In this Issue:
- Why Your Will and Powers of Attorney Matter More Than You Think
- Three Key Estate Planning Tools for Dentists
- Spotlight on Dr. Raj Khanuja: Leading with Compassion
- What Your Health Plan May Not Cover When Travelling Within Canada
- New Continuing Education Courses
- MNP Webinar Recap: Growing Your Dental Practice
- Scotiabank: Simplify Payments, Strengthen Your Practice
Beyond Death and Taxes: Estate Strategies to Protect Your Family, Practice, and Legacy
From Vancouver to St. John’s, this year’s panel series, Navigating the Inevitable: Strategies for Dentists to Minimize the Risk of Death & Taxes drew record turnout and energy. The conversations covered everything from updating wills and powers of attorney to setting up simple trusts and ensuring families are protected when the unexpected happens.
Dentists across the country described the sessions as “excellent” and “valuable,” praising the panelists as “knowledgeable” and “helpful.” Many said they left with practical strategies they could put to work right away.
For those who could not be in the room with us – and those who want a refresher – this issue of The Loop brings you some of the same strategies and advice that made those sessions one of the highlights of the year and one of our most talked-about events ever.
For dentists in their prime accumulation years, the message was clear: protect the value you’ve built while planning for the unique needs of your family. The challenge: building assets and value while ensuring your family won’t be left scrambling if something unexpected happens to you. Let’s look more closely at some of the planning tools and practical advice that emerged from the sessions that could help you safeguard both.
WHY YOUR WILL AND POWER OF ATTORNEY (POAs) MATTER MORE THAN YOU THINK
At the panels, one theme kept coming up: too many dentists with a will treat it like a one-time document instead of a living plan. That works fine until life changes. Then the gaps become obvious, and with an out-of-date will, a crisis is a matter of when, not if.
One panelist shared the story of a dentist who had written a simple will before buying a practice. Years later, when he passed away unexpectedly, his will did not specify who should manage his professional corporation. As a result, the estate had to go through probate to grant someone legal authority to manage his business – a process that can take several weeks or even months, with associated probate fees payable before authority takes effect. In Ontario probate can cost around 1-2% of the estate’s value.
While probate rates vary by province (for example, about 1.4% in British Columbia and 1.6% in Nova Scotia, compared with minimal fees in Alberta, Manitoba, and the Territories), the real issue was the delay. With no one authorized to make decisions, patients left, staff were unsettled, and by the time the estate was settled, much of the practice’s goodwill had disappeared.
It’s a scenario no family wants to face, but it’s what can happen when wills don’t keep up with reality. Updating wills and POAs is especially critical for dentists because:
- Your practice is a business with real, fast-changing value. Without an executor or attorney authorized to act quickly, that value can erode within weeks.
- If your spouse is not a dentist, they probably can’t run your professional corporation. You may need a separate POA to ensure a qualified person can step in.
- High-probate-fee jurisdictions like Ontario and British Columbia allow multiple wills to help reduce or avoid probate tax on corporate assets, preserving more for your heirs. However, Nova Scotia does not allow this practice, making comprehensive single will planning crucial.
Professional legal advice is critical in each province to draft wills and POAs correctly for dentists and dentistry professional corporations, ensuring compliance and minimizing probate fees without invalidating your wishes and intentions The bottom line is that if your will was written before you bought your practice, or before your family circumstances changed, it’s time to update it.
Beyond the Basics: Three Key Estate Planning Tools for Dentists
While much of the discussion focused on the importance of having up-to-date wills and POAs, our panelists also explored a range of other estate planning strategies that can enhance tax efficiency and preserve practice value. These include the use of a Capital Dividend Account (CDA), estate freezes, and various types of trusts. The following section highlights how each can play a role in a well-structured plan.
Capital Dividend Account (CDA)
A CDA is a notional account in your corporation that tracks certain tax-free amounts, such as the non-taxable portion of capital gains and life insurance proceeds. It allows these amounts to be paid out to shareholders tax-free.
For dentists, a CDA becomes particularly powerful late in your career:
- It can fund estate taxes without forcing the sale of assets.
- It can equalize inheritances between children who are and are not in the practice.
- It creates flexibility for your executor, who may need immediate cash to deal with tax liabilities.
THE BIGGER PICTURE: HOW DENTISTS USE CDA's
Many dentists accumulate wealth in holding companies through practice profits and prudent investing. But few realize how much of that value could be trapped behind tax if they don’t plan ahead. Your financial advisor can help you make the most of this account by:
- Helping you trigger capital gains when appropriate
- Coordinating with your accountant to file a T2054 CDA election
- Integrating permanent life insurance into your corporate structure to create CDA value at death
As Renata Whiteman, Senior Insurance Advisor at CDSPI Advisory Services Inc., explains: “Holding a Term 100 life insurance policy in a holding company is key. It allows the proceeds to flow into the CDA, creating a tax-efficient way to provide cash to your heirs or cover estate taxes”.
