TORONTO, ON - July 8, 2025 - Cardinal Point Wealth Management is alerting business owners across Canada to the critical importance of succession planning, as the country stands at the brink of a major generational transition in business ownership. With over 70% of Canadian businesses classified as family-owned, and nearly half of owners expected to exit within the next five years, the need for structured, tax-efficient transitions is increasingly urgent.

Despite the scale of this impending wealth transfer—estimated to involve billions in private business assets—only a minority of owners have formal succession plans in place. As the firm advises, the process of transitioning ownership, whether to family, employees, or third parties, is a complex undertaking that must begin years before a transaction takes place in order to ensure long-term success and minimal tax exposure.

The Foundations of Succession Planning

Cardinal Point emphasizes that succession is far more than a mere financial transaction. It is a multi-year process that impacts family relationships, management structures, ownership rights, and the legacy of the enterprise. A well-constructed succession plan should thoughtfully address:

• The long-term needs of the owner, family, and the business;

• Business valuation and its justification;

• Communication strategies with stakeholders and successors;

• Timeline and implementation phases; and

• Proactive tax and legal considerations.

Cardinal Point recommends initiating planning at least two to three years before a proposed transition takes place to allow for proper structuring and strategy implementation.

Exit Options and Tax Implications

1. Sale to a Third Party: Share vs. Asset Sale

This decision carries significant tax ramifications. Share sales are typically preferred by sellers, as they may qualify for the $1,250,000 lifetime Capital Gains Exemption (CGE). Additionally, such sales simplify tax reporting and transfer liabilities with the corporate entity.

Buyers, on the other hand, often favor asset purchases to optimize future tax deductions and isolate themselves from prior liabilities. A hybrid strategy, such as selling shares of a new corporation or “newco” that holds the business assets, can satisfy both parties.

Other advanced planning strategies include:

• Safe income strips via holding companies;

• Pre-sale capital dividend distributions;

• Corporate purification to meet Qualified Small Business Corporation (QSBC) status; and/or

• CGE multiplication using family members.

2. Transition to Family Members or Employees

Family or employee buyouts involve not only financial complexities, but emotional and relational ones as well. Issues of fairness vs. equality, leadership succession, and long-term governance must be delicately and thoughtfully managed.

Cardinal Point outlines several tools available for internal succession:

• Estate Freezes: Allow the current owner to lock in value while passing future growth to children or trusts.

• Thaw and Re-Freeze: Offer flexibility if successors change or if transition timing needs adjustment.

• Trust Structures: Provide tax advantages and creditor protection.

• Shareholder Agreements: Define roles, rights, and buy-sell mechanics.

Employee transitions typically require financing support, such as vendor take-back arrangements and incremental buy-ins. Equal share distribution among children may not align with operational involvement, and alternative equalization methods—like life insurance or allocating other assets—should be considered.

3. Wind-Down or Liquidation

In cases where the business cannot continue or be sold, structured wind-downs are the final alternative. These involve asset sales, calculation of capital gains and recapture, and the distribution of net proceeds to shareholders. Where possible, strategic use of the Capital Dividend Account (CDA), Paid-Up Capital (PUC), and Refundable Dividend Tax on Hand (RDTOH) accounts can minimize tax leakage.

A Legacy Beyond Numbers

Cardinal Point underscores the fact that succession planning is not just about financial optimization—it is also about preserving legacy, sustaining family relationships, and securing the long-term viability of the enterprise. Effective planning requires:

• Alignment of personal and business goals;

• Transparent communication among stakeholders;

• Timely and informed tax structuring; and

• Objective, expert valuations.

A neglected or poorly executed succession plan can unravel decades of effort, whereas a thoughtful and comprehensive strategy can unify a family and secure financial independence for generations.

About Cardinal Point Wealth Management

Cardinal Point Wealth Management is a leading provider of cross-border financial planning and investment management services, uniquely positioned to serve clients with assets and interests in both Canada and the United States. The firm offers specialized expertise in cross-border tax planning, cross-border financial planning, and advising Canada-US expatriates on complex residency and ownership transitions. With a deep understanding of succession, estate, and legacy planning, Cardinal Point supports clients in navigating critical life and business milestones.

Disclaimer: This press release may contain forward-looking statements. Forward-looking statements describe future expectations, plans, results, or strategies (including product offerings, regulatory plans and business plans) and may change without notice. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements.

Media Contact
Company Name: Cardinal Point Wealth Management, ULC
Contact Person: Kris Rossignoli, Senior Private Wealth Manager
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Country: United States
Website: http://www.cardinalpointwealth.com/