This year, more than ever before, I have either become more aware of unexpected death and disability, or it is occurring with more frequency in the dental community. your practice is one of your primary assets. If something should happen to you, are you prepared?
What should you have in place to protect you and your estate in the event of an unexpected death?
The first and most obvious is adequate insurance.
The second is an up-to-date will.
When you die, your estate enters into a state of "probate," which is the distribution of your assets. Without clear instructions in a will, the trustee or executor will make decisions about the distribution of your estate. This may take weeks, months, or even years if any of his/her decisions are challenged. Your practice is an asset and how it runs - if it runs - will become a decision of the executor, unless you have specific instructions on its disposition.
An attachment or appendix to a will is called a Codicil. A Codicil can provide very specific instructions to the executor to immediately appoint a person or company of your choice (another dentist, a consultant, or a broker) to run your practice until the practice is disposed of. It can also include a listing agreement with a broker to immediately begin marketing the practice in order to keep it viable and retain value. Without these instructions, nothing may happen with the practice for months after your death, thus diminishing or negating its value to your heirs. The proceeds from the operation or the sale of the practice will remain in the estate and be distributed by the executor during probate. This ensures that the proceeds will not be lost because of inaction.
An important element of the quick disposal of a practice is the determination of its value. It is highly recommended that, at the time a Codicil is attached to your will and a broker or consultant is designated, you have an appraisal done; then keep it annually updated. This will provide a continuous history of value of the practice and though it may have to be discounted slightly for a quick sale, there will be little to challenge when it comes to justifying its value.
Consult with your attorney or estate planner about preparing a Codicil to your will to protect one of your most valuable assets. A sample of a Codicil will be provided upon request. Send an e-mail to firstname.lastname@example.org, or call (800) 262-4119.
H.M. (Hy) Smith is president of Professional Transitions, Inc., located in Naples, Florida. Professional Transitions, Inc. assists dentists in selling, buying, appraising, or financing practices. He is a member of American Dental Sales, Inc. Mr. Smith can be contacted at (800) 262-4119.