Criss cross, promissory note or share redemption: which structure?
They are three named routes to the same outcome, and they differ in who holds the coverage, who receives the money and what the surviving shareholders end up owning. The choice is made by a tax lawyer and a CPA together, working from the shareholders agreement, and it is not a choice an insurance professional can make for them.
What kind of answer this is
- Claim type: Tax or regulatory position
- Claim type: Requires another professional
- Jurisdiction: Canada wide
These are drafting and tax structures rather than insurance products. Naming them is education; selecting one for a particular company is a legal and accounting engagement.
How it works
In the first, each shareholder holds coverage on the others and buys the shares personally. In the second, the purchase is promised and the money follows. In the third, the company itself buys back the departing shares. Different hands, different documents, different results.
The cost or the catch
Every one of the three works on paper and fails in practice for the same reason: the paperwork stops matching the people. Coverage bought for one structure and left in place while the agreement is rewritten for another funds nothing the agreement now requires.
Where this answer may not apply
- Structures put in place under earlier rules may be protected in ways a new arrangement would not be, and that protection can be lost by changing them.
- A company with two equal shareholders faces different arithmetic from one with five unequal ones.
- Rules limiting what an estate may claim on a redemption can change which route is preferred, and they are technical.
- A structure that suits the tax result may not suit the family, and the family question is not a tax question.
What to verify in your own contract
- Which structure the current agreement actually describes, in its own words.
- Whether the ownership of each contract matches the structure the agreement assumes.
- Whether the arrangement predates a change in the rules, and whether anyone has checked.
- What the estate would be able to claim under each route, from the CPA.
- Who signs off on the structure, and on what date they last looked at it.
Continue to the full explanation
Prepare the questions for a CPA, a lawyer and an insurance professional.
Sources
- Income Tax Act, Justice Laws Canada, verified 2026-08-30
- Canada Business Corporations Act, Justice Laws Canada, verified 2026-08-30
Accountability and disclosure
- Written by
- José Salloum
- Professional capacity
- Financial security advisor, Canadian Wealth Creation Centre Inc., operating as IBC Financial
- Reviewed by
- Tax and corporate tier, reviewed by a qualified Canadian tax professional before publication
- Jurisdiction
- Canada wide
- Last reviewed
- 2026-08-30
- Version
- 1.0
- Compensation disclosure
- Canadian Wealth Creation Centre Inc., operating as IBC Financial, may receive insurer paid compensation if a policy is purchased. It takes the form of first year compensation followed by renewal compensation, and the amount varies by insurer, product, age, premium, contract design, riders and the arrangement with the managing general agency. No single figure would describe every contract honestly, and none is published here.
- Report a correction
- Info@ibcfinancial.com. Write without a policy number, medical information or account details.
Last reviewed 2026-08-30. By Jose Salloum, Financial Security Advisor.