TOP TEN WAYS TO PROTECT YOUR FAMILY

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  • 2055 Woodside Road, Suite 160, Redwood City, CA 94061 www.carrollandco.info tel: (650) 362-7004 email: dental@carrollandco.info

    TOP TEN WAYS TO PROTECT YOUR FAMILY FROM AN UNTIMELY DEATH OR DISABILITY

    One of the toughest things we are called to do as Transition consultants is to assist the family of a dentist who has passed away suddenly or become disabled in selling the practice. Sadly, these types of engagements come up multiple times per year. The value of the dental practice is one of the largest single assets the average dentist owns and without swift action can be reduced to a fraction of its former value. The death or disability of a dentist is a personal loss that is devastating to the family. With the proper planning the dentist and his or her family can preserve the value of the practice and provide a systematic approach to dealing with this crisis.

    Over the years, we have assisted many dentists and their families and have found the following to be the key items to a successful management of the crisis of the dentist death or disability:

    1. Know the value of the practice. Most times dentists and their families either have no idea of the value of the practice or their opinion of value is distorted. Such distortions can be either too low or too high. For proper planning to take place, the dentist and his family must have a realistic idea of the value of the practice.

    2. Know the market place in your area and the likely buyers. The ease of finding a buyer quickly is totally dependent on the market place for your geographic area. Metropolitan areas will have a larger and more ready group of buyers. Rural communities and small towns outside of the metro areas will have a smaller group of available buyers.

  • 2055 Woodside Road, Suite 160, Redwood City, CA 94061 www.carrollandco.info tel: (650) 362-7004 email: dental@carrollandco.info

    3. Understand the importance of moving quickly. The value of the practice without you will diminish very quickly. It is essential in the event of death or disability that steps are taken to ensure the continued operation of the practice as soon as possible. We have seen practices that have maintained their value for months if one or more doctors staff the practice during this crisis time and the patients are kept informed.

    4. Involve your spouse and family members in the crisis plan. To protect the value of your practice, it is essential to have a crisis plan. The plan requires that you involve your spouse and any other family members who your spouse would rely on for help in a time of need. The plan should include an advisor to help recruit a doctor to work in the practice and coordinate the efforts of your staff. Ideally, the plan should be written to avoid forgetting important items due to the emotions of the moment.

    5. Work with the staff to determine the crisis plan for the practice, including the lead staff. In addition to your family, the crisis plan should involve your staff. The plan should detail each action the staff should take. It should discuss how to inform the patients, which advisors to call, which of the family will be in charge of the practice. Remember, it is very difficult to run a practice by committee. Many successful crisis strategies involve a key staff person who is the lead staff person. Many times this is the office manager, but we have seen occasions where a hygienist or assistant takes the leadership role.

    6. Establish a practice continuation agreement with a friend in dentistry or join a mutual aid group. Every dentist, regardless whether they have been in practice for many years or just starting should a contingency plan to deal with a possible untimely death or disability. One good way to do so is to enter into a practice continuation agreement with a colleague. The agreement is a mutual agreement whereby each of you agrees to operate the practice of the other until the other is able to return to work or the practice is sold. Some agreements call for a purchase of the practice or right of first refusal. Some local dental society units have a mutual aid group where there is an organized approach to covering a dentist in an emergency for a short period of time. We have also seen where a group of dentists agree to

  • 2055 Woodside Road, Suite 160, Redwood City, CA 94061 www.carrollandco.info tel: (650) 362-7004 email: dental@carrollandco.info

    cover each other. It is a go idea to assign one of them as the lead advisor. I recommend that you commit the crisis plan to writing and have a meeting to share the plan with your advisors.

    7. Put together your advisor team. The key to success in any crisis plan is to put together the advisor team. In addition to the spouse, family members and key staff you should enlist the support of your CPA/financial planner, attorney, and a practice broker as a minimum. You might also consider a practice management consultant and insurance agent as well. Each of the advisors will have a particular area of expertise. It is a good idea to assign one of them as the lead advisor. I recommend that you commit the crisis plan to writing and have a meeting to share the plan with your advisors.

    8. Dont plan on the value to be enough to support your family. Many times a dentist may mistakenly assume that the practice value will be enough to support the family. The truth is that at best, the value netted from the practice sale may only last 1-3 years.

    9. Have appropriate Life and Disability coverage. It is my experience that most dentists are underinsured for both life and disability insurance coverage. The coverage needed depends on the dentist age, dependents, assets accumulated, and the amount of money owed. You should review your coverage with your financial planner on an annual basis.

    10. Letter of direction. In our practice brokerage and transition practice, we have developed a letter of direction for dentists to use. This letter is part of their estate plan and directs their family to contact us immediately should something happen to the dentist. We have included a copy of this letter for your review.