Life Insurance and Financial Services

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Life Insurance and Financial Services

Financial Risk Considerations

A significant portion of business owners’ wealth is in the value of their company, and realization of the value of this asset requires time and planning. Lloyd Sadd partners with a leading financial advisory firm with full-service offices in Edmonton, Toronto, and Vancouver to deliver a suite of services for successful private business owners with sophisticated insurance, financial, and estate planning needs.

Key Person Planning

  • The death of the owner/manager or a key employee will have significant impact on the operations of a business.
  • Debt covenants may require the repayment or renegotiation of loans.
  • Life insurance can maintain the value and solvency of the business during the transition period.

Family Protection

  • Maintaining solvency of the business after the loss of the owner/manager is vital to the family/estate.
  • If no family member is capable of managing the business or if family members need money because of the loss of income, then it often becomes necessary to sell the company at a time when the value is already depressed.
  • Life insurance can provide the family with sufficient liquidity to prevent the "fire sale" of the company.

Buy-Sell Funding

  • When a shareholder dies, the buy-sell clause of a shareholder's agreement protects the interests of the surviving shareholders and the heirs of the deceased by forcing the sale of the deceased's shares at fair value.
  • With properly structured life insurance, cash will be available to execute the share purchase on a tax-free basis.

Estate Equalization

  • Life insurance is commonly used to facilitate the equitable distribution of an estate among beneficiaries.
  • This is particularly the case when a family business is passed to only those beneficiaries active in the business.

Estate Tax Liability Funding

  • On death, deemed disposition rules typically trigger significant tax liabilities; these liabilities can often be deferred to the death of the second person in a couple.
  • Properly structured insurance can:
    • Reduce the tax liability through the capital dividend account
    • Fund the remaining tax liability in a cost-effective manner

U.S. Estate Tax

  • Even if they are not residents or citizens of the U.S., Canadians may be subject to U.S. estate tax if they own U.S. real estate, including recreational property or shares in U.S. corporations.
  • Unless new legislation comes into effect for 2013, significantly higher tax rates will return—as high as 55%. Additional tax may be payable as the basic exemption / “unified credit” amount will also be reduced.






“Based on their proven performance, we would not hesitate to recommend the services of Lloyd Sadd.”

- Todd Grundy, Vice President, Arpi's North Inc.