Business Succession Presentation - JVK Life & Wealth Advisory Group

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Investing in your
small business
success
Agenda
 Protecting your business
 Banking outside the box
 Investing in the future
Protecting
your business
The problems you face
 Day-to-day managing
 Long-term viability
 Liability protection
 Managing risk
Your challenges
Investment and retirement planning
Succession planning
Loss of owner/key person
Attracting/retaining employees
Income taxes and tax liabilities
Creditor and Liability Protection
Business investment income taxes
Innovative banking solutions
Your business – your legacy
 Plan a successful succession
 Protect your interests
 Anticipate future needs
Valuation
Tax Liabilities
Capital Gains
Exemption
Estate Freeze
Buy/Sell Funding
Life Insurance
Can your business survive without you?
Sole Owner
 Sufficient funds to carry on
 Succession planning protects your heirs
 Your expectations can be met
Can your business survive without you?
Multiple owners
 Death or disability stresses the partnership
 Who steps in to act for the deceased?
 Chances for a good outcome are poor
Advance planning averts catastrophe
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Buy/sell agreements
Buy-out options
Proper funding
Business as usual
Orderly dissolution plan
Life insured investments
Life insurance
Death
Disability
Retirement
Disagreement
How much is it worth?
 Adjusted balance-sheet or
asset book value
 Asset replacement value
 Comparison
Pulling the trigger on tax
 Tax is triggered by
 Sale of the business
 A ‘deemed disposition’
 Capital gains tax
Change of use
Transfer
Emigration
Death
Asset exchange
Assets pay debts
Transfer to trust
Succession strategies you can use
 Use your $500,000 lifetime capital gains
exemption*
 Consider an estate freeze*
 Life insurance or life-insured investments
*Applies to incorporated companies only
Buy/Sell Funding
 Shareholders’ agreement
 Changes in ownership create financial
obligations
 Life insurance death benefits funds:
 buy-out
 tax implications
Buy/Sell Funding
Corporate owned policy*
 Lower aggregate premiums
 Easier cost allocation
 Ensure that premiums are paid
*Concerns about creditor protection, tax consequences and effects of provincial family
legislation must be addressed to determine the best approach for your circumstances
Buy/Sell Funding
Individually owned policy*
 Paid for with after-tax dollars
 Expensive
 Confusing
*Concerns about creditor protection, tax consequences and effects of provincial family
legislation must be addressed to determine the best approach for your circumstances
Collateral insurance coverage
 Tax deductible business expense
 Tailored to fit your needs
What impact will the loss of
a key person have on your business?
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Business is disrupted
Sales decline
Employees’ security is threatened
Creditors become alarmed
Deliverables in doubt
Attract and retain good employees
 Financial compensation
 Business environment
 Life and living benefits insurance
Creditor Protection Strategy
 Protect your personal assets
 Investments with insurance
benefits
 Growth from investment
Personally guaranteed
debts
Wages and vacation pay
to employees
Source deductions owed
to Canada Revenue
GST and PST
Health and safety
violations
Environmental damage
Strategies for protecting
personal assets
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Incorporation
Spouse’s name
Business liability insurance
Invest in products that offer creditor protection
Hold life insurance contracts personally
Professional tax and legal advice
Establish a plan while the business is healthy
Banking
outside
the box
Banking outside the box
 Highest return on
investments
 Unique alternatives to
borrowing
 Innovative products
 Simply financing needs
Manulife Bank
Innovation, flexibility, outstanding rates
 Business Advantage
Account
 GICs
 Custom investment loans
 Flexible, low cost
financing
 Access Line of Credit Plus
 Manulife one Account
Manulife Bank
Investing in
the future
Working toward
retirement
 Retained earnings
 Business investment income
 Individual Pension Plan
 Segregated Funds
 Life insurance
GICs and GICs. What’s in a name?
Guaranteed
Investment Certificates
Guaranteed
Interest Contracts
 Bank
 Insurance company
 Designate beneficiary
 Creditor protection
 Probate fees and
settlement delays
avoided
GICs. Security for your portfolio.
 Solid foundation for your portfolio
 Positive rate of return
 Peace of mind
 Broad range of investment choices
Segregated Funds
 Investment with insurance guarantees
 Creditor protection
 Protects your beneficiaries
 Tax advantages
 Benefits for long-term investing
You’ve got leverage
 Borrow money to earn money
 Interest is tax-deductible
 Benefit from compounding
 Good potential, higher risk
Business investment
income taxes
Option: Invest surplus in GICs and CSBs
 CSBs and GICs taxed at top corporate rate
Option: Use surplus to buy life insurance
 Tax-deferred growth of the surplus
 Tax-free death benefit
Small Business Solutions Recap
 Loss of owner/key person
 Retirement
 Tax liabilities
 Succession planning
 Creditor protection
 Capital Growth
 Life-insured
investments
 Life insurance
 Buy/Sell funding
 Leveraged investing
 Pension plan/IPP
 Collateral insurance
Small Business Solutions Recap
 Loss of owner/key person
 Retirement
 Tax liabilities
 Succession planning
 Creditor protection
 Capital Growth
 Life-insured
investments
 Life insurance
 Buy/Sell funding
 Leveraged investing
 Pension plan/IPP
 Collateral insurance
Small Business Solutions Recap
Loss of owner/key person
Retirement
Tax liabilities
Succession planning
Creditor protection
Capital Growth
 Life-insured
Investments
 Life insurance
 Buy/Sell funding
 Leveraged investing
 Pension plan/IPP
 Collateral insurance
Small Business Solutions Recap
Loss of owner/key person
Retirement
Tax liabilities
Succession planning
Creditor protection
Capital Growth
 Life-insured
Investments
 Life insurance
 Buy/Sell funding
 Leveraged investing
 Pension plan/IPP
 Collateral insurance
Small Business Solutions Recap
Loss of owner/key person
Retirement
Tax liabilities
Succession planning
Creditor protection
Capital Growth
 Life-Insured
Investments
 Life Insurance
 Buy/Sell funding
 Leveraged investing
 Pension plan/IPP
 Collateral insurance
Small Business Solutions Recap
Loss of owner/key person
Retirement
Tax liabilities
Succession planning
Creditor protection
Capital Growth
 Life-Insured
Investments
 Life Insurance
 Buy/Sell funding
 Leveraged investing
 Pension plan/IPP
 Collateral insurance
Solutions for Small Business
 Investing
 Banking
 Insurance
Manulife Investments
 Solutions for today
 Solutions for tomorrow
Thank you
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