One of the toughest parts of my job as an advisor to dentists involves the circumstance when a dentist meets with either an untimely death or disability. Usually the call comes from a distraught family or staff member. The most devastating thing that can happen to a dentist, or his or her family, at any age is an untimely death or disability. Often, the family or staff is unsure exactly what they should do because the doctor didn’t have a contingency plan in place. Let’s face it — pondering something as unpleasant as our death or disability is not easy. None of us wants to face our own mortality or human frailty, yet without a well-thought-out plan, you and your family are at risk.
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There are some typical reasons why dentists fail to put together a contingency plan. It is common to see young and older dentists alike believe they will live forever and assume that they don’t need to plan because they have few assets to plan for or protect. Most of us don’t think about death or disability, because we don’t think it will happen to us. It’s easy to procrastinate about such an unpleasant task. Many times we find dentists of all ages overwhelmed by the process and become confused as to what to do.
Maybe you are like me and are convinced that if you die, the world will come to an end. Sometimes dentists make the mistake of thinking that just because they are well insured that the planning is complete. In some cases, a disability can be more devastating to the family than a premature death. As a young dentist you are 10 times more likely to be disabled than to die young. The sooner the planning begins, the better. Putting together this road map now while you and your family are clear-headed and matters are not urgent could be the greatest gift of love you can give to your family.
Perhaps the greatest reason to plan ahead for this type of disaster is to protect your family. My experience in these circumstances is that your family will be in shock and be dealing with their own grief and worry. As tough as it is for your family, they must understand the need for quick action. Decisions need to be made about:
- Who will run the practice?
- Who will staff the office?
- Who pays the bills?
- Who makes the day-to-day business decisions?
It is obviously much easier to make sure your family is prepared now when things are normal rather than wait until a crisis happens.
It is imperative to teach your family how your business runs. We suggest that you prepare a written practice overview even if your spouse doesn’t work in the practice. Your spouse needs to be acquainted with how the operation works. Make sure you give your family passwords for computer programs, keys to your safe deposit box, and signature control over business accounts. Introduce your spouse and grown children to your advisors. It is important to indicate to your family which advisor will be the lead advisor. Include your spouse in meetings with your accountant, financial advisor, insurance agent, and lender. Ask the advisors to spell out just what their role would be if something were to happen to you.
You should expect that your staff might be equally in shock if something were to happen to you. Every successful death or disability preparedness scenario that I have witnessed included team members who understood their key roles in keeping the practice together during this critical time. You will need to choose one of your staff to be the key team member who will serve as the coordinator. This person must be level-headed, confident, and informed about the practice operations. This staff person will implement and oversee the plan from the staff perspective. Without a plan, your team will be unsure of what to do next. You should expect that staff have natural concerns such as “What about me, what do we do, where do we go from here, and how long will this last?” They will be torn between loyalty and obligation on one hand and self-preservation on the other. Communication and trust will be the key during this crisis.
A key ingredient to protecting yourself in the event of an untimely death or disability is having the correct insurance. From my experience, most dentists are woefully underinsured. You need to have enough life insurance, disability income, and business overhead. It is a good idea to discuss potential death and disability numbers with your accountant and insurance agent to determine your needs. It is always better be overinsured rather than underinsured.
My strongest recommendation to you is to develop a written plan to deal with your unexpected death or disability. The plan should address an interim manager to step into your shoes as manager of the practice. This could be a trusted friend or level-headed advisor, your CPA, or another dentist. It is essential that the plan protect your family from making emotional decisions. The plan should include a letter of direction to family and advisors, template letters to patients, and a detailed step-by-step plan of everyone’s role and what to do and in what order. Pay particular attention to how you staff the practice with another doctor. This is the most important part of the plan. If you live in a rural area, this is easier said than done.
Finding a dentist to staff your practice may be one of the most difficult items to accomplish. Look to classmates and friends as well as local colleagues. A good way to protect your practice and your family may be to join or form a mutual aid group or sign a practice continuation agreement with another colleague. The mutual aid group can be formal or informal. We have seen some circumstances where the