We ask two experts the same question to give you two different answers on a complex issue
QUESTION "A dentist in my community recently passed away. I have seen many of his patients in my practice, and his hygienist has now joined my team. It appears the widow has closed down the practice, and the patients and staff have been left to fend for themselves. What can I do to be certain my family, patients, and staff won't face the same situation should something happen to me?"
Peter Ackerman, CPA
A few simple steps taken now will make a significant difference in the burden placed on others.
Choose a local practice broker whom you trust and arrange a meeting with him or her and your spouse or trusted family member who may have to make decisions on your behalf. At the end of the meeting, you should feel comfortable reviewing the procedures and time line necessary for a successful transition.
Meet with your estate-planning attorney and put in place the proper documentation. Not only do you need a proper will and living trust, but it is extremely important to draft a durable power of attorney. A durable power of attorney authorizes an individual to act for another in the event of incapacity. Without such a document, an incapacitated dentist could lock up the family's ability to either operate or dispose of the practice.
Review the legal documents relating to your practice. Many doctors have brought in associates and/or partners to mitigate the risks we are discussing. However, it is these particular doctors who may pose the greatest risk. If you have an associate in your office without a well-drafted noncompete and nonsolicitation agreement, your heirs will be giving -- not selling -- the practice to your associate.
Your practice is a valuable asset that requires constant attention to survive. Placing the burden on your family to sustain and transition your practice after your death is an unfair and unnecessary consequence of not being prepared.
Peter J. Ackerman, CPA, is a principal of ADS Midwest, a firm that provides practice brokerage, appraisal, and consulting services to dentists and related specialists throughout the Midwest, and past president of ADS. He can be reached at [email protected] or call (855) 463-0101.
Tom Snyder, DMD, MBA
As transition consultants, we place a premium on planning not only for long-term transitions, but on addressing situations such as this tragedy. Here are several recommendations to assist you in developing your emergency exit strategy.
We recommend that you get your practice appraised now and share the document with those close to you. Your practice appraisal does not have to be updated annually; every few years is fine, especially if you've been experiencing steady growth or have made some major purchases of equipment and technology.
Next, you should prepare a "Letter of Instruction." This will provide your heirs a quick and orderly way to set the wheels in motion to sell your practice immediately. The "Letter of Instruction" should contain a list of key individuals who will need to be contacted in order to take appropriate action. Advisors can include your accountant, your attorney, your dental supply rep, and, if you've been working with a transition consultant, include him or her as well. Additionally, within this document, you can also include information about your life and disability insurance policies as well as the name of your insurance agent(s).
The "Letter of Instruction" also can be used in the event of a severe disability in which you are incapable of making sound business decisions about the disposition of your practice.
Tom Snyder, DMD, MBA, is the director of transition services for the Snyder Group, a division of Henry Schein Professional Practice Transitions. He can be reached at (800) 988-5674 or [email protected] .
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