Real Estate Investors: Hold Companies & Corporate Dumpster Fires
Protect Your Wealth: A Corporate Estate Planning Strategy
With real estate values at record highs, many private real estate investors in Ontario are sitting on significant wealth. However, the tax implications on death are often underestimated, leaving families with unexpected financial burdens.
Case Study: The Tax Trap for Real Estate Investors
A couple in their late 60s has accumulated:
- $10 million in rental properties
- $5 million in liquid assets (stocks and fixed income) held inside their holding company.
While this $15 million wealth seems like a strong legacy, taxes create a domino effect:
- Corporate Asset Tax: Taxes are owed on corporate assets.
- Forced Asset Sale: Selling an asset to pay the first tax bill triggers more tax.
- Personal Tax: The value of the holding company shares incurs personal tax when money is withdrawn to pay the personal bill.
- Estate Administration Tax: Additional taxes further reduce the estate's value.
The result? A large portion of the $15 million wealth is lost to the CRA.
The Solution: A Holistic Corporate Tax & Estate Planning Strategy
Instead of losing wealth to taxes, you can protect it using a permanent life insurance strategy owned by your corporation. This strategy:
- Avoids taxes with a tax-exempt structure.
- Maintains liquidity to cover tax obligations without selling assets.
- Preserves your legacy for the next generation.
The choice is clear: Write a smaller check to an insurance company now or a much larger one to the CRA later.
At Taylor Insurance and Estate Planning, we specialize in helping business owners grow wealth, mitigate taxes, and secure their legacy.
At Tayler Insurance & Estate Planning, we help business owners grow their wealth, minimize taxes, and protect their legacy. Learn more today.
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