Business Owner & Entrepreneur
Net Worth: $23 Million | Business Value: $15 Million
Comprehensive Tax & Estate Planning Strategy
Strategic wealth management for multi-generational prosperity
Robert, at age 45, you have built substantial wealth through your successful business enterprise valued at $15 million and accumulated personal assets of $8 million. This comprehensive plan outlines sophisticated strategies to optimize your tax position, protect your wealth, facilitate business succession, and ensure efficient transfer to the next generation while supporting your philanthropic goals.
Through strategic implementation of estate freeze, holding company optimization, and tax-efficient strategies:
| Strategy | Timeline | Tax Benefit | Wealth Impact |
|---|---|---|---|
| Estate Freeze | Immediate | Defer $5.5M tax | Lock value at $15M |
| HoldCo Structure | Q4 2025 | Save $200K/year | Investment income deferral |
| CDA Optimization | 2025-2027 | $2.5M tax-free | Efficient extraction |
| Charitable Strategy | 2025-2030 | $4.2M credits | Legacy creation |
| Family Trust | Q1 2026 | Income splitting | Next-gen transfer |
| Insurance Strategy | Q1 2026 | Estate liquidity | Tax-free proceeds |
Understanding your comprehensive financial position
| Category | Details | Financial Implications |
|---|---|---|
| Age | 45 years | 20 years to traditional retirement |
| Marital Status | Married | Income splitting opportunities |
| Children | 3 (Ages 22, 19, 16) | Succession planning critical |
| Business Type | Manufacturing/Technology | Eligible for small business deduction |
| Years in Business | 20 years | Established with strong cash flow |
| Residence | Ontario, Canada | Provincial tax considerations |
| Risk Profile | Moderate Conservative | Wealth preservation focus |
| Income Source | Annual Amount | Tax Treatment | Optimization Opportunity |
|---|---|---|---|
| Salary from OpCo | $250,000 | Employment income | Reduce to $150K |
| Eligible Dividends | $250,000 | 38% effective rate | Optimize with spouse |
| Investment Income (HoldCo) | $600,000 | Corporate rates | Defer personal tax |
| Rental Income | $120,000 | Business income | Corporate ownership |
| Capital Gains | $200,000 | 50% inclusion | Realize in HoldCo |
| Total Income | $1,420,000 | Various | Comprehensive planning |
Comprehensive analysis of your corporate holdings
| Valuation Method | Calculation | Value | Weight | Weighted Value |
|---|---|---|---|---|
| Asset-Based | Net assets + Goodwill | $12,500,000 | 20% | $2,500,000 |
| Income Approach | 5x EBITDA ($3.2M) | $16,000,000 | 40% | $6,400,000 |
| Market Comparables | Industry multiples | $14,800,000 | 40% | $5,920,000 |
| Fair Market Value | 100% | $14,820,000 | ||
| Freeze Value (Rounded) | - | $15,000,000 | ||
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 (Proj) |
|---|---|---|---|---|---|
| Revenue | $8.5M | $9.2M | $10.5M | $11.8M | $13.2M |
| EBITDA | $2.1M | $2.4M | $2.8M | $3.2M | $3.6M |
| Net Income | $1.5M | $1.7M | $2.0M | $2.3M | $2.6M |
| Free Cash Flow | $1.2M | $1.4M | $1.7M | $2.0M | $2.3M |
| Growth Rate | 8% | 8% | 14% | 12% | 12% |
Locking in value and transferring growth to the next generation
An estate freeze is a tax planning strategy that "freezes" the value of your business at its current fair market value of $15 million. You exchange your common shares for preferred shares with a fixed redemption value, while new common shares (with nominal value) are issued to a family trust for your beneficiaries. This allows all future growth to accrue to the next generation, limiting your tax liability to the frozen value.