For more on Capital Dividend Accounts, including a detailed case study, see Capital Dividend Accounts: A Guide for Dentists.
ESTATE FREEZE
An estate freeze lets you “lock in” the current value of your shares so future growth accrues to others — often children or a holding company. This protects access to the Lifetime Capital Gains Exemption (LCGE) and reduces the tax burden that would otherwise pass through your estate.
CASE SNAPSHOT: WHY TIMING MATTERS FOR ESTATE FREEZES
During the panel, the experts looked at the case of a 49-year-old dentist who had built significant wealth but her estate plan had not kept pace. Her outdated will was written before she owned her $1.2 million practice, leaving major risks for her spouse and two children from a previous marriage.
Profile
- Married with two children (ages 10 and 13)
- Practice value: $1.2 million
- Savings and investments: $2.5 million+
- Home: $300,000 mortgage remaining
- Spouse: a professor with a $200,000 salary and a pension
Key risks
- Outdated will: Did not reflect practice ownership; practice shares would pass through probate, costing ~$18,000 in fees and risking a loss of goodwill if no one could act quickly.
- POA gap: Spouse is not a dentist and cannot manage the professional corporation, leaving uncertainty about who could run or wind up the practice if she was incapacitated.
- Minor children: Without specific provisions, the Office of the Children’s Lawyer could intervene, with costs paid by the estate.
RECOMMENDED STRATEGIES
- Estate freeze: Lock in current $1.2 million value as preferred shares, issue new growth shares to family members. o If the practice grows by another $1 million over 10 years, that growth accrues to the new common shares. o With multiple family members using the capital gains exemption, a sale worth up to $4 million could potentially be sheltered from tax.
- Insurance restructuring: Hold permanent insurance in a holding company, not the professional corporation, to avoid jeopardizing the exemption on sale.
- Updated wills and dual POAs: Ensure one POA covers personal assets and another covers the business, with clear authority for succession.
- Risk protection: Review life, disability, and overhead expense coverage to secure income and practice continuity.
THE RESULT
By freezing the value today and reorganizing her plan, the dentist preserved tax advantages, ensured her practice could be managed smoothly in a crisis, and gave her family financial stability. Learn more about: Estate Freezes for Dentists.
TRUSTS
Trusts allow you to split future income and growth among multiple beneficiaries. For dentists, this can be powerful: children, spouses, or even future generations can benefit from dividends or gains without transferring control of the practice. Trusts also give flexibility in deciding who ultimately inherits the value, without locking that choice in too early.
THE TYPES OF TRUST: DR. KUNAN'S DILEMMA
Dr. Priya Kunan (not her real name), a sought-after specialist, had one burning question when she started thinking about her estate plan: “How do I make sure my kids inherit wisely, not just quickly?”
With one child still a pre-teen and another managing a developmental disability, simply leaving everything outright in her will didn’t sit right. She recognized that each child needed different levels of support. Creating family trusts gave her the level of control she wanted over how her estate would be distributed. Her plan included:
- A testamentary trust for her pre-teen child, giving a trustee discretion to cover tuition, living expenses, or milestones until the child reaches maturity.
- A Henson Trust for her child with a disability, ensuring long-term financial security without jeopardizing government supports.
As Raphael Tachie, a Partner at the law firm Dentons, explained: “You can’t just top up a Tax-Free Savings Account and call it a day. A Henson Trust ensures your child doesn’t lose access to critical supports because they inherited money the wrong way.” To learn more, check out: Trusts for Dentists: What You Need to Know.
Your Estate Action Plan: 5 Steps That Make It Work
At this stage of your career, strategy only succeeds when backed by clear actions. The following steps combine the most important organizational, financial, and communication tasks discussed at our national Navigating the Inevitable panels.
STEP 1: ASSEMBLE YOUR TRANSITION BINDER
Pull together all essential documents in one place: wills and POAs, corporate minute book, shareholder agreements, trust deeds (if in place), CRA business account details, insurance policies, loan documents, and recent valuations. Appoint and notify your executor or trusted family member who knows where this binder is and has direct contact info for your advisors.
STEP 2: GET A CLEAR PICTURE OF TAX AND LIQUIDITY
Ask your accountant for an updated tax estimate at death, including CDA projections, and confirm how liabilities would be funded. Meet with your insurance advisor to make sure coverage is sufficient, and review whether corporate or personal ownership of policies makes sense. Ensure CDA entries are being tracked annually.
