PI Financial Services

Corporate Estate Bond


If you are one of the privileged Canadians, you have spent your life working very hard to accumulate significant wealth. Yet at some point you may realize that you will not need to spend everything that you have accumulated. At that time, you will want to consider how to maximize the amount that will be transferred to the next generation. This is where a Corporate Estate Bond can help.

This concept assumes that you own a company with considerable conservative, liquid investments. The company would liquidate some of these investments to purchase a Universal Life or Whole Life permanent insurance plan, and move a portion of your savings from a tax-exposed investment to a tax-exempt insurance policy. The Corporate Estate Bond provides immediate life insurance protection, and an investment within the policy that accumulates on a tax-deferred basis.

When you die, your corporation receives the proceeds of the policy, tax-free, as well as a credit to its Capital Dividend Account for the amount of the life insurance proceeds less the policy's Adjusted Cost Basis. Dividends can then be paid - tax free - to your estate out of the Capital Dividend Account. By taking advantage of the Corporate Estate Bond, you can maximize the amount you can give your heirs or favourite charity when you die.

Who It Works For:

  • You are over 50 years old and in good health.
  • You have significant capital inside a corporation that exceeds your lifestyle requirements. You would like to earmark these funds to leave to your family or charity at death.
  • You are receptive to long-term planning strategies.