| Scenario | Without Freeze | With Freeze | Tax Savings |
|---|---|---|---|
| Current Business Value | $15,000,000 | $15,000,000 | - |
| Projected Value at Death (20 yrs) | $32,000,000 | $15,000,000 | - |
| Capital Gain | $32,000,000 | $15,000,000 | $17,000,000 |
| Taxable Gain (50%) | $16,000,000 | $7,500,000 | $8,500,000 |
| Tax at 53.53% | $8,564,800 | $4,014,750 | $4,550,050 |
| Estate Tax Savings | - | - | $4,550,050 |
• Obtain independent business valuation
• Determine freeze price: $15M
• Engage tax professionals
• Establish discretionary family trust
• Name beneficiaries (spouse & children)
• Appoint trustees
• Exchange common for preferred shares
• Issue new common to trust
• File Section 85 election
• Create holding company structure
• Transfer preferred shares
• Optimize for dividends
• Complete all legal documents
• File with CRA
• Update corporate records
| Feature | Terms | Benefit |
|---|---|---|
| Redemption Value | $15,000,000 | Fixed value for tax purposes |
| Dividend Rate | 5% cumulative | $750,000 annual income |
| Voting Rights | 10 votes per share | Maintain control |
| Redemption | At holder's option | Flexibility for retirement |
| Retraction | At company's option | Corporate flexibility |
| Price Adjustment | CRA clause included | Protection from reassessment |
Post-freeze structure enables significant income splitting:
Maximizing investment income and tax deferral
| Asset Class | Allocation | Amount | Expected Return | Annual Income |
|---|---|---|---|---|
| Canadian Equities | 30% | $2,400,000 | 8% | $192,000 |
| US Equities | 25% | $2,000,000 | 9% | $180,000 |
| Fixed Income | 20% | $1,600,000 | 4% | $64,000 |
| Real Estate/REITs | 15% | $1,200,000 | 6% | $72,000 |
| Alternative Investments | 10% | $800,000 | 12% | $96,000 |
| Total Portfolio | 100% | $8,000,000 | 7.5% | $604,000 |
| Extraction Method | Amount | Tax Treatment | Net to Robert |
|---|---|---|---|
| Salary | $150,000 | 53.53% marginal | $69,705 |
| Eligible Dividends | $200,000 | 39.34% effective | $121,320 |
| Capital Dividend (CDA) | $100,000 | 0% (tax-free) | $100,000 |
| Return of Capital | $50,000 | 0% (deferred) | $50,000 |
| Total Annual | $500,000 | 31.8% effective | $341,025 |
Your Capital Dividend Account balance of $2.5 million represents a significant tax-free extraction opportunity:
| Income Type | Annual Amount | Corporate Tax | Integration Tax | Total Tax |
|---|---|---|---|---|
| Canadian Dividends | $150,000 | 38.33% | 8% | 46.33% |
| Interest Income | $100,000 | 50.17% | 3% | 53.17% |
| Capital Gains | $200,000 | 25.08% | 2% | 27.08% |
| Foreign Income | $150,000 | 50.17% | 3% | 53.17% |
| Weighted Average | $600,000 | Blended | 41.2% | |
Reducing your effective tax rate through strategic planning
| Strategy | Implementation | Annual Tax Saving | Complexity |
|---|---|---|---|
| Income Splitting | Family trust distributions | $75,000 | Medium |
| Salary/Dividend Mix | Optimize compensation | $35,000 | Low |
| CDA Utilization | Tax-free dividends | $40,000 | Low |
| Investment Location | HoldCo vs personal | $25,000 | Medium |
| Pension Splitting | IPP implementation | $15,000 | High |
| Charitable Giving | In-kind donations | $10,000 | Low |
| Total Savings | Combined strategies | $200,000 | - |
| Feature | RRSP | IPP | Advantage |
|---|---|---|---|
| Annual Contribution | $31,560 | $85,000 | IPP +$53,440 |
| Past Service | No | $500,000 | IPP |
| Creditor Protection | Limited | Full | IPP |
| Terminal Funding | No | $250,000 | IPP |
| 20-Year Value | $1,200,000 | $3,500,000 | IPP +$2.3M |
| Tax Type | Ontario Rate | Strategy | Benefit |
|---|---|---|---|
| Personal Income Tax | 53.53% | Minimize personal income | Use corporate structure |
| Small Business Rate | 12.2% | Maximize SBD limit | $500K at low rate |
| Investment Income | 50.17% | Defer in HoldCo | Time value benefit |
| Capital Gains | 26.76% | Realize in corporation | Lower effective rate |
| Eligible Dividends | 39.34% | Split among family | Multiple tax brackets |
Tax-free extraction of corporate wealth
The Capital Dividend Account (CDA) is a notional account that tracks certain tax-free amounts that can be distributed to shareholders as tax-free capital dividends. Your current CDA balance of $2.5 million represents one of the most valuable tax planning tools available.
