Business Valuations for Estate Planning

Why estate planning valuations are different

A valuation for estate planning isn't the same as a valuation for a sale or an internal decision. It needs to satisfy CRA, hold up under potential audit, and support the specific tax transaction being implemented — whether that's a Section 85 rollover, a shareholder buyout under an agreement, or a deemed disposition filing on a terminal return.

If CRA reassesses the value, the estate freeze price changes, the capital gain changes, and the entire tax plan built on top of the valuation can unravel. The stakes are high and the margin for error is small.

Example: An estate freeze is executed at a value of $3M based on an internal estimate. CRA later reassesses the business at $5M. The $2M shortfall means the preferred shares don't capture the full fair market value — the new common shares were effectively issued at a discount, triggering a shareholder benefit. On the owner's eventual deemed disposition, the capital gain is recalculated on the higher value. At top combined rates, the additional tax on the $2M discrepancy exceeds $530,000 — plus interest from the original freeze date and potential penalties. An independent CBV-prepared valuation would have either supported the $3M or identified the correct value before the freeze was implemented.

When you need a valuation

Estate freezes

Setting the redemption value of preferred shares in a Section 85 rollover, Section 86 reorganization, or Section 51 conversion. The freeze price must reflect FMV at the date of the freeze.

Deemed dispositions

Determining the FMV of shares at the date of death for the terminal return, or at the date of emigration for departure tax purposes.

Shareholder agreements

Setting buy-sell prices, triggering shotgun clauses, or establishing the value at which shares will change hands under the terms of an agreement.

Post-mortem planning

Supporting pipeline transactions and the 164(6) election by establishing the FMV of corporate assets and shares at the date of death.

LCGE crystallization

Triggering a deemed disposition to use available LCGE room (~$1,275,000 for 2026) requires a supportable FMV at the crystallization date.

Charitable donations

Gifts of private company shares require an independent valuation to determine the eligible donation amount and support the tax receipt.

Our valuation approach

We follow the professional standards of the CBV Institute. Every valuation is prepared by a Chartered Business Valuator (CBV) and is designed to meet the specific requirements of the transaction it supports.

Understand the context first

Before we begin the analysis, we need to understand the purpose of the valuation, the ownership structure, the transaction being planned, and the parties involved. A valuation for an estate freeze has different considerations than one for a post-mortem filing, even for the same business.

Rigorous but practical

We apply recognized methodologies — income approach, market approach, asset-based approach — based on what's appropriate for the specific business and context. We don't default to formulaic models. The analysis reflects the economic realities of the business, including industry dynamics, growth prospects, risk factors, and the quality of earnings.

Discounts and premiums

The value of a private company share depends on what it represents. A controlling interest is worth more than a minority position. Shares in a private company are less liquid than publicly traded securities. Our valuations account for these realities — applying minority discounts, control premiums, and lack-of-marketability discounts where appropriate, with each adjustment documented and supported.

The valuation date matters

In estate planning, the FMV must be established as of a specific date — the freeze date, the date of death, the departure date. A valuation prepared months later using different financial data can be challenged. We work to ensure the analysis reflects the economic conditions and financial performance as of the required date, not after the fact.

Built for scrutiny

Our reports are prepared with the expectation that they may be reviewed by CRA, opposing counsel, or other professional advisors. Assumptions are transparent, methodologies are explained, and conclusions are supported by documented analysis.

Working with your team: We don't replace your accountant or lawyer. We provide the independent valuation they need to implement the estate plan. We coordinate directly with your advisory team to ensure the valuation aligns with the specific transaction structure being used.

The financial impact of getting valuation right

Every dollar of valuation difference flows directly into the tax calculation. On a $5M business, even a 10% valuation discrepancy means $500,000 that's either overtaxed or — worse — triggers a CRA reassessment down the road. At the 50% inclusion rate and top combined marginal rates, a $500,000 valuation error translates to roughly $133,000 in additional tax, plus interest that compounds from the original transaction date.

For LCGE crystallization, the valuation also determines how much of the ~$1,275,000 lifetime exemption (for 2026) is actually used. An undervaluation means wasted exemption room that can't be recovered. An overvaluation means reporting a gain that exceeds the actual FMV — creating a mismatch that CRA can challenge. The valuation has to be right, not just close.

Types of valuation reports

The CBV Institute recognizes three levels of valuation report, each with different scope and cost implications. We'll help you determine which is appropriate for your situation.

Calculation Valuation

The most limited scope, based on assumptions agreed upon by the parties involved.

Relies on agreed-upon or specified assumptions
Typically for internal or preliminary purposes
Useful for annual shareholder agreement updates
Lowest cost, narrowest scope

Estimate Valuation

A focused analysis with disclosed scope limitations, balancing rigour with cost.

Scope limitations are clearly stated in the report
Most common for estate freezes and tax planning
Sufficient for most CRA filing purposes
Good balance of thoroughness and cost

Comprehensive Valuation

The highest standard, with unrestricted scope and full analysis of all relevant factors.

No scope limitations or restrictions
Required for litigation and court proceedings
Often used for significant estate planning transactions
Most thorough — and most costly

Last reviewed: April 2026

Business Valuations