Estate Planning Accountants for Doctors, Lawyers, and Incorporated Business Owners

Key Takeaways

• Incorporated professionals face estate planning challenges that differ significantly from those of salaried individuals, particularly around retained corporate earnings and shareholder structures.
• Without proactive tax planning, a deemed disposition at death can trigger substantial capital gains and corporate surplus taxes that drastically reduce what beneficiaries receive.
• Estate freezes, family trusts, and individual pension plans are among the most effective tools accountants use to shift future growth and shelter wealth for incorporated professionals.
• Coordinating your accountant with your lawyer and financial planner ensures that corporate structures, wills, and insurance strategies all work together rather than at cross-purposes.
• Regular plan reviews are essential, especially after changes in income, family structure, corporate holdings, or tax legislation.

Doctors, lawyers, dentists, and other incorporated professionals in Markham and the surrounding GTA communities often accumulate significant wealth inside their professional corporations. The corporate structure that serves them well during their working years, sheltering income at lower small business tax rates and funding retirement through retained earnings, can become a serious liability at death if no estate plan accounts for how that wealth will be extracted and transferred. For professionals in this position, working with estate planning accountants in Markham who understand the intersection of corporate tax law, trust structures, and succession planning is not optional; it is the difference between a well-ordered transfer of wealth and a preventable six-figure tax bill.

At HSM LLP, we have spent more than five decades working with owner-managers and incorporated professionals across the GTA. We see firsthand the gap between what professionals assume their families will receive and what actually flows through after taxes, probate, and administrative costs. Closing that gap requires planning that starts years before retirement, not weeks before a will is drafted.

Corporate-Held Wealth and the Deemed Disposition Problem

In the case of a salaried person’s death, the estate is mainly concerned with personal assets: a residence, registered accounts and investments in that person’s name. The tax picture is, albeit not trivial, at least circumscribed. For an incorporated professional, things are multi-layered. The professional corporation often has retained earnings, investments and sometimes real property. Under the Income Tax Act, the shares of that corporation are regarded as being disposed of at fair market value on the death of the individual. Such a presumed disposition may result in capital gains on the increase in the value of those shares, while any corporate excess distributed to the estate as a dividend is taxed again.

The cumulative effect can be devastating. If a physician has $2 million in accumulated earnings and investment growth in his professional corporation, the estate could owe hundreds of thousands of dollars in tax before a dime is paid to the spouse or children. The issue is not that the tax is unexpected, but that the most effective instruments are no longer available when they are needed.

We model these tax repercussions well in advance at HSM LLP. We assess the exposure to presumed dispositions, detail corporate surplus accounts (including the capital dividend account, which permits some amounts to move tax-free) and outline measures to lessen the overall impact. All of the estate plans we develop for professional clients are based on this modelling.

Estate Freezes, Family Trusts, and Individual Pension Plans

Three tools come up repeatedly in our work with estate planning accountants in Markham clients who hold incorporated practices: estate freezes, family trusts, and individual pension plans. Each serves a distinct purpose, and the right combination depends on the professional’s age, family situation, corporate structure, and retirement timeline.

An estate freeze locks the current value of the corporation’s shares in the hands of the professional (typically through a share exchange into fixed-value preferred shares) while directing all future growth to new common shares held by family members or a family trust. The result is that the deemed disposition at death applies only to the frozen value, not to the growth that occurs afterward. For a professional in their late forties or early fifties with decades of earning ahead, an estate freeze executed at the right time can save their estate hundreds of thousands of dollars in capital gains tax.

Family trusts serve an additional purpose. The new growth shares can be held in a discretionary family trust which can distribute income and capital gains to a range of beneficiaries including a spouse and adult children in the most tax-effective way. Trusts also offer asset protection by removing assets from the reach of creditors or ex-spouses of beneficiaries. For professionals with minor children, the trust can store such assets until the children are old enough to handle them.

Individual pension plans provide another layer of planning. An IPP is a recognized defined benefit pension plan for incorporated business owners and professionals registered with the CRA. Contributions are tax-deductible and made by the corporation, and the contribution limits are frequently higher than RRSP limits, especially for professionals over 40. IPP assets also can be passed on death to a surviving spouse on a tax-deferred basis, whereas corporate retained earnings must be drawn out via dividends and taxed accordingly.

Coordinating Professional Advisors for a Complete Plan

One pattern we encounter regularly at HSM LLP is the professional who has a will drafted by a lawyer, an insurance policy recommended by a financial planner, and a corporate structure set up by an accountant, but none of these pieces work together. The will may direct assets in a way that triggers unnecessary tax. The insurance policy may be held personally rather than corporately, missing an opportunity to fund the tax liability through the capital dividend account. The corporate structure may include a holding company set up for income splitting but never updated after the 2018 tax on split income (TOSI) rules changed.

Our role as estate planning accountants in Markham is often to sit at the centre of this advisory team. We model the tax outcomes of different scenarios, identify gaps between what the will says and what the corporate structure allows, and recommend adjustments that bring everything into alignment. This coordination is especially important for professionals who hold multiple corporations, own real property through a holding company, or have complex family situations involving blended families or dependants with disabilities.

We also handle the ongoing compliance that estate plans require. Corporate reorganizations require suitable elections to be submitted. IPPs require actuarial valuations. Family trusts require T3S every year. When planning and compliance are handled by the same firm, the chances of missing a vital filing or of a structure deviating from the original design are much lower.

Your plan is only as good as your periodic reviews. Tax laws are always changing, and what was the best plan five years ago may not be the best strategy now. For example, the 2024 increase to the capital gains inclusion rate affected the calculation for estate freezing and surplus extraction for several professionals. We conduct frequent assessments to stress-test plans against current legislation and revised estimates.

Estate planning for incorporated professionals is not a task that can be handled by a single document or a single advisor. It requires an accountant who understands corporate tax structures, a lawyer who drafts documents that reflect the tax strategy, and a financial planner who ensures the insurance and investment pieces are in place. For doctors, lawyers, and business owners across the GTA, working with estate planning accountants in Markham who have the depth to manage these moving parts is the most reliable way to protect what you have built. At HSM LLP, we bring more than 50 years of experience to that work and treat every client’s plan as a living structure that evolves alongside their practice, their family, and the tax landscape.