By city

Infinite Banking in Granby

Granby runs on small and mid-sized manufacturers, often family-held across two generations. That is the setting where the corporate side of this strategy genuinely matters, and where mistakes cost the most.

The small-manufacturer city at the foot of the Appalachians

Granby sits in the Eastern Townships below Mont Shefford and within sight of Mont Yamaska, with Lac Boivin and its nature interpretation centre in the middle of town. The Granby Zoo has been here since 1953 and the Route verte cycling network crosses the region.

What defines its economy is small and mid-sized manufacturing, often family-owned and often across two generations. That setting is what makes this page different from the others: here the corporate side is not a footnote, it is the main conversation.

The Capital Dividend Account, stated correctly

Where a corporation owns the policy, the credit arising in the Capital Dividend Account at death is calculated under subsection 89(1) by reference to the death benefit and the policy's adjusted cost basis. It is that credited amount which can then be paid to shareholders as a capital dividend, not the corporation's accumulated wealth generally.

That precision matters because the loose version circulates widely, and it gives owners an impression of latitude that does not exist. Ask for the calculation on your own structure, with your own numbers, before agreeing to anything.

The trade-off that goes unmentioned

Here is the part presentations almost always leave out. Accumulating surplus in the corporation builds cash value. Cash value is generally not an asset used in an active business, so it works against qualifying for the lifetime capital gains exemption on a future share sale.

Those two objectives conflict rather than stack. Which matters more depends entirely on whether a sale is contemplated and when. For a Granby business owner approaching sixty and wondering whether the company goes to a child or to a buyer, that is the central question, and it is settled with an accountant who has done this work rather than with a brochure.

Have a lawyer read the shareholders' agreement alongside the policy before anything is placed too. If the share redemption at death is structured one way and the Capital Dividend Account credit another, the liquidity arrives in the wrong place. That is a failure of coordination rather than of product, and it is expensive to repair after the fact.

Succession, which is often the real problem

In Canada death triggers a deemed disposition of capital property rather than an estate tax. For a family business that has appreciated across a generation, that means a tax bill lands on the estate while the value stays locked in shares, equipment and the building.

Life insurance has answered that problem for a long time, independently of any strategy. And here is the sentence that matters most on this page: if that is your actual problem, you may need insurance and not need this strategy at all. They are separate questions, and an honest practitioner will tell you which one you have rather than selling you the more elaborate answer.

Income from a small manufacturer

A small business does not pay its owner a steady income the way a salary does. Good years fund equipment; poor ones demand working capital. Size the base premium against your worst plausible year and put strong-year capacity into paid-up additions, because in most contracts the base premium is the binding obligation and additional deposits are the flexible part.

A business carrying operating debt, or one that may need every dollar for equipment in the next few years, should not be funding long-dated premiums.

The two Quebec rules and where it does not fit

A designation naming a married or civil-union spouse is presumed irrevocable in Quebec unless declared otherwise, and an irrevocable designation can restrict the ability to request a loan or assign the policy as collateral. Exemption from seizure depends on the class of beneficiary and on the circumstances, is never absolute, and disappears if the policy is assigned as security for a loan.

Cash surrender value is typically below cumulative premiums for many years and commonly for more than a decade, so an early exit is a loss. Nothing on this page is advice. No assessment has been made of anyone reading it, and the author is not a neutral party: he is licensed to sell the contracts this strategy uses and is paid a commission when one is placed. Ask for the illustration in French, which is your right under the Charter of the French Language, read the guaranteed column first, check the licence in the AMF register, and take the answers to an accountant and a notary of your own choosing.

One closing word on the order in which to build the team, because that is where small businesses get badly served. Do not start with the insurance practitioner. Start with the accountant who already knows your structure and have two numbers calculated: what the deemed disposition would cost your estate today, and where you stand against the qualified small business corporation tests. Those two numbers determine whether there is anything to fund and whether accumulating surplus is working against you. Only then does the insurance conversation make sense. A practitioner willing to work in that order has earned your trust; one who wants to start with the product has already told you something useful.