Blue Mountain Village, Ontario, Canada

Running a Business as a Sole Proprietor? You Should Have an Estate Plan

By C. Andreea Muth and Nozomi (Zoe) Smith, Pallett Valo LLP

When a business is owned by an individual where there is no legal distinction between the individual and the business, it is called a sole proprietorship. The owner owns the assets, takes on the liabilities, and makes profits – all in their personal capacity.

You need to understand how your business can impact your estate. What do you want done with the business when you pass away? A consulting business is not likely to have much value without its consultant. But a physical or online store can carry on after you die, if there is someone willing and able to step into your shoes. If not, it makes sense to sell the business.

Once you have a plan, make sure it is laid out in your Will. You can appoint someone you trust as an executor and give them instructions on what you want done with your business. In Ontario, if you die without a Will, no one is legally authorised to act on your behalf and deal with your business unless someone applies to the court to be appointed as “Estate Trustee Without a Will”.

Business Assets and Liabilities

You are personally responsible for leases, bank accounts, supplies, sales contracts, etc. Parties with whom you have contracts, including website platforms, will need to be notified that you have passed away. Any profits from your business after you have passed away will form part of your estate.

With a Will, you can decide who makes decisions about your business contracts, and how to distribute your business profits and assets after your death.

Business Assets and Liabilities

If you collect and remit Harmonised Sales Tax (HST), someone will need to close your HST account and file your final HST return. Someone will also need to file your final personal income tax return, close your business number, and close any other Canada Revenue Agency business accounts once all returns are filed.

An estate plan, which can be as simple as creating a Will, is critical to give your loved ones the starting point and make sure your affairs are taken care of after you die. You can read the full article here.


Andreea Muth

Andreea Muth

GGI member firm
Pallett Valo LLP
Law Firm Services
Mississauga (ON), Canada
T: +1 905 273 33 00
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W: www.pallettvalo.com

Pallett Valo LLP is one of Ontario’s Top 10 Regional Law Firms. The firm practices in the areas of business law, commercial litigation, commercial real estate, construction, insolvency and corporate restructuring, employment and labour, and wills, estates, and trusts.

Andreea Muth is a member of the Business Law Practice. Andreea has a general corporate/commercial law practice, representing start-ups and mature business owners. She also has a developing expertise in trust and estate planning for business owners.
Nozomi (Zoe) Smith

Nozomi (Zoe) Smith

GGI member firm
Pallett Valo LLP
Law Firm Services
Mississauga (ON), Canada
T: +1 905 273 33 00
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W: www.pallettvalo.com

Zoe Smith is a member of the Wills, Estates and Trusts Practice. Zoe has a broad practice, providing estate-planning advice to business owners, professionals, families of children with disabilities, and individuals with foreign assets or beneficiaries and complex family relationships
 


Published: Trust & Estate Planning Newsletter, No. 05, Spring 2020 l Photo: PhotoSerg - stock.adobe.com

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