Veterinary Practice Succession & Estate Structuring
1. Client Snapshot
| Item | Details |
|---|---|
| Business Type | Veterinary clinic |
| Location | Ottawa Ontario |
| Owner | Husband & wife, age 50 |
| Annual Revenue | ~$3.1M |
| After-Tax Profit | ~$500K |
| Retained Earnings | ~$4.2M |
| Corporate Real Estate | FMV ~$2.5M |
| Successor | Son, Veterinary |
2. Planning Challenge
- Direct share transfer may trigger tax consequences
- Future growth increases estate tax exposure
- Retirement requires liquidity beyond business assets
- Wealth concentrated in business and real estate
3. Strategy Framework
Implementation Structure (Illustrative)
- Policy type: Corporate-owned joint last-to-die participating whole life insurance
- Insured structure: Spousal joint coverage
- Initial death benefit: ~$4.85M
- Annual premium: $300,000
- Funding period: 10 years (limited pay)
- Designed to support long-term estate liquidity and intergenerational wealth transfer objectives
| Step | Planning Element | Purpose |
|---|---|---|
| Step 1 | Estate Freeze + Family HoldCo | Shift future growth to next generation |
| Step 2 | Surplus profit movement | Asset protection and planning capital |
| Step 3 | Corporate participating life insurance | Estate liquidity and CDA planning |
| Step 4 | Liquidity Structuring Flexibility | Liquidity flexibility within the broader estate and retirement planning framework |
4. Before vs After Structuring — Family Estate Structure
| Planning Dimension | Before Structuring | After Structuring |
|---|---|---|
| Estate Liquidity | Dependent on asset sales or dividend extraction | Dedicated tax-efficient liquidity at second death |
| Intergenerational Transfer | Corporate wealth largely taxable on distribution | Significant tax-free capital dividend capacity via CDA |
| Asset Transition Risk | Estate may need to liquidate corporate or real assets | Liquidity available without disrupting asset base |
| Tax Efficiency | Estate value exposed to personal-level taxation | Estate liquidity structure provides funding to offset estate-level tax exposure |
| Capital Allocation | Surplus retained or traditionally invested | Capital repositioned into long-term estate structure |
| Wealth Concentration Risk | Wealth tied to operating and market assets | Portion shifted into protected insurance-based asset class |
| Estate Planning Certainty | Outcome dependent on market values at death | Defined estate liquidity outcome independent of market timing |
5. Financial Outcome (Illustrative, projected to age 90)
Projections are based on current dividend scale assumptions for comparative planning purposes. Two planning scenarios were evaluated:
Retirement Liquidity Scenario
- Retirement income support≈ $230K/year
- Remaining estate benefit≈ $7.4M
- CDA credit≈ $18.45M
Estate-Focused Scenario
- Projected death benefit≈ $18.45M
- CDA credit≈ $18.45M
CDA note (general): At death, a CDA credit is generally created equal to insurance proceeds minus ACB, enabling a tax-free capital dividend to shareholders. In long-duration modeling, ACB is projected to decline to zero, and CDA credit is independent of retirement liquidity modeling.
6. Planning Impact
- Long-term estate liquidity established independent of asset sale timing
- Corporate wealth partially transitioned into a defined intergenerational transfer structure
- Reduction of estate exposure to market-dependent asset valuation at death
- Enhanced certainty in family wealth succession planning
7. Suitability Factors
Professional Summary
This structure demonstrates how business wealth can be structurally transitioned into a long-term corporate estate planning framework designed to improve transfer certainty, tax efficiency, and estate liquidity for the next generation.
Next Step
A confidential review can evaluate whether a structured corporate estate planning approach aligns with your family wealth objectives, succession priorities, and long-term transfer planning, in coordination with your professional advisors.
Book a Private Strategy Review