The Corporate Wealth Transfer strategy is common planning strategy that helps business owners transfer surplus assets held in their Canadian Controlled Private Corporation (e.g. a holding company). This approach is ideal for those with excess cash or investments who not only want to reduce the tax burden that may come from passive income but also maximize the estate value for their beneficiaries. By reallocating these assets into a tax-exempt life insurance policy, business owners can move tax-exposed funds into a tax-deferred growth opportunity. The corporation owns and benefits from the policy, allowing for tax-free dividend distributions to shareholders upon the insured’s death (normally of the shareholder(s) of the holding company).

This strategy not only minimizes taxes but also ensures that more of your hard-earned assets reach your loved ones. The tax-exempt life insurance policy allows for growth without the heavy tax burden associated with passive investment income. Additionally, the accumulated cash values within the policy can be accessed during the insured’s lifetime, providing financial flexibility.

For business owners seeking to protect their legacy and enhance the value of their estate, the corporate wealth transfer strategy is a powerful solution worth exploring. So, if you are a business owner (or have a holding company), are between the ages of 55-70, then please read this article to learn more and/or contact us to see how it might fit into your estate plan.