I shared the example of a taxpayer named Wendy who owns $1-million of investments. I compared the taxes owing after her death if she owned them personally versus in a holding company. In the latter situation, she would be the sole shareholder of the company.
In my example, the math showed that Wendy would owe $312,500 in taxes on death if she owned the portfolio personally, but $683,377 if the portfolio was in a holding company – factoring in the three layers of tax. In Wendy’s example, I assumed an adjusted cost base of just $1 for the portfolio. Some criticized this and suggested I was inflating the double-tax problem. But if I had used a higher ACB of, say $600,000, the gap between the personal and corporate portfolio would have been even wider. The bottom line? Regardless of the ACB of the assets, the double-tax issue is a consistent problem. Here are three ways to address it.
These three ideas can be used in isolation from each other, or a combination of them could make sense. The best approach depends on a number of factors and your tax adviser can do the math to see what’s best in your case. Tim Cestnick, FCPA, FCA, CPA, CFP, TEP, is an author, and co-founder and CEO of Our Family Office Inc. He can be reached at