Financial advisor for lawyers

Financial planning for lawyers, from associate to equity partner. Kaetyn St. Hilaire, CFA, plans around the way law firm income actually arrives: partnership allocations, capital calls, tax instalments and a retirement with no firm pension, for lawyers in Calgary and across Canada.

Making partner changes how you are paid, how you are taxed and what you owe the firm. The cheque gets larger and less predictable at the same time, and most of the new decisions arrive in the first two years.

Most firms ask a new equity partner to contribute capital, often financed with a bank loan arranged through the firm. Interest on money borrowed to fund that contribution is generally deductible, because the capital is used to earn business income. The capital usually comes back only when you leave, sometimes over several years, so it belongs in your net worth but not in your spending plan.

A partner is taxed on their share of the partnership's income for the year, not on what they drew. Nothing is withheld, so CRA expects quarterly instalments once your net tax owing is more than $3,000 in the current year and in either of the two previous years. Setting the reserve aside every month avoids an April surprise.

Lawyers used to be able to elect to leave work in progress out of income. The 2017 federal budget phased that election out, so unbilled time at year end is now part of income. For a growing practice it raises the tax bill, and it is worth modelling before you change firms or open your own.

The move to partner often brings a capital contribution, the end of payroll withholding and a first instalment cycle all at once. Planning the year before the move, with a cash reserve and a clear view of the first April tax bill, keeps the promotion from feeling like a pay cut.

Lawyers can practise through a professional corporation in Alberta, British Columbia and Ontario. Whether it pays depends on how much you can leave invested inside the corporation, and on who is allowed to own shares where you practise.

Each law society regulates its own corporations, and the share rules differ. In Ontario, every share of a lawyer's professional corporation must be held by a licensee, so family members cannot be shareholders. Alberta and British Columbia set their own conditions for other shareholders, which your law society and accountant should confirm before the structure is set. Even where family can hold shares, the tax on split income rules usually remove the benefit of paying them dividends.

A partner can often hold their interest through a professional corporation, but under the specified partnership income rules the $500,000 small business limit is shared across the partnership unless the firm assigns part of it to you. Without an assignment, a partner's corporation usually pays the general rate on its share of firm income: 23% in Alberta, still well below the top personal rate of 48%. The deferral is real only on income you do not need to spend.

RRSP room is 18% of last year's earned income, up to $33,810 for 2026, and a partner's share of firm income counts as earned income. With a professional corporation that pays you a salary, an individual pension plan can allow larger deductible contributions from your late forties onward.

Retiring partners usually receive their capital account and any retirement payments under the partnership agreement, sometimes over several years. Those payments need to be mapped against your brackets so that a large cheque does not land in a year that is already high.

Sole practitioners and small firm owners face a different exit: transitioning clients and files and, if the practice is incorporated, deciding what happens to the corporation's investments once fees stop. Retained earnings can be paid out as dividends in retirement, which lets you choose the year the income is taxed.

Many lawyers keep a reduced practice into their late sixties. Part-time income changes the best age to start CPP and OAS, the size of RRSP withdrawals and whether OAS will be clawed back, so the plan should be run with and without those years.

Kaetyn is a Calgary-based financial advisor who works with high earners and medical professionals, particularly physicians and dentists navigating the financial complexities that come with high-income careers. He focuses on actionable strategies: the salary-dividend mix inside a professional corporation, RRSP and TFSA contributions, and a long-term investment plan.

A complimentary, no-obligation conversation about your firm, your partnership or corporation and your goals, and a clear explanation of how we can help.