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Estate Planning for Incorporated Physicians

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When you set up your corporation, you knew what you hoped to achieve—higher savings, lower taxes and more investment options. Now you need to make sure your estate plan doesn't make the Canada Revenue Agency the chief beneficiary of those achievements.

Estates involving a corporation or holding company are more complex to administer, and could be taxed more highly due to the potential for double taxation. One level of tax occurs upon your death when you are deemed to have disposed of your corporation's shares at their fair market value—potentially resulting in a taxable capital gain to be reported on your final personal income tax return.

A second level of tax could occur when the corporation pays dividends to your estate (in its capacity as shareholder) or if your executor decides to wind-up the corporation. (In Quebec a liquidator plays this role.) Appropriate estate planning can help mitigate the impact of this potential double tax dilemma and can help you maximize the after-tax value of your estate.

Here are two examples of how this could be achieved:

Appoint a Professional Executor or Co-executor

Administering an estate with a corporation or holding company requires knowledge of, and an understanding of the interplay between, corporate and personal income tax issues. You'll want a carefully thought out estate plan, a well-drafted will and an experienced executor.

Your MD Advisor can refer you to an MD Private Trust Estate and Trust Advisor. They are experts in dealing with physician incorporation. They will work with you to:

  • Identify your estate planning goals and review your current will.
  • Explore and implement strategies to maximize the after-tax value of your estate.
  • Recommend updates to your will and executor(s), if necessary.

Use Your Corporate Surplus to Purchase a Permanent Life Insurance Policy

A corporate-owned permanent life insurance policy can help you mitigate income tax obligations and maximize the wealth-building potential of your assets because investment earnings within the policy are tax sheltered.

Talk to your MD advisor today about a referral to an MD Insurance Consultant, who can show you how a permanent life insurance policy could work for you.

Contact an MD Advisor

Talk to an MD Advisor today for all your financial and practice needs.

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On-Demand Webinar: Estate Planning Considerations For Incorporated Physicians

On-Demand Webinar: Estate Planning Considerations For Incorporated Physicians.

Watch this short MD Quick Clinic to gain insight into estate planning for incorporated physicians.