Estate Planning
Capital Dividend Account (CDA)
The most powerful mechanism for transferring corporate wealth to your family tax-free.
The most powerful mechanism for transferring corporate wealth to your family tax-free.
If you withdraw retained earnings from your corporation as a regular dividend, you pay personal tax. If you pass away, the deemed disposition of your shares can trigger a double-tax event, eroding up to 70% of your corporate estate.
The Capital Dividend Account (CDA) is a notional account that changes this. It allows specific amounts—primarily life insurance death benefits—to flow out of the corporation to your shareholders or estate 100% Tax-Free.
We reallocate a portion of your passive assets (which are highly taxed) into a tax-sheltered corporate whole life policy.
Investments inside the policy grow tax-exempt, unlike your taxable bond or GIC portfolio.
Upon death, the insurance payout creates a massive credit to your CDA, allowing the funds to flow to your family tax-free.
Every corporation has a different "tax-trap" liability. We can model your specific numbers to show the net estate benefit.
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