Estate Planning for Business Owners & Their Families

Estate planning gives you and your family assurance about the future. For business owners, this process must include business succession planning to ensure your business survives transition to new ownership.

Recognizing that our clients may have other advisors who help them with estate planning, we do not include it in our service packages. Estate planning is available to our clients for an additional fee.

We suggest that all our clients have us review existing estate plans from a tax perspective. Our team includes tax experts who also have the Trust and Estate Practitioners (TEP) designation from the Society of Trust and Estate Practitioners (STEP) and who have in-depth knowledge of Canada’s Income Tax Act and the U.S. Internal Revenue Code, allowing us to determine whether there are changes you can make to your plans that will benefit you or your family financially.


Our Estate Planning Process

An effective estate plan allows for the orderly transfer of assets to your beneficiaries, provides security for your surviving family, and can reduce or eliminate the tax that would otherwise be triggered on the transfer of your business and other assets. We work with insurance brokers, investment planners, and lawyers to develop a clear and comprehensive estate plan.

Our estate planning process allows us to tailor each estate plan to the client’s unique circumstances. The steps are as follows:

  1. Getting to know you and identifying goals. As we only offer this service to our clients, we already know most of what we need to know about their assets, family, legal arrangements, and relationships. The estate planning process is an opportunity to have discussions about specific issues, such as whether you want to leave assets to charitable organizations or how you want to handle taxes related to the estate (it may cost more to defer tax but tax deferral may be very important to you).
  2. Analyzing the information and identifying strategies to implement.

We recommend conducting a review of your estate plan when your circumstances change.

Estate Planning: Estate Freezes & Family Trusts

One estate planning strategy is an estate freeze. Estate freezes have long been an effective way of income splitting (now, potentially, income sprinkling) with other family members.

We freeze the current value of the business and, usually, give you preferred shares equal to that value. Upon death, there will be a deemed disposition of your preferred shares, resulting in a capital gain that that is fixed and predictable. You can now get a life insurance policy that will cover the tax liability on the sale of those shares.

We will often set up a family trust for you, your spouse, your kids, and possibly others, depending on the situation. The family trust would purchase the new shares of the operating company, and all future growth of the business is attributed to the trust and its beneficiaries.

This creates a flexible structure for distributing cash—by accessing various family member’s marginal tax rates and lifetime capital gains exemptions or by paying tax-deferred dividends to beneficiary holding companies, minimizing overall taxes payable.

Changes in Legislation

The new income sprinkling rules may have a significant impact on estate freezes. Determining the impact is complicated. Talk to your accountant about your unique situation and read more about the income sprinkling rule changes here.

Our estate and trust planning and tax services are available to our Unburdened and Unleashed clients for additional fees.

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