STEP 3: COORDINATE AGREEMENTS AND RECORDS
Confirm that resolutions and freeze documentation are recorded, trust deeds are signed and stored, and shareholder agreements reflect current ownership and succession intentions. Make sure all records align so there are no surprises for executors or beneficiaries.
STEP 4: BUILD AND SHARE YOUR ADVISOR CARD
List direct contact details for your accountant, lawyer, and insurance advisor. Share this card with your spouse, executor, and adult children if appropriate, and give written permission for them to speak with these professionals in an emergency.
STEP 5: COMMUNICATE THE PLAN
Hold a short family meeting to walk through the broad strokes. Explain what trusts or insurance structures are in place, how the CDA works, and who to call first. Revisit the plan annually or whenever there is a significant change, such as selling assets, adding insurance, or restructuring corporations.
Keep it living
Planning isn’t a one-and-done task. Revisit your strategy every 3–5 years, or after major life events like buying/expanding a practice, adding a partner, or significant changes in family circumstances.
Summing up
Whether you are focused on protecting the growth you have built or preparing for a smooth transition out of practice, the fundamentals are the same: updated wills, coordinated agreements, and clear logistics. Tools such as estate freezes, trusts, and the use of a CDA with permanent insurance can help safeguard value, reduce tax, and provide stability for both your family and your practice.
With careful sequencing and regular reviews, these strategies can provide clarity and confidence. If you want to discuss any of these financial issues, advisors from CDSPI Advisory Services Inc. can talk you through it. If you are ready for a deeper conversation about your estate plan, our partners at MNP and other professional advisors can provide guidance tailored to your situation.
Quick Poll
Many dentists told us that the panel discussions were a good reminder to review their own wills and powers of attorney. How about you? When it comes to your will and POAs, where do you stand?
- Up to date and reflects my current situation
- Completed, but needs review
- It’s on my to-do list
- Not on my radar
Our last poll asked how much of your income is derived from activities outside of your clinical practice. The top answer was:
- 💰 5% or less — 47% ✅
- 💼 26% to 50% — 21%
- 💸 50% or more — 15%
Spotlight: Dr. Raj Khanuja – Leading with Compassion
For Dr. Raj Khanuja, dentistry has always been about more than oral health: it’s about restoring dignity, confidence, and community. What began over a decade ago as a single act of kindness has since grown into National Dental Care Day, a movement he founded that now unites more than 16 clinics across Ontario to provide free dental care to those in need. Through his leadership, Dr. Khanuja continues to show how generosity and professional excellence can go hand in hand, inspiring colleagues to give back in meaningful ways. Read the full interview with Dr. Khanuja.
Why Travel Insurance Matters Even Within Canada
Did you know your provincial health plan may not fully cover you when traveling to another province? From ambulance fees to emergency dental care, gaps in coverage can lead to unexpected costs. Travel insurance helps fill those gaps and offers added protection for trip cancellations, lost baggage, and more. Whether you're attending a conference or taking a well-earned break, travel insurance ensures peace of mind because your health and safety matter wherever you go. See the full article and case study from Allianz Canada to find out more.
New Continuing Education (CE) Courses
CDSPI’s On-Demand Continuing Education Courses provide expert-led insights into the legal, financial, and security risks facing today’s dentists. Our latest courses provide insights into two essential topics:
- How to benefit from the free, confidential resources available through the Members' Assistance Program (MAP) to help support your mental, emotional, and professional well-being.
- Navigating the decision to buy, join, or start a practice. Our expert panel of specialists in accounting, law, finance, insurance, and investments address the challenges and opportunities of this critical career choice.
Simply watch the videos and complete the quizzes to receive your personalized certificates of attendance.
MNP Webinar Recap: Growing Your Dental Practice
Whether you're considering organic growth, a startup, or acquiring another practice, having a structured strategy is key to sustainable success. In a recent webinar, MNP advisors shared practical insights for dental professionals looking to grow their practices. Read the recap to learn about aligning your team, systems, and culture for long-term success.
Simplify Payments, Strengthen Your Practice
Running a dental practice means juggling a lot of moving parts, but payments don’t have to be one of them. Through CDSPI’s partnership with Scotiabank® and Chase Payment SolutionsSM , you can access Merchant Services. Accept payments in person, online, or through your practice software, all with secure, efficient processing and advice from Healthcare & Professional Specialists who understand your business. Contact a Scotiabank Healthcare & Professional Specialist today to learn more.
The information in this newsletter is provided for general information purposes only and does not constitute professional advice. Please consult a qualified professional for advice tailored to your specific needs. While every effort has been made to ensure this information is accurate and current, no guarantee is made to its completeness or applicability.