Estate Freeze
Do you hope to sell your business at some point in the future? Or do you want to transfer your company to your children in the next few years? If yes, you should consider whether an estate freeze is a good strategy for you.
An estate freeze – also know as a “section 86” reorganization – requires you to exchange your share holdings for fixed value preferred shares. Then new shareholders, such as your children or a family trust, would purchase common shares in the company. By implementing an estate freeze within your company, you effectively “freeze” the value of your shares and stop any future growth, in order not to trigger a large tax liability all at once.
Let us help you to prepare the corporate documents necessary to put a section 86 structure in place, and then update your company’s minute book to reflect the transfer. We will work together with your tax advisors to ensure that the transaction occurs on a tax-deferred basis.
Pipeline and Loss Carryback
After an owner of a private company dies, our corporate and tax lawyers use certain planning techniques, such as “loss carryback” and “pipeline” to save taxpayers from a potential triple tax hit. Such techniques are authorized under the Income Tax Act, and under the Canada Revenue Agency bulletins. We routinely help executors and beneficiaries with these techniques to minimize the tax on the estate so that there are more assets to distribute to the beneficiaries.
Tax-Free Rollover
A “section 85” rollover is a corporate transaction that involves the transfer or sale of capital property, such as real estate, to a company on a tax-free basis – which means that no tax is payable on the date of sale. The property is taken in exchange for company shares. Your accountant or tax professional may recommend a section 85 transfer as a handy tax-planning tool.
A section 85 rollover can allow you to continue to control your operating company through a new holdco, while fixing your capital gain. Our business lawyers can help you by incorporating a holding company and properly documenting the rollover. This would involve preparing the sale documents for the assets, the transfer and issuance of new shares, completion of an election form as required by the Canada Revenue Agency, and updating to the company’s record book.
The corporate law team at Westcoast Wills & Estates can collaborate with you and your other professional advisors, such as accountants, financial advisors and insurance brokers, to implement your estate freeze, rollover, share exchange, or corporate restructuring. Ultimately, we work hard to help you reach your business and financial objectives. We do this by getting to know you, your business needs, and your short and long-term goals, to determine what is right for you.
If you are a business owner who would like the advice of a corporate lawyer, contact us – we’d be glad to help.
