.” Finance.yahoo.com. https://finance.yahoo.com/news/report-shows-employee-retention-outranks-130000507.html (accessed 1/30/2026).
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