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The Importance of Estate Planning for Canadian Business Owners

The Importance of Estate Planning for Canadian Business Owners
Estate Planning for Canadian Business Owners

Life happens, and business owners would be wise to plan an organized, tax-efficient transfer of assets in the event of an untimely or unexpected death or incapacitation. Business owners work hard to accumulate wealth, so most probably don’t want their wealth to be used in ways that go against their wishes or for their heirs to be left with a significant tax liability. Two primary goals of estate planning, therefore, are to 1) distribute assets according to the owner’s wishes and 2) minimize tax liabilities.

Estate planning in Canada is not as difficult as many may think. This article covers the basics of estate planning for Canadian business owners.

What is Estate Planning for Canadian Business Owners?

Estate planning is more than drafting a will. A will is only one estate planning tool among many. To fully implement your wishes for the future of your business or utilize available tax efficiencies, your estate plan will often include components beyond a will. Below are a few examples:

Powers of Attorney

A power of attorney is a legal authorization giving someone you trust the authority to make legal and financial decisions on your behalf. You may have more than one power of attorney.

There may be instances where you may wish to appoint one power of attorney to deal with business issues, another to deal with personal issues, and another to deal with health care issues, if the people best suited to carry out your wishes in these areas are different.

Minimizing Tax Liabilities

By implementing effective tax strategies with proper estate planning, you may be able to minimize tax liabilities, leaving more wealth to your beneficiaries.

[If you are interested in learning how to minimize tax liabilities when transferring wealth in Canada, be sure to read Bloom Investment Counsel, Inc.’s article How To Pass Money To Heirs While Minimizing Taxes In Canada where we highlight 4 ways to minimize the tax bite.]

Shareholders’ Agreement as Part of an Estate Plan

If you are not the sole shareholder of your business, a shareholders’ agreement can be an important part of your estate plan and could cover such matters as how the transfer or sale of shares is to occur and what happens to the business in the event of the death or incapacitation of a shareholder.

What is the Difference Between an Estate Plan and a Succession Plan?

An estate plan includes all of your business and personal assets whereas a succession plan involves only your business assets. As a result, a succession plan is a component of an estate plan, but not necessarily the other way around. As a business owner, it may be ideal to have both to cover your personal and your business assets.

You’re in Charge of Your Estate Plan

In all provinces in Canada, if you die without a will, your assets will be distributed by law according to default rules that may not be aligned with your wishes. Therefore, it is best to prepare for the unexpected so that your wishes are fulfilled, your assets are protected, your business endures, and what you intend to leave to loved ones is preserved.

Preserve and Build Intergenerational Wealth with Bloom Investment Counsel, Inc.

Established in 1985, Bloom Investment Counsel, Inc. is a Toronto-based independent, privately-owned boutique investment management firm with experience in managing in excess of $2.5B in assets over the years.

We provide actively managed, customized Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

For more than 25 years, we have specialized in one thing and strive to be the best at it—investing in income-generating investments, specifically dividend-paying stocks, which can help you generate income, if needed, and growth from investing in the stock market.

If you are looking for a personal investment management service that can help you generate income, if needed, and growth, we may be who you have been looking for. Let’s TalkCall us at +1-416-861-9941 or email us at for more information on our personalized investment management services.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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