Protect Your Business’ Future: Effective Estate Planning and Wills

“…Time is money…”

Do you own an Ontario business?

You may be familiar with Ben Franklin’s quote that time is money. You may not, however, know that, almost overnight, your business can lose its value. This can happen when a sole proprietor, partner or shareholder dies. Legal representatives must act quickly. Hopefully you have a valid will to deal with your business.

The Ontario Estate Administration Tax (EAT) is roughly 1.5% on the fair market value of your business. No tax is charged on the first $50,000 of the estate. Therefore, the provincial estate tax is roughly $14,250 on $1 million of the business’ value in the estate. In many cases, this tax can be avoided by having multiple wills.

How can you have more than one will?

In some jurisdictions, this is permitted to reduce provincial probate or estate tax. You may create a private will that includes your business assets. Private wills are sometimes called secondary wills. Private or secondary wills do not need to be certified by an estate court. Secondary will assets are not subject to provincial probate tax.

Only assets that need to be collected or sold with an estate certificate are subject to provincial Estate Administration Tax (EAT) or probate tax. Therefore, if you are an owner of an Ontario business, you need wills in your estate plan strategy.

A private will permits a sale or transfer of the business to beneficiaries who may be related and will not require certified wills. This leaves your business affairs private. In many cases, this provides protection from creditors and competitors. In addition, it is not necessary for the business to pay for appraisals for provincial tax. Unless, that is, the business is being sold to independent purchasers who wish to have certainty a private will is certified as valid.

If you own an Ontario business, proper estate planning protects your business’ value. It saves your loved ones a great deal of worry and taxes.

You must consider your business succession plan; who will be your estate trustee to handle the business without a conflict of interest? Can they work with accountants, financial planners and business consultants? Will they assume the risks associated with the business unit until it is sold? Do you need buy-sell agreements?

I can help you answer these questions and others. Call me today.

Do you have questions about estate planning for your business? Contact me for a meeting to discuss your needs. I look forward to helping you.

As an Ontario Certified Specialist, estate law is all I do.