Business estate planning helps owners pass on their company and its value with as little tax and disruption as possible. When you die, the CRA treats your private company shares as sold at fair market value. That can create a large capital gains tax bill, often when your family has little cash to pay it. With a plan in place, your shares pass the way you intend and your family isn’t forced to sell. The CRA explains final returns in its guide to doing taxes for someone who died.
Every owner needs an up-to-date will and power of attorney. In some provinces, such as Ontario, a separate will for private company shares can also reduce probate fees.
An estate freeze locks in the current value of your shares, so future growth passes to your children. As a result, the tax at your death is capped at today’s value.
Your corporation can own a policy on your life. When you pass away, the death benefit can flow out to your family largely tax-free through the capital dividend account. In other words, the company’s money pays the tax bill efficiently.
Qualifying small business shares may be eligible for the lifetime capital gains exemption. Your accountant can confirm whether your company qualifies and how to keep it eligible.
Our consultants focus on the insurance side of your estate plan, working alongside your lawyer and accountant. We can help you:
Don’t leave your legacy to chance. Contact Nova Star Insurance Consultants today to book a free consultation.
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