A Business Option Worth Considering

Business succession planning provides the perfect opportunity to use strategic generosity to fulfill your charitable aspirations while maximizing tax efficiency.

The majority of small and mid-sized businesses in Canada are owned by individuals over fifty[1]. Within the next 10-20 years, many of these businesses will experience an ownership transition due to life events such as:

Retirement
Transitioning the next generation of family members to the business
A disability
The death of an existing owner

In most cases, a succession plan will provide continuity for the business. But did you know that a well-drafted succession plan can also help you achieve your charitable goals?

It is important to proactively discuss charitable giving with your advisors when designing your succession plan to ensure that it is incorporated as part of the overall strategy. Share on X

Consider Strategic Generosity

Many business owners give to charity regularly, either personally or through their business. However, charitable giving can be overlooked when it comes to succession planning. It might be forgotten in the heat of enacting a succession plan, as there are usually many other pressing issues to deal with, or the professional advisors involved may not be aware of your charitable intentions. It is important to proactively discuss charitable giving with your advisors when designing your succession plan to ensure that it is incorporated as part of the overall strategy. This will maximize the opportunities to support charity and ensure you do so in the most tax efficient manner.

How Does Philanthropy Fit into Your Succession Plan?

There are many options when considering charitable giving in your succession plan. You can donate different types of assets:

Cash
Private company shares
Publicly traded securities
Life insurance (if there is excess life insurance that can be donated to charity).

Of course, each situation is unique, and the best strategy will depend on your business ownership structure before and after the succession plan, as well as assets held personally and in the business. Abundance Canada can help you design a personalized Generosity Plan™ that fits into your overall succession plan strategy.

Working with your professional advisors, a gift planning consultant at Abundance Canada will provide input regarding:

The type of assets that can be donated
The timing of these donations
When the donated assets will be converted to cash (private company shares).

Donations can be timed to align with taxable events resulting from the implementation of your succession plan.

Get Your Family in on the Giving

Some business owners use their succession plan as an opportunity to establish a private family foundation, allowing their family to participate in their philanthropy. A Generosity Plan™ at Abundance Canada can be set up to provide the same benefits as a private family foundation with fewer administrative responsibilities and more anonymity for the family. Your Generosity Plan™ can create a legacy that supports causes your family and you care about today, tomorrow and after you have passed on.

All businesses, no matter the size or complexity, require some sort of succession plan. As you consider possible scenarios for transitioning your business and develop a plan to address them, don’t forget that charitable giving is another what-if well worth considering.

To find out more about creating a Generosity Plan™ to complement your succession strategy, call 1.800.772.3257 or contact us to speak with a gift planning consultant today.