It takes entrepreneurship and grit to build a successful family business. But ensuring the fruits of that success get passed to the next generation takes careful planning. In the case of Wilson’s Lifestyle Centre in Saskatoon, they learned first-hand the value of having a plan in place. Kim Parlee speaks with Georgia Swan, Tax and Estate Planner with TD Wealth, about how business owners can get an early start on their estate planning.
Wilson's Lifestyle Centre is basically a European style garden center. And then, part of that, we have our Stoked Centre. And the Stoked Centre is a family entertainment center.
So we have go-karts. We have bouncy houses. We have an indoor zip line and ropes course. So we have lots of entertainment options. So basically, the buzzword is retailtainments.
My brother I started out in business together. After high school, we bought a small lawn care company. And that's just expanded from our 100 customers we had 30 years. But we still have the company. And we have about 1,500 residential customers. And we do a lot of landscaping, commercial, residential projects today with that.
We found some land. And we started our own Wilson's Greenhouse on the east side of Saskatoon. Like most garden centers, it's built on the edge of town. And then, the city grows around you or up to you. And they usually end up selling out retiring.
Well, we didn't do that. We kept the land. And now, we're part of a large shopping mall. And yeah, that's done really well for us.
My father passed away last December. So it's coming up on a year. And well, he-- [CHUCKLES] it's like everybody. We're never going to die. So my dad didn't think anything was going to ever happen to him, and he was going to live to be 100. And there were other plans, obviously, for him.
So he never had-- he had a will in place, which was fine. But he didn't do any estate planning, per se. So my dad had Hi-Way Greenhouse, which was a seasonal, typical greenhouse that had bedding pots, perennials, plants.
When he bought his property, it wasn't worth very much. Now, that's just depreciated in value. And now, there could be a huge liability for us. Stuff that should have been done five years ago, we're scrambling to get that all done in six months.
Now, we're doing our own tax planning for our families, so that-- You never know what's going to happen. So we want to make sure that if something happens to one of us that they don't have to go through what we went through. And our children are obviously quite a bit younger than what we were. And if something happened to me tomorrow, they would be at a loss on what to do.
Expert advice is hugely important for this. Because if we didn't have that, everything that you've worked a lifetime to achieve to pass on to your children can be lost. We don't know what the future holds, whether our children would want to take over the business or continue with it. But we want to make sure things are set up so that if our children want to take over that they can do so and that they have everything in place to make them successful.
And that is a great story of Wilson Lifestyle Centre in Saskatoon and also a great story of the importance of estate planning. Georgia Swan is a Tax and Estate Planner with TD Wealth. She joins us from Barrie, Ontario to talk a bit about that, which business owners have to deal with. Georgia, it's great to have you with us. I want to start with what I heard a bit of when I was listening to that is there is a difference between having a will and estate planning.
- Yes, there really is. A will is actually the last step of the estate planning process. And let's call it step 10. And if you don't get step 1 through 9 done, then the will just might not be as effective as you think.
So take us maybe through a bit of the steps 1 to 9. I know we can't go into all of them. But part of that, of course, is just the planning for taxes.
- Exactly. That's probably-- I don't want to say it's most important, because all of the steps are important. But it's the one that's often forgotten.
There are tax consequences when somebody passes away, especially if they do so with significant capital assets, so those assets that have grown in value over the years. Because there is a deemed disposition, so a pretend sale of everything you have when you die. And while there is deferral available if it goes to a spouse, that's not necessarily the case when it goes to other beneficiaries.
And then, of course, you have to know what is it that you own. Sounds weird, but sometimes I've had people that say to me, I own the business. And I say, well, how? What shares? How many shares? And they have no idea.
You have to know what your liabilities are. So what do you owe? And who are the people that you're required by law to leave something to or not? And that depends on the province that you live in.
It's funny. You say it might sound weird. But when you're busy running a business and building it, I'm sure there's lots of things that you lose track of. These are busy people doing a lot of things at the same time.
Here's a question for you. Do estate plans, when you make them, go out of date? I'm assuming that you might have had plans even before, let's say, the pandemic. And then, things may have changed because of what's going on right now.
- They absolutely go out of date. So not only do major life events cause the need for changes to your estate plan-- so births, deaths, marriages, divorces, all of those things, exponential growth in the business, or maybe a step back in the business, maybe there is a loss. All of those things affect your estate plans.
So you really want to look at it again whenever there is a major life event. But as well, changes to the law can affect your estate plan. So you want to check in with your lawyer, and with your accountant, and other professionals that you're dealing with about every five years just to update what you've got in place.
And I know that probably, as important as it is to have the plans and to go through the steps 1 to 9, plus 10, you talked about, but then communicate the plans to the people to whom it affects.
- Yes. That is one of the most important lessons that I try to give to people. Transparency solves so many problems. And a lot of times, that communication-- and I know it can be hard-- family dynamics. Sometimes people are uncomfortable talking about financial issues. Certainly, lots of people are uncomfortable talking about death.
But sometimes, those conversations can yield such surprises. I've been in on meetings, where the owners, the parents, let's say, of the business think they know exactly how they're going to transition of the business to the next generation. And then, all of a sudden, the kids pipe up and say, you know what? That's not what we want.
I was in a meeting once, where one of the kids actually said, you know what? I don't want to be in the business with my siblings. We have different ideas about where the business is going to go.
It was really shocking to the parents to hear about that. And it totally changed the direction of their estate planning that they thought they were going in. But giving everybody an opportunity to have that input is so important.