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Insurance Audit for the Business Owner

Many business owners understand the important role that life insurance plays in effective corporate planning.  Whether it is the funding of a shareholders’ agreement, life insuring corporate debt, or protecting against loss from the death of a key employee, life insurance is of great value in underpinning the financial success of a corporation.

Just as life insurance needs for families change over time the same is also true for requirements of a business.  If it has been some time since you last reviewed your corporate needs then it is probably time for a corporate insurance audit. This is especially true if the company has grown in value since the time the insurance was first implemented.  The scope of the audit and the insurance related issues include the following: Read more

Private Corporations in the Cross Hairs

If you are the owner of a private corporation you should be concerned about the commentary that is coming from the Department of Finance.  In the Federal Budget of March 2017, Finance expressed their concern that private corporations were being used by high income Canadians to obtain tax advantages that were not available to other Canadian tax payers.  That concern has led to the release on July 18th 2017, of a consultation paper along with draft legislation.  Finance is currently asking for input from interested parties and stakeholders and has stated that the consultation period will end on October 2, 2017.  At this point, whatever happens after that date is anyone’s guess, but speculation is high that changes will be introduced to close what the Department perceives as abusive practices relating to private corporations.

Specifically, there are three specific tax planning strategies employed by private corporations that the department is most concerned with:

Sprinkling income using a private corporation

Income tax paid on income from a private corporation can be greatly reduced by causing that income to be received in the form of dividends by individuals who would pay tax at a much lower rate or not at all.  These dividends are usually paid to adult children or other family members who are shareholders of the private corporation or to a family trust.  By “sprinkling” the income in this manner the amount of income tax paid can be greatly reduced. Read more

How to Keep the Family Business Thriving For Generations to Come

Most corporate dynasties fail to make it to a second generation, making these Canadian firms thriving under the leadership of the founder’s grandkids (and great-grandkids!) truly remarkable

Izzy Asper never wanted his children to work at Canwest Global Communications, the now defunct media empire he founded. His drive and hunger for acquisitions turned Canwest into one of the most powerful firms in Canada and, for a time, earned the Aspers a spot on the Rich 100. He wanted his kids to succeed elsewhere, however.

“They were all practising lawyers and were doing very nicely on their own. It was they who got this dynastic glaze in their eyes—which I generally discouraged,” he told journalist Peter C. Newman. “I don’t believe in dynasties.” But his daughter, Gail, “slipped through the net” to become general counsel at Canwest, and brothers David and Leonard followed. It was under Leonard’s stewardship that Canwest filed for bankruptcy in 2009. Read more

Preparing your Heirs for Wealth

If you think your heirs are not quite old enough or prepared enough to discuss the wealth they will inherit on your death, you’re not alone. Unfortunately though, this way of thinking can leave your beneficiaries in a decision-making vacuum: an unnecessary predicament which can be avoided by facing your own mortality and making a plan.

If you have a will in place, great. A will, however, is only a fundamental first step, not a comprehensive plan, point out authors of the 2017 Wealth Transfer Report from RBC Wealth Management.

“One generation’s success at building wealth does not ensure the next generation’s ability to manage wealth responsibly, or provide effective stewardship for the future,” they write. “Knowing the value (alone) does little to prepare inheritors for managing the considerable responsibilities of wealth.” Overall, the report’s authors say the number of inheritors who’ve been prepared hovers at just one in three. Read more

The Duties of an Executor

An executor is an individual or institution that is named in a will whose duty is to distribute estate assets according to the testator’s wishes. Acting as an executor can be stressful and time consuming so it is a good idea for a testator to make his or her choice wisely, and for someone who is asked to be an executor to investigate and review exactly what the job entails.  Often the executor is the spouse of the deceased. That tends to make the role somewhat more straightforward than it would be for a family member, friend or other acquaintance. In any event, this article covers the duties and obligations of an executor.

Arranging the funeral 

In addition to arranging the burial or cremation and funeral services according to the deceased’s wishes the executor would be responsible in ensuring that family, friends and interested parties (especially employer) have been notified about the death.  Family members will most likely assist in this including the posting of the obituary. If there are sufficient funds in the bank account of the deceased the bank will usually release  funds to cover the cost of the funeral. Read more

Why Private Wealth Management?

I am asked frequently the benefits of being in the Private Wealth Management (PWM) stream versus investing in mutual funds and/or bank funds. In order to answer this, we define PWM as the following:

  • Minimum investment $500,000
  • Custodial account (TD/National Bank/Laurentian Bank) managed by an Investment Counsellor (IC)
  • IC buys and sells securities within your account based on a rigid Investment Management Agreement (IMA) signed by you
  • A fixed fee of between 1-2% per annum is charged monthly based on the dollar amount of your account
  • The portfolio is managed according to the “discretion” of the IC, and done without your signature or acknowledgement. You give the IC the authority to trade on your behalf

Read more

ARTICLES OF INTEREST

17
Oct

How to prepare your finances for maternity leave

By Helen Burnett-Nichols

Expecting your first baby? By all means get the nursery ready — but make sure you put your financial house in order, too.

Preparing for a baby is a time full of celebration, showers and shopping, but the arrival of a little one brings not only added expense for your family but also a noticeable drop in income for many new families. Read more »

16
Oct

DM Monthly Newsletter – October

WHAT WILL IT TAKE TO JUMPSTART THE TSX? – In our third quarter portfolio commentary, we highlighted the recent contrast between the Canadian economy, which has led all G7 countries in growth for each of the past four quarters, and the TSX, which is the worst performing stock market amongst the same group so far this year. On the bright side, lethargic Canadian share prices combined with rising earnings have pushed the relative valuation of the TSX down to multi-year lows against the S&P 500; unfortunately, though, it’s hard to know when global capital will start to take notice of this comparative advantage and begin to shift back to our market.

Click here to read more:  DM-Monthly-Report-Oct-17

6
Oct

DM – Q3 Portfolio Commentary

Best Economy, Worst Market – In last quarter’s edition of this report, we lamented that Canadian stocks hadn’t been doing much for investors in the months preceding, despite our economy having posted some of the strongest growth in the developed work. We also noted, however, that the silver lining of this stall in prices was that the valuation of the TSX has been pushed down to an uncommonly attractive level relative to the S&P 500, which we felt would eventually catch the attention of capital allocators around the world. Up until the last 2 weeks of September, though, it looked like the Canadian equity story would be little changed for this report.

Click here to read more: DM-Portfolio-Commentary-Q3-17