Georgette is the president and sole shareholder of Vitality Plus Canada Ltd., a wholesale make-up and vitamin distributor. Twenty years ago, after the birth of her third child, Georgette invested $20,000 into the corporation and worked out of her home. Her corporation presently has the Canadian distribution rights for Vitality Plus, a European make-up line that continues to grow in popularity each year.
The company’s net income (pre-tax) is approximately $320,000 per year, and Georgette’s $100,000 salary is more than sufficient for her needs. The company shares have a current fair market value of approximately $680,000.
Candice, Georgette’s eldest daughter, is 26 years of age and currently works full-time for the business. Since Candice lives at home, Georgette pays her a small salary of $22,000 per year. Candice would eventually like to take over the business but Georgette is not quite ready to retire and still wonders if her other two daughters, aged 20 and 22, would be interested in joining the company. At the same time, Georgette would like to slow down and spend more time with her fianc?, who she will soon marry.
Georgette, a single mother for several years, has a portfolio of Canadian public utility shares worth about $250,000. The unrealized capital gain on those shares is $120,000. She also has a self-directed RRSP valued at approximately $490,000.
Georgette would like you to prepare a report outlining how she could plan for her new marriage and retirement over the next few years. Consider the options for estate planning arrangements that will assist Georgette in transferring her business to other family members.