Overview
When Brian and Joyce came to Access, they were two to five years from retirement and a business exit, with a $7.9M net worth and a Muskoka cottage they wanted their children and grandchildren to enjoy for generations. On paper, they were in great shape. Underneath the surface, nearly 25% of their estate was on track to be lost to tax.
Problem Statement
Without intervention, Brian and Joyce’s estate was projected to lose up to $4M in tax at death – putting both their retirement security and the family cottage at risk.
Challenge
A passive asset balance inside their operating company (OpCo) disqualified them from the Lifetime Capital Gains Exemption = a roughly $250K avoidable tax bill on the eventual business sale.
Passive income held corporately was being taxed at 50.17%, with further taxation triggered at death to wind up the corporation.
A deferred capital gain of approximately $1M on the Muskoka cottage was growing every year, with no funded plan to cover the tax liability when it eventually came due.
Taken together, these inefficiencies are expected to result in an approximate 25% reduction in the estate’s value.
Our Solution
1. Purification Planning.
We engaged partners to prepare OpCo for sale, completed a corporate reorganization, and moved passive assets into a HoldCo structure — clearing the path for a successful exit with the Lifetime Capital Gains Exemption captured.
2. Corporate Insurance Strategy.
We implemented corporate-owned insurance to shield passive income from tax drag, leverage the Capital Dividend Account at death, and create a tax-efficient pool of capital to offset the future cottage tax liability — preserving the family’s ability to keep the property.
3. Retirement Cash Flow Optimization.
We addressed Brian and Joyce’s large RRSP balances ahead of mandatory RRIF conversion, optimized CPP and OAS timing, and developed a withdrawal strategy designed to reduce lifetime tax — and the additional tax burden their estate would otherwise face at death.
Results
– Insert Results
– Insert Results
– Insert Results
– Insert Results
“We came to Access already confident in our finances. What we didn’t realize was how much of what we’d built was quietly going to be lost. The team showed us exactly what was at stake – and built a plan that protects our retirement, our kids, and the cottage. That peace of mind is worth everything.” – Brian & Joyce
Frequently Asked Questions
How much tax do business owners typically lose at death without proper planning?
For incorporated business owners, estate shrinkage of 20–25% is common – and often higher when passive investments, real estate, and registered accounts compound the problem. The exact figure depends on your structure, but most owners are surprised by how much of their net worth never reaches the next generation without a coordinated plan.
What is “purification planning” and why does it matter for a business sale?
Purification is the process of cleaning up an operating company’s balance sheet – typically by moving passive assets out of OpCo and into a holding company – so the business qualifies for the Lifetime Capital Gains Exemption at sale. For most business owners, this single step represents hundreds of thousands of dollars in avoidable tax.
Can a strategy like this work if I’m already close to retirement or have health considerations?
Yes. Brian and Joyce were within five years of retirement, and we designed their corporate insurance solution around real health considerations. The earlier you start, the more options you have – but meaningful improvement is almost always possible, even later in the planning window.