Turn corporate surplus into non-taxable income
Corporate surplus that is not needed by you or your practice is often left within the corporation to earn passive investment income. Unfortunately, passive income is subject to the highest corporate tax rate.
MD Life Plan is an efficient way to free trapped surplus from your corporation. After-tax corporate dollars can be used to pay premiums into a MD Life Plan policy and invest in MD Life Plan investments. Name the corporation as owner and beneficiary and when you pass away the death benefit amount could flow through to the corporation on a tax-free basis. The portion of the death benefit that exceeds the cost basis of the policy can be added to the corporation's Capital Dividend Account and may be paid out to surviving shareholders or your estate on a tax-free basis.
Protect your practice and enjoy living benefits
MD Life Plan can benefit both you and your incorporated medical practice. An insurance solution can be structured so that the corporation owns (and is the beneficiary of) the insurance death benefit portion of your MD Life Plan policy and you own the savings portion (and designate a beneficiary of your choice). The corporation pays the premium for the insurance while you contribute to the investment accounts. Should you pass away during your working years, the insurance death benefit is payable to the corporation and can flow to the corporation's surviving shareholders or your estate. The death benefit from the investments are paid tax-free to your named beneficiary. Should you wind-up your corporation, it can transfer remaining policy ownership to you (taxes may apply), providing your beneficiary with a valuable future death benefit and leaving you with access to the cash value of the policy. This type of policy structure also allows you to access the savings portion of the policy in a tax-efficient manner should you become disabled. Your MD Insurance Consultant and your tax advisor can help you structure a policy to achieve your desired outcome.
For additional information on investing your corporate assets, visit our Incorporation section and view our webcast on investment and tax saving opportunities for incorporated physicians.
Protect a group practice
Physicians often share office space and related expenses with other physicians. If one partner becomes disabled or is no longer able to practice, expenses still need to be paid. If the partner dies, the heirs will need to be paid for their portion of the business. A shareholder agreement and MD Life Plan policies can provide an equitable solution; if one partner dies, the insurance payment can be used to buy out the heirs and/or pay office expenses.
To learn more about how MD Life Plan can benefit your corporation, contact your MD Management Financial Consultant or call 1 800 267-2332 to be put in touch with a MD Management office near you.
