For business owners & incorporated professionals
Incorporated owners face a different set of questions: how to take income out tax-efficiently, how to protect the company if a key person is lost, and how to move what you've built to family, partners or a buyer. Whether you run a company or an incorporated practice as a physician, lawyer, engineer or consultant — there are strategies for these that we can explore together.
General information, not personal advice — several of these strategies work best alongside your accountant and lawyer.
Protect the business
The company is both your income and your legacy. These are the tools that keep it standing through the events no one wants to think about.
If your business depends on you — or on a handful of key people — the sudden loss of one of them can stall revenue, rattle lenders and leave very large shoes to fill. Key-person insurance pays the company a benefit to bridge that gap: time to recruit, reorganize, and reassure customers and the bank.
If you co-own a business, a buy-sell agreement sets out what happens when an owner exits — but an unfunded agreement is only a promise. Life insurance can fund it, so that when an owner dies the survivors have the money ready to buy the shares, and the family receives fair value in cash rather than inheriting a role they didn't choose.
Your corporation can own a life insurance policy on an owner or key person. At death, the proceeds can flow through the corporation on a favourable tax basis, and during your lifetime the policy's cash value can be borrowed against while it continues to grow. One policy, several possible jobs.
A serious illness can hurt a business as much as a death can. A corporation can own critical illness coverage on an owner or key employee, so a lump-sum benefit is available to hire temporary help, buy back time, or keep obligations covered while you focus on recovery.
Tax-efficient structures
These strategies sit at the intersection of insurance, and tax law. They're powerful — and they deserve to be set up properly, with your accountant and lawyer at the table.
For owners with substantial life insurance needs and strong cash flow, an IFA lets you borrow to fund the premium, using the policy itself as collateral. Because the borrowed funds are typically put to work in the business or investments, the interest may be tax-deductible — which can substantially lower the effective cost of the coverage. Eligibility and deductibility depend entirely on your circumstances, so this one is planned carefully.
If your company — or your investments — have grown well past what you'll ever need, a freeze locks in today's value in your hands and directs future growth to the next generation, often through a family trust. Done well, it can shrink the eventual estate tax bill and set up succession cleanly. It's a legal and tax exercise first, an insurance exercise second.
A holding company can be the workbench of an owner's plan: setting up a second corporation to hold profits and investments away from operating risk, creating room to distribute wealth among family members, and providing a flexible place for insurance and investments. Trusts add another layer of control over who eventually receives what — and when.
Life insurance proceeds and the tax-free portion of capital gains can build up a Capital Dividend Account inside your corporation. Money paid out of the CDA to shareholders is received completely tax-free — one of the most powerful, and most underused, ways to move corporate wealth to your family.
Your retirement & exit
The goal isn't just a thriving business — it's a thriving owner after the business.
A customized, registered pension plan built around you as an owner-manager. For owners in their forties and beyond, an IPP can allow larger deductible contributions than an RRSP, reward long service through past-service contributions, and carry strong creditor protection. It's a serious commitment — best suited to corporations with solid, steady income.
Most owners sell or transition a business only once, so it pays to start years ahead rather than months. Exit planning pulls the pieces together: what the business is worth, who the realistic buyers are, how shareholder agreements are funded, and how the proceeds convert into retirement income tax-efficiently. Whether the next owner is family, management or a third party, the plan shapes the outcome.
Estate & legacy
When one child wants the business or the cottage and the others don't, "fair" isn't always "equal". Life insurance creates liquid cash at exactly the right moment, so the business can pass to the child who runs it while the others receive equivalent value, without anyone having to sell assets to pay out siblings.
At death, taxes can come due on registered plans, deemed dispositions and company value and sometimes a substantial bill, payable within months. Life insurance provides the cash to settle that bill, so your heirs aren't forced into a rushed sale of the assets you spent a lifetime building.
If a cause matters to you, insurance can turn modest annual giving into a significant legacy. For example, a policy that benefits a charity, or insurance that replaces the value of assets you give during your lifetime so your children aren't shortchanged. Each route has different tax outcomes, worth planning deliberately.
Financing & borrowing
For owners, the line between the mortgage, the line of credit and the investment plan can be redrawn — carefully.
A flexible all-in-one banking product that combines your mortgage, debts and day-to-day banking into a single borrowing account at a prime-based rate. Every dollar sitting idle works to reduce your borrowing costs automatically. For disciplined owners, it can shorten the mortgage runway and free up monthly cash flow.
A strategy that converts your mortgage's non-deductible interest into tax-deductible investment borrowing: as you pay the mortgage down, you re-borrow that room to invest. Done well, it can turn your biggest debt into a tax-efficient wealth-builder; done carelessly, it simply adds risk. It requires discipline, the right plan, and professional tax advice — I'll be straightforward with you about whether it suits your situation.
Private wealth
When investable assets grow past the retail level, I introduce clients to my private wealth management partners — discretionary portfolio management, deeper planning, and coordination with the insurance and corporate strategies above. This is a referral partnership: they do the managing, and I stay in the loop so everything keeps pulling in the same direction as the rest of your plan. Private wealth management is generally a fit for households with $500,000 or more in investable assets.
A note on scope: strategies on this page — especially the IFAs, freezes, holdco and trust structures — involve tax and legal considerations that depend entirely on your circumstances. I work alongside your accountant and lawyer, and I'll always tell you plainly when something isn't a fit. General information, not personal advice.
Usually with one question: "what happens if…?" We'll talk it through — no jargon, no pressure — and if a strategy makes sense, we'll bring your accountant and lawyer into the loop before anything is decided.
Book a conversation
That's exactly what the first conversation is for. We'll match the right accounts to your goals — and confirm the numbers that apply today.
Lavern Rankin is a Senior Partner with Eau Claire Partners — a full-service financial advisory firm helping Canadians build, protect and transfer their wealth with confidence.
Learn more about Eau Claire Partners