Protect Your Family and Your Dental Legacy
A growing number of dentists are continuing to practice as long as they can physically handle the stresses of the job. The decision not to move into retirement has been very positive for their patients and staff since they continue to receive high quality care from a person they trust. Additionally, the dentist has the benefit of continuing to do what they love and remaining engaged in the community.
The downside to this trend has been the growing number of dentists who are passing away while still in practice. This can cause tremendous turmoil for your family, after you pass, if the appropriate precautions have not been taken, and can have a devastating effect on the value of your life’s work.
I will illustrate this point with an actual story from a recent client. The doctor had not fully planned ahead for the contingency of an unexpected death. He had life insurance and practice overhead insurance. But he never established a justifiable fair market value for the practice, he had not established a business continuity plan, and had not designated, in his will, who would handle the sale of the practice in the event of his death. When this dentist died unexpectedly, his wife, while in the midst of grieving, was left trying to figure out how to keep the practice running and package it for sale in an unfamiliar dental practice sale market.
Her brother-in-law told her that he knew a CPA that could handle the sale for her. Since there was not a plan in place and she had no idea how to deal with the practice, she jumped at the chance for help. As you know, word travels fast in our small dental community and several potential buyers for the practice emerged almost immediately. Several were bottom feeders looking to take advantage of a bad situation, but a couple of them were strong buyers with integrity that made fair market value offers. Due to the CPA’s lack of experience, he misunderstood the abundance of initial interest and thought that they could get better offers if they waited. The serious buyers moved on when their offers were rejected. The wife struggled to learn, as fast as she could, how to keep the practice going while this CPA tried to sell it. The practice started to decline rapidly because there was no continuity. Ultimately, the CPA was able to sell the practice almost a year later for significantly less than the initial fair market offers.
The punchline of the story is this: the wife spent a very frustrating year trying to keep the practice afloat and for her efforts received NOTHING after the sale. Because of the practice decline, there were not even sufficient proceeds to pay off the creditors once the sale closed. This dentist left a legacy of frustration, pain and debt to his family. The really tragic part of this story is that it could have easily been prevented.
For more information on this, click here to read our white paper “Selling Your Practice After Your Death”