1. Business Owners: Eric and Cindy

Eric and Cindy, a couple in their early 50s, own a thriving business with three locations across different cities. When they approached us several years ago, their focus was entirely on managing and growing their business, leaving little time to review their corporate structure or personal financial plans.

At the time, Eric was the sole shareholder, despite Cindy working full-time in the business. This setup was inefficient for income distribution and would have caused complications during a sale or transition of ownership. Additionally, their operating company held significant excess cash beyond operational needs, which created unnecessary liability risks in the event of business failure or lawsuits. On the personal side, their children had entered post-secondary education and required funding, and they were also dealing with challenges involving a partner at one of their locations.

Their accountant reached out to us to explore restructuring options and to align their corporate and personal financial strategies. Having worked closely with this accountant on similar cases, we were well-versed in the team of professionals required to implement a comprehensive solution. We introduced Eric and Cindy to a corporate lawyer to assist with a potential reorganization.

Through collaborative consultations with the accountant, corporate lawyer, and our team, we implemented a strategy that resulted in:

• Significant annual tax savings
• Enhanced creditor protection
• Higher investment returns without additional risk
• Reduced management fees

Perhaps the most impactful benefit will be realized when the business is eventually sold, as the restructuring virtually eliminates taxable gains, providing Eric and Cindy with peace of mind and long-term financial security.

2. Retirees: Stan and Patricia

Stan and Patricia, a couple in their 60s, have been enjoying retirement for a few years. They recently came to us seeking help to consolidate their finances and address some tax challenges.

Stan spent 20 years as a general manager for a car dealership, while Patricia served as a VP at a large financial institution, earning a substantial pension. Over their careers, they built a respectable nest egg in addition to Patricia’s pension income. However, they were concerned about the longevity of their funds and their ability to leave a financial legacy for their heirs.

Recently, Patricia experienced an Old Age Security (OAS) clawback due to her high income, which included pension payments, CPP, OAS, RRSP withdrawals, and investment income. With Stan having faced health challenges in the past, they were also worried about how future health issues might impact their financial security.

We worked collaboratively with their accountant to review their tax history and explore various tax-saving strategies. Our objective was to reduce their overall taxable income and shift as much income as possible to Stan to optimize their financial situation.

The recommended plan achieved several key outcomes:

• Patricia recovered her lost OAS income.
• Her marginal tax rate was reduced, increasing their after-tax income.
• Income drawn from investments was lowered, providing additional flexibility.
• Savings from these changes were partially allocated to a protection plan to address potential health-related expenses.

Highlights:

• A holistic planning approach in collaboration with their accountant and other professionals.
• Achieved over $6,400 in annual tax savings.
• Reduced long-term care risks through strategic planning.
• Consolidated accounts to lower management fees.
• Established a secure retirement income stream to last their lifetime while ensuring a financial legacy for their heirs.