Canada · Case study
A couple in their late 40s with one child, an operating company feeding a holding company with no cash in it.
He was doing everything he had been told to do. Dividends out of the corporation, tax paid on them, RRSPs topped up, some property held in the holding company and next to no cash beside it. What Scott noticed was that the corporation was earning at about 12 to 15 percent tax and then handing money to a shareholder taxed at over 50 percent, purely so it could be invested. Nobody had shown him what the same $120,000 a year does if it never leaves the corporation. He was also careful, so he was postponed at medical underwriting and then asked his accountant to review the whole thing, which stretched the process out by months. That review is the reason this case exists.
From day one his family had $2,789,000 of coverage that did not exist before, and $2,640,000 of it could reach them through the CDA without tax. At year 20 the projection is $2,874,000 of value against the $2,300,000 the same money would have made personally at 7 percent, and from there he can draw $22,000 a year for twenty years and still leave $2,690,000 behind at year 40. The personally invested version runs out in year 14 of retirement. Then his own accounting firm, which has an insurance division of its own, sent the design to a lawyer and an accountant who specialise in this work. They had looked at 96 strategies across the client base. Four were properly structured. His was one of them, and the other 92 had liquidity problems, odd cost burdens, or universal life with market risk built in.
This only worked because the corporation had profit it did not need for ten years straight and because he was insurable, and he was postponed at underwriting himself, so an owner who pulls out every dollar to live on, or who cannot get through medical underwriting, has no way to do this.
This case study describes one client’s circumstances and is provided for information only. Individual results vary and are not typical. Projected figures are illustrations based on the advisor’s own case design rather than booked results, and are neither a quote nor a projection of your outcome. Preserve Wealth Group is a referral and marketing platform, not a licensed financial, tax, or legal advisor. Independent licensed professionals implement every strategy described. No client identifying information has been disclosed.
Private business owner, industry not specified
Commodities brokerage
Financial Services
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