Written by Ron Cooke, President & Founder of Strategic Wealth Protection Partners in Ontario
The Problem:
James*, a successful real estate investor in his early 50s, owned several residential investment properties—houses, condos, and similar assets—through a corporation.
Like many high-net-worth investors, James was concerned about the significant tax bill his estate would face upon his death. He initially believed that transferring his assets into a trust would help reduce or defer these estate taxes.
However, during the estate planning process, it became clear that a trust wasn’t the right fit for James.
He didn’t intend to hold on to his current properties long-term.
Instead, he planned to sell them and reinvest in larger commercial properties at a later date. Selling would trigger capital gains tax regardless of whether the assets were inside a trust, making the cost of setting up the trust unnecessary and counterproductive.
The Solution:
Instead of using a trust, James implemented a more flexible and cost-effective strategy: permanent life insurance tailored to cover future tax liabilities.
Key components of this solution included:
- Customized Life Insurance: A policy was structured to grow alongside James’s assets. Whether he kept his current properties or reinvested in new ones, the insurance benefit would provide his estate with the liquidity needed to cover taxes.
- Corporate Ownership of Assets: Since his properties were held in a corporation, James faced a potential double taxation issue: once when the corporation sells the properties and again when money is distributed to shareholders (e.g., his estate). The insurance policy addressed this by providing funds that could be accessed mostly tax-free through the corporation to pay estate taxes.
- Leveraged Insurance Strategy: James paid a large premium into the insurance policy, then borrowed back that money using the policy as collateral. He reinvested those funds into new real estate opportunities. This allowed him to maintain liquidity and continue growing his portfolio without tying up capital.
- Tax Efficiency: The interest on the loan used to borrow against the policy was tax-deductible because it was used for investment purposes. Additionally, a portion of the insurance cost could also be deducted, further improving the tax efficiency of the overall strategy.
Why This Worked:
This approach provided several strategic benefits:
- Flexibility: It accommodated James’s plan to sell and reinvest in different properties.
- Liquidity: It ensured there would be funds available to pay taxes, avoiding forced sales of assets.
- Tax Minimization: It reduced the risk of double taxation and made use of deductible interest and insurance expenses.
- Wealth Multiplication: By borrowing against his insurance and reinvesting, James effectively had two streams of growth—his insurance and his real estate investments—while only paying loan costs on one.
The Outcome:
James felt reassured and confident after going through this process. And he was relieved that he hadn’t been saddled with a trust that he didn’t need.
Our solution addressed his primary concern: ensuring his loved ones wouldn’t face a heavy tax burden after his death. At the same time, it gave him the freedom to keep expanding his real estate portfolio, a passion of his. He was able to continue doing what he loved (finding and investing in great real estate deals) while knowing his estate plan was secure and tax-efficient.
*Names have been changed to protect the identity of SWPP’s clients.
Discover How to Minimize Taxes and Secure Your Legacy
Did you know that without a solid estate plan, taxes and fees in Ontario could claim a significant portion of your wealth?
If you’ve worked hard to build your business, investments, and properties, protecting your legacy for your loved ones is critical. At Strategic Wealth Protection Partners, we specialize in helping high-net-worth individuals in Ontario secure their financial futures.
Our Living Estate Plan is designed to:
- Reduce estate taxes and probate fees.
- Simplify wealth transfer to your loved ones.
- Reflect your values and priorities in every detail.
Your Legacy Matters
With our personalized guidance, we’ll help you navigate options like Living Trusts to protect your assets and ensure your family’s peace of mind. Contact us today to book your Living Estate Plan Consultation and take the first step toward a secure future.
Schedule a Living Estate Plan Consultation
Planning your legacy is about more than numbers—it’s about ensuring your family remembers you and your values are honoured for many years to come.
Estate planning and trusts can feel overwhelming, especially if it’s your first time. That’s why we’re here.
With our simple, 5-Step Living Estate Plan, we make the process easy, helping you create a comprehensive estate plan or trust that protects your assets from taxes and probate fees while preserving your legacy. Tools like The Final Word Journal capture your story, wishes, and essential details like accounts and end-of-life plans, ensuring your family has clarity and comfort.
Take the first step today—schedule a consultation call and give your family the ultimate gift: peace of mind and the assurance they were always your priority.
Read More
If you’re starting your estate planning process, you may find these articles helpful:
- Death Tax Canada: How to Avoid a Surprise Tax Hit
- How to Avoid Estate Tax in Canada in 2025
- How Much Can You Inherit Without Paying Taxes In Canada?
About the Author
RON COOKE, PRESIDENT & FOUNDER OF STRATEGIC WEALTH PROTECTION PARTNERS
With over 30 years in financial services, I’ve seen the challenges families face when a loved one passes—lost assets, unnecessary taxes, and emotional stress. That’s why I created the Living Estate Plan, a comprehensive process to protect assets, eliminate estate and probate fees, and create legacies that are remembered for many years to come.
This plan ensures your family receives not just your wealth, but a meaningful reminder of your care and love. Tools like The Final Word Journal capture your story, wishes, and essential details, offering clarity and comfort during difficult times.
Your final gift should be more than money—it should be peace of mind, cherished memories, and an organized estate.
Schedule a Call
Schedule a 30-minute consultation call with Strategic Wealth Protection Partners.
Click HERE to schedule a consultation.
