How You Can Benefit from A Corporate Asset Transfer
Are you looking for a way to minimize estate taxes and maximize the amount of money you can transfer to the next generation? Then you should strongly consider a corporate asset transfer.
We’ll explain:
- Why you should consider a corporate asset transfer.
- Who the ideal client for a corporate asset transfer is.
- How a corporate asset transfer works.
Why should I consider a corporate asset transfer?
There are several benefits to a corporate asset transfer:
- First, it will increase the amount of money available to your heirs when you die and has the added benefit of making funds available immediately after your death.
- It reduces the taxes your corporation will have to pay.
- It creates a tax-free system to move funds out of your corporation when you die.
- Your company can withdraw money from the policy’s cash value if they require emergency funding while you’re still living.
- When properly structured, it offers the potential for creditor protection.
Who is the ideal client for a corporate asset transfer?
The ideal client for a corporate asset transfer is:
- A shareholder in a private Canadian-controlled corporation.
- In good enough health to qualify for life insurance.
- Interested in long-term planning, slow growth, and reducing corporate taxes.
- Invested in maximizing their estate value to leave a legacy.
So how does a corporate asset transfer work?
- Your corporation purchases a permanent life insurance policy using either surplus cash or corporate investment assets to pay its premiums. The corporation will be the beneficiary of the policy.
- Your corporation can also deposit excess funds in the policy. Depositing excess funds will create a cash value that increases the death benefit payable and can be reinvested without income tax being deducted.
- When you die, the corporation receives the proceeds of the life insurance policy tax-free.
- The corporation can then place the payout in the corporation’s capital dividend account, and your estate can receive tax-free dividends via the capital dividend account.