Case study: Business owner

"What strategy makes sense for paying off my mortgage?”

The following is based on one of Ellis Wealth’s clients. All of the names and telling details have been changed to preserve client privacy.

Is there a way to pay off my mortgage by using funds from my corporation to minimize the amount of tax I pay? Although business owners may be thinking this, they may not always know how to ask it. Our client, Deepak, is a business owner that required a strategy tailored to solve this need.

Deepak is a hardworking optometrist with the benefit of a practice set up as a corporation that allows him flexibility when developing strategies to reach his financial goals. Having just purchased the remaining 50 percent of his business from a partner who was retiring, Deepak was feeling anxious over his large mortgage on his family home and the new debt he had taken on to purchase the remainder of his practice. His monthly mortgage payments seemed to him to be having minimal impact and he wanted to see more progress that would give him peace of mind.

When we met in our office and had a conversation with Deepak about his uneasiness, the solution for him became apparent: invest in a Critical Illness Insurance policy through the corporation that will allow him to have a long term plan in place to pay off his mortgage. With the benefit of a return of premium option Deepak had a clear date of when his home would be paid off. He could continue to make his monthly payments and at the return of premium date he would make one final payment allowing his family to be mortgage free. By paying for the policy through the corporation, Deepak also decreased his exposure to taxes and increased his confidence that he will reach his financial goals.

Furthermore, Deepak also received the added benefit and peace of mind that should he face a life altering illness, his family and finances would be protected. By being the sole provider, his family was at great risk should he be faced with a life altering illness such as cancer or a stroke. The lump sum payout and no restrictions on use would allow him and his family to spend the money on their terms with the primary focus on medical treatment and a full recovery.

The clear date and peace of mind were exactly what Deepak needed, along with the protection for his family and finances in the event of a life altering illness.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates.
Richardson GMP Limited, Member Canadian Investor Protection Fund. Richardson is a trade-mark of James Richardson & Sons, Limited.GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.


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