Most family wealth in this province is held in things that are hard to divide and expensive to transfer: shares of a private company, real estate, a corporation full of retained surplus. The estate owes capital gains tax on the shares the day the owner dies, probate on what passes through the will, and a second tax when the company's surplus is finally distributed. The family then has to find the cash for all of it, usually by selling something they wanted to keep.
What we see most often
- A business owner in their sixties with the company's value in a single class of shares and a will that leaves it equally to children, only one of whom works in the business.
- Real estate held personally or in a company, with a large accrued gain and no liquidity to pay the tax on it.
- A first-generation family where the children are being brought into ownership and the parents want control, income and fairness all at once.
- Insurance that exists but was never sized to the actual estate liability, or is owned by the wrong entity.
How we approach it
- Quantify the liability. The capital gains tax on death, the probate fee, the trapped corporate surplus and the cash the estate will need in its first year. This is a number, and most families have never seen it.
- Decide where the value should go. An estate freeze, a family trust, and the division between active and non-active children are legal decisions made with your lawyer. We make sure the insurance fits the plan the lawyer draws, not the other way round.
- Fund the liability in advance. A permanent policy, corporately owned where the structure allows it, that pays the tax so the assets do not have to be sold. For families who want the proceeds directed to particular people, or kept out of the probated estate, there are share arrangements that achieve it; we cover them in a review once we know the corporation.
What to bring to a first conversation
Wills and any trust deeds, the corporate organisation chart if there is one, the most recent financial statements, and a list of the real estate with approximate cost and value. We will show you the estate's tax bill as it stands today before we talk about anything else.
Guides for this situation
Corporate or personal ownership of life insurance: how to decide
Premium cost, death benefit, cash value access, creditor protection, probate and tax on death, compared side by side.
Corporate-owned life insurance and the capital dividend account
How a corporate policy turns a death benefit into a tax-free capital dividend, and the adjusted cost basis mechanics that decide how much.
Participating whole life dividends, explained
What a policy dividend is, what the dividend scale interest rate means, and how to read an illustration without being misled by it.