| CDA Component | Amount | Source |
|---|---|---|
| Capital Gains (50% non-taxable) | $1,800,000 | Investment dispositions |
| Life Insurance Proceeds | $500,000 | Key person policy |
| Capital Dividends Received | $200,000 | From investments |
| Total CDA Balance | $2,500,000 | - |
| Extraction Method | Amount | Tax if Regular Dividend | Tax if Capital Dividend | Tax Saved |
|---|---|---|---|---|
| Year 1 Distribution | $1,000,000 | $393,400 | $0 | $393,400 |
| Year 2 Distribution | $800,000 | $314,720 | $0 | $314,720 |
| Year 3 Distribution | $700,000 | $275,380 | $0 | $275,380 |
| Total | $2,500,000 | $983,500 | $0 | $983,500 |
| Method | $100,000 Distribution | Tax Cost | Net to Shareholder |
|---|---|---|---|
| Capital Dividend (CDA) | $100,000 | $0 | $100,000 |
| Eligible Dividend | $100,000 | $39,340 | $60,660 |
| Salary/Bonus | $100,000 | $53,530 | $46,470 |
| Return of Capital | $100,000 | $0* | $100,000* |
*Return of capital is tax-deferred, not tax-free
Sophisticated wealth preservation and growth strategies
| Asset Class | Holdings | Value | Yield | Annual Income |
|---|---|---|---|---|
| Equities (70%) | ||||
| Canadian Blue Chips | Banks, Utilities, Telcos | $1,800,000 | 4.5% | $81,000 |
| Canadian Growth | Tech, Healthcare | $600,000 | 1.5% | $9,000 |
| US Large Cap | S&P 500 Leaders | $1,500,000 | 2.0% | $30,000 |
| US Growth | NASDAQ Tech | $500,000 | 0.5% | $2,500 |
| International Developed | Europe, Japan | $800,000 | 3.0% | $24,000 |
| Emerging Markets | Asia, Latin America | $400,000 | 2.5% | $10,000 |
| Fixed Income (20%) | ||||
| Corporate Bonds | Investment Grade | $800,000 | 4.5% | $36,000 |
| Government Bonds | Federal & Provincial | $500,000 | 3.5% | $17,500 |
| High Yield | BB rated | $300,000 | 6.5% | $19,500 |
| Alternatives (10%) | ||||
| Private Equity | Mid-market funds | $400,000 | 12% | $48,000 |
| Real Estate | REITs & Direct | $300,000 | 5% | $15,000 |
| Commodities | Gold, Energy | $100,000 | 2% | $2,000 |
| Total Portfolio | - | $8,000,000 | 3.7% | $295,000 |
*Additional returns from capital appreciation target 3.8% annually
| Period | Portfolio Return | Benchmark | Alpha | Sharpe Ratio |
|---|---|---|---|---|
| 2020-2024 | 8.2% | 7.1% | +1.1% | 0.85 |
| 2019-2023 | 7.8% | 6.9% | +0.9% | 0.78 |
| 2018-2022 | 6.5% | 5.8% | +0.7% | 0.72 |
| Average | 7.5% | 6.6% | +0.9% | 0.78 |
Your roadmap to generational wealth
Robert, you have built exceptional wealth through your business acumen and strategic investments. This comprehensive plan positions you to:
Your strategic wealth plan awaits implementation.
Robert Anderson | Ultra-High-Net-Worth Financial Plan
Prepared September 2025
Building Generational Wealth
This financial plan is provided for informational purposes only and does not constitute legal, tax, or investment advice. The strategies presented are based on current tax legislation and may be affected by future changes in law. Estate freeze, holding company structures, and tax strategies require professional implementation.
All projections are hypothetical and based on assumptions that may not materialize. Investment returns are not guaranteed. Business valuations are estimates subject to market conditions. Tax rates and regulations are subject to change. CDA balances must be verified with current records.
Before implementing any strategies, consult with qualified professionals including tax attorneys, chartered accountants, investment advisors, and estate planning specialists familiar with your specific circumstances. Complex corporate reorganizations require careful legal and tax planning to ensure compliance with all applicable laws and regulations.