Estate Planning Basics for Incorporated Professionals in Ontario

If you're a doctor, dentist, lawyer, or other regulated professional practising through a professional corporation in Ontario, your estate plan has to do more work than a standard personal will. You're not just leaving behind a house and savings — you're leaving behind shares in a corporation, a practice with ongoing patient or client obligations, and often restrictions on who is even allowed to own those shares in the first place.

This is a general starting point, not a substitute for planning that accounts for your specific corporate structure, regulatory college rules, and family situation.

Why a Professional Corporation Changes the Estate Planning Picture

A professional corporation is a separate legal entity from you personally, and its shares are an asset you own — just like a bank account or an investment portfolio. But unlike most investments, those shares usually come with strings attached:

• Many professional regulatory colleges restrict who is allowed to own shares in a professional corporation (often only members of the same or a related profession).
• The corporation may hold significant value tied up in accounts receivable, goodwill, or investments, not just cash sitting ready to distribute.
• The corporation typically can't simply be "handed to" a spouse or child who isn't licensed in the same profession — even though they may still be entitled to the economic value of the shares.

This gap — between who can legally hold the shares and who is entitled to their value — is the single most important thing to plan around.

Core Building Blocks of the Plan

1. A will that specifically addresses the corporation's shares

A generic will that simply leaves "the residue of my estate" to a spouse or children doesn't grapple with the ownership restriction problem. A will drafted with your professional corporation in mind should address who is meant to receive the value of the shares, how that value will be realized if the named beneficiary can't hold the shares directly, and who is authorized to make decisions about the corporation in the meantime.

2. A shareholders' agreement (if there's more than one shareholder)

If you practise with partners through a shared corporate structure, or your professional corporation holds shares alongside others, a shareholders' agreement often sets out what happens to a deceased shareholder's shares — sometimes including a buy-sell mechanism. Your will and your shareholders' agreement need to say consistent things, because the agreement's terms can control what actually happens to those specific shares regardless of what your will says.

3. A primary and secondary will structure

Many Ontario estate plans for business owners — including incorporated professionals — use a "primary" will for assets that typically require probate and a separate "secondary" will for assets, like private company shares, that generally do not. This is a long-established and lawful Ontario planning technique, and it's worth asking whether it fits your situation.

4. Powers of attorney that anticipate incapacity, not just death

A Continuing Power of Attorney for Property should be drafted with your corporate shares in mind too. If you become incapable before you die, your attorney needs clear authority to deal with the corporation — voting shares, signing on corporate matters where appropriate — not just your personal bank accounts.

Questions Worth Working Through With a Lawyer

• [ ] Who is legally eligible to hold shares in your professional corporation under your regulatory college's rules?
• [ ] If your intended beneficiary can't hold the shares directly, how will they receive the value — a sale to a co-shareholder, a buyout, a trust arrangement?
• [ ] Does a shareholders' agreement already exist, and does it say anything about what happens on death?
• [ ] Who should be authorized to make interim decisions about the corporation if you become incapable before you die?
• [ ] Does your will's executor have the financial or professional literacy to deal with a corporation, or should someone else be named for that piece specifically?
• [ ] Have life insurance and corporate-owned insurance been coordinated with the estate plan, so the right funds land in the right hands?

A Common Misconception Worth Correcting

Many incorporated professionals assume that because the corporation is "just for tax purposes," their personal will automatically takes care of it the same way it handles a bank account. It doesn't. The corporation is a distinct legal entity with its own share ownership rules, and failing to address it specifically in your estate plan can leave your family holding an asset they can't easily access, sell, or even legally own.

Frequently asked questions