Important for farm and business owners
What would happen to your business without you?
 If
you have a business, you should have a business succession
plan. If you don’t, and something were to happen to
you, the government could become your unintended beneficiary.
Or, your business could pass to family members who may be
unable or unwilling to continue your business. Or your family
might be forced to sell your business at less than market
value to settle estate taxes.
Very few family-owned businesses survive past a 3rd generation.
One of the major reasons is lack of a succession plan that
deals with retirement, disability or death of the owner. It
should cover how the shares will transfer in the event of
death or disability among the shareholders.
If you have a business, a business succession plan should
be a part of your estate plan. You business could be the largest
asset in your estate and if you were to die, what would happen
to it. Who would purchase it and how would the purchase be
funded?
With a business succession plan, a buy-sell agreement for
the business is created and funded with life insurance. A
buy-sell plan funded by life insurance, however, provides
for an orderly transfer of your business to the successor
of your choice, at an agreed-upon, fair market value. The
life insurance covers most of the costs of the business purchase
for pennies on the dollar.
The buy-sell agreement should have a disability buyout provision?
If not, what would happen to your company if you or your business
partner became too sick or injured to work?
In the event that one partner becomes disabled, a Disability
Buyout Insurance policy can keep the business intact by allowing
for a smooth transfer of ownership. Such a policy can help
provide the balance of cash flow necessary to buy your disabled
associate's business interest.
Will your farm go on without you?
 The
family farm is a highly valued Canadian institution, a fact
reflected in Canada’s tax laws, which encourage keeping
the farm in the family.
If you are a farmer, you owe it to yourself and your family
to investigate your options. For one thing, farm properties
are eligible for a $500,000 lifetime capital gains exemption.
To qualify, certain conditions have to be met, which essentially
require that the property be a “qualified farm property”.
Although farm property receives certain benefits under existing
laws in Canada, you have to be aware of these benefits and
you have to plan ahead to take advantage of them.
To learn more about the financial benefits available when
transferring qualified farm property, click
here to find the RBC financial planning professional closest
to you.
Or go to www.farmsuccession.com.
Important information about our financial planning services can be found at the bottom of our
homepage.
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