Estate planning for a business owner is complicated as it needs to address intricate personal and business relationships, complex tax issues and business succession. Planning can help you reduce your tax liability, minimize the difficulties faced by your executors and maximize the wealth passed to your heirs. Follow these guidelines to help you minimize the tax burden on your business estate.
- Start early: Don’t wait for a crisis (illness/death) before consulting with your CPA regarding estate planning.
- Incorporate your company in order to take advantage of a lower tax rate.
- Minimize capital gains tax by taking advantage of exemptions.
- Consider an estate freeze: a strategy in which a business owner transfers assets to their beneficiaries, without triggering tax consequences.
- Contemplate an early inheritance/gift for your children/grandchildren, providing them with tax-free monies.
- Consider establishing a trust: a legal arrangement that will help you take advantage of certain tax-planning opportunities/asset protection by transferring shares to family members without losing control.
- Give loans to family members; interest-free funds to help pay down a mortgage, cover tuition, buy a car or fund a vacation with arrangements for the loan to be forgiven at the time of your death.
- Set up bequests/donations: Gifting monies to a charity in your will can shave thousands of dollars off the tax bill for your estate.
- Purchase life insurance to provide your heirs with a tax-free income for paying taxes on capital gains and other liabilities.
- Pay dividends to your spouse: As long as your spouse’s income is less than yours, dividends will reduce your family’s overall tax burden.
- Invest in RRSPs and /or RRIFs to provide immediate access to cash upon your death, helping fund any tax liabilities.
Consult your chartered professional accountant for help in planning your business estate. They will have the credentials, knowledge and experience to help you reduce tax liability and maximize a successful business transfer.
Cook & Company offer specialized skills in business accounting and asset management, provide expertise in tax planning strategies and can assist you in retaining the value of your company’s estate. Our team of chartered professional accountants are dedicated, knowledgeable and experienced and will provide a personal touch. Contact us for a complimentary consultation.