7 Costly Tax & Estate Planning Mistakes Incorporated Professionals Make – And How to Avoid Them
A straightforward guide for doctors, dentists, and consultants who want to protect their family, reduce taxes, and build lasting wealth.
A Quick Note from Munish Mehan
Hi, I’m Munish Mehan, a Certified Financial Planner (CFP®) and Chartered Life Underwriter (CLU) based right here in Calgary.
Over the years, I’ve worked with many busy professionals who’ve built thriving practices or businesses. But far too often, I see simple planning mistakes cost them and their families tens or even hundreds of thousands of dollars, most of which could have been avoided with the right advice.
This article will walk you through seven of the most common oversights I come across and what you can do to stay one step ahead of the CRA.
1. Leaving Too Much Cash in Your Corporation
Having surplus cash sit in your corporation may feel safe, but once your passive income hits $50,000 a year, you start losing access to the small business tax rate. That means higher taxes and less working capital.
What to do: Consider moving excess cash into a holding company, investment vehicles, corporate-owned insurance, or that are more tax-efficient.
2. No Buy-Sell Agreement or Protection Plan Between Partners
If you have a business partner, what happens if one of you passes away or becomes disabled? Will your family be compensated fairly? Can your business survive the disruption?
What to do: A simple legal agreement, backed by life and disability insurance, can make sure your business and your family are both protected.
3. No Plan for the Final Tax Bill
When a shareholder dies, the CRA can apply multiple layers of tax — one on the value of your shares, and another when your heirs try to access the funds. This is often called “double” or even “triple” taxation.
What to do: Solutions like, trust to defer the taxes, an estate freeze, corporate life insurance, or a pipeline strategy can reduce or even eliminate this tax hit.
4. Not Splitting Income with Family Members
When all your income is taxed in your own hands, you could be paying 48 to 53% in tax, depending on your province.
What to do: Look into income-splitting strategies such as paying dividends to adult family members, using prescribed rate loans, or setting up a trust (if appropriate for your situation).
5. Relying Too Heavily on RRSPs
RRSPs are great, but they’re not the only answer. If you’re in a high tax bracket now and expect to stay there in retirement, RRSP withdrawals could end up being fully taxed at the top rate.
What to do: Blend your RRSPs with tools like TFSAs, IPPs, and your corporation’s retained earnings for more control and better tax outcomes.
6. Putting Your Child’s Name on Property or Bank Accounts
It might seem like a good idea to add your child’s name to your home or accounts to avoid probate. But this can lead to capital gains tax issues, legal disputes, and unintended consequences.
What to do: Consider a trust structure or work with an estate lawyer/Accountant to set things up properly while still meeting your goals.
7. Outdated Will or Power of Attorney
Many professionals create a will when they have young kids, then forget about it for 15 or 20 years. By the time something happens, the will no longer reflects your wishes — or your assets.
What to do: Review your will, power of attorney, and personal directive every few years. Make sure it aligns with your business, your insurance, and your financial goals.
What You Can Do Next
If even one of these sounds familiar, you’re not alone. Many of my clients started with similar blind spots before we put a strategy in place.
I’d like to offer you a free 30-minute planning session. We’ll take a high-level look at your corporate setup, your estate plan, and your tax exposure. You’ll leave with practical ideas, and if we’re a fit, we can talk about what working together could look like.