At a glance
- Estate planning protects your family, business, and wealth today, while ensuring your wishes are carried out tax-effectively in the future.
- The consequences of inadequate planning can be far-reaching and costly.
- Powerful estate planning strategies and tools are available to help you protect your assets and ensure a smooth transfer of wealth.
- Without coordination across your advisors, gaps and inconsistencies can quietly undermine even the best intentions.
As an owner-manager, your business is more than an investment—it is often your primary source of income, your largest asset, and a key part of your legacy. Yet many successful owner-managers delay estate planning because it doesn’t seem urgent, or the process feels complex or uncomfortable.
Estate planning is not just about what happens when you pass away. It is about protecting your family, business, and wealth today, while ensuring your wishes are carried out efficiently and tax-effectively in the future.
What is estate planning and why it matters
Estate planning is the process of organizing your personal and business affairs so that:
- your business and personal assets are protected;
- you can maintain your lifestyle during your lifetime;
- taxes and other costs are minimized; and
- your assets pass to the right people, in the right way, at the right time.
For owner-managers, estate planning is more complex than for salaried employees. Your personal and business lives are deeply connected, and decisions about share ownership, succession, insurance, and family members all intersect.
Without proper planning:
- taxes on death may be much higher than expected;
- your business may need to be sold to fund tax liabilities;
- family members may disagree on succession or control; and
- your intentions may not be carried out as planned.
A well-designed estate plan helps avoid these outcomes by aligning tax, legal, business, and family considerations into one integrated strategy.
Estate planning is an ongoing process
Estate planning is not a onetime exercise. As an owner-manager, your circumstances will change over time as your business grows, your family evolves, and tax rules change.
An effective estate plan is reviewed and updated regularly. This requires an advisor who understands your broader financial and personal circumstances and can anticipate how changes in one area affect the others.
For example, a change in your or a family member’s U.S. residency or citizenship can significantly impact Canadian estate planning. A U.S. tax professional should be consulted early in the process to factor in cross-border considerations.
Common estate planning objectives
While every estate plan is unique, most owner-managers
share several key goals.
Preserving wealth and lifestyle
Estate planning starts with ensuring you have enough income and assets to support the lifestyle you want, now and in retirement. This includes managing personal debt, using registered plans effectively, and protecting assets from unnecessary business or creditor risk.
Minimizing and deferring taxes
For many owner-managers, the largest tax liability they will ever face arises on death. At that time, you are generally deemed to dispose of your assets at fair market value, triggering income tax on accrued gains. Estate planning can help reduce or defer these taxes and ensure liquidity is available to pay them. Assets can pass to your spouse or common-law partner at death without incurring taxes, and the accrued tax liability will be due when the assets are disposed of in their lifetime, or on deemed disposition at their death.
In addition to income tax, other taxes can arise on death, including probate tax and U.S. estate tax. Unlike income tax, these taxes are based on the value of your estate and not accrued gains. However, with planning, it is possible to reduce the effect of both taxes on your estate.
Business continuity and succession
If you own a business, estate planning is inseparable from succession planning. Key questions include:
- Who will own the business in the future?
- Who will manage it?
- How should children be treated, whether active or nonactive in the business?
- Is selling your business to a third-party part of your exit strategy?
Without advance planning, businesses can lose value, face leadership gaps, or be forced into a sale at the wrong time.
Providing for family
Estate planning ensures your spouse, children, and dependants are provided for in a way that reflects your intentions. This may include balancing support for a spouse with preserving capital for the next generation or managing blended family dynamics.
Key estate planning strategies and tools
Estate planning solutions are highly personalized, but several
tools are commonly used.
Wills and powers of attorney
A properly drafted will ensures your assets are distributed according to your wishes and that the right person is appointed to administer your estate. Powers of attorney allow trusted individuals to manage your affairs if you become incapacitated. For owner-managers, these documents must align with corporate structures and shareholder agreements.
Estate freeze
An estate freeze is a process where you take steps to ensure that the future growth of your estate accumulates in the hands of your intended beneficiaries.
By freezing the value of your estate, you effectively lock in the tax that will arise on your death (subject to changes in tax rates in the future) so that you can ensure that cash will be available to pay that tax (for example, by taking out sufficient life insurance). The future growth of your estate will accrue for the benefit of your younger family members, which means that tax deferral will be achieved if they continue to hold the common shares after your death.
Even if the shares are sold, it is important to remember that an estate freeze can allow you to multiply a key tax reduction tool: the capital gains exemption. If the shares of your corporation are shares of a qualified small business corporation or are qualified farm or fishing property, you can shelter gains up to the limit ($1,275,000 for 2026) by claiming the exemption. Each member of your family can claim their own exemption on the disposition of their shares in the future, provided all the requirements are met.
Careful planning and execution are essential for a successful estate freeze. This involves identifying the best estate freeze structure and deciding if a full or partial estate freeze (where the owner continues to participate in some future growth) best suits your needs.
To avoid adverse tax consequences, it is important to obtain proper valuations, analyze corporate attribution, consider the tax on split income rules, and undertake purification strategies to ensure the capital gains exemption would be available.
Trusts
One common concern for most business or portfolio owners is losing control over the property they want to freeze. Another issue arises when the current owner supports transferring future asset appreciation to the next generation, but is not yet ready to decide who should receive that growth.
A discretionary family trust is a tool you can use to deal with both issues. Family trusts may be used to provide flexibility, maintain control, and manage how future growth is shared among beneficiaries. Trust planning is powerful but complex and must be designed carefully.
Life insurance
Life insurance is often used to fund taxes on death, providing liquidity so a business does not need to be sold, or it can be used to support buysell arrangements. Insurance should always be integrated into the broader estate plan.
Why coordination is critical
Owner-managers often work with multiple advisors, including lawyers, investment advisors, and insurance professionals. When planning is done in silos, gaps and inconsistencies can arise. A will may conflict with a shareholder agreement, or insurance coverage may not reflect actual tax exposure. Effective estate planning requires coordination.
How BDO can help
Proactive estate planning can protect what you’ve built, reduce uncertainty, and provide confidence that your objectives will be achieved. Our team can lead your estate planning process or serve as a key tax advisor, depending on your needs. We start by understanding your goals, business, and family situation, then work closely with your legal, investment, and insurance advisors to ensure alignment.
We can help you:
- Translate complex tax rules into practical decisions.
- Identify risks and opportunities early.
- Ensure your plan remains relevant as your circumstances change.
Through a coordinated approach, we help ensure your estate plan is tailored to your needs and works as intended, today and in the future.
Contact our team to develop or strengthen your estate plan.
The information in this publication is current as of March 23, 2026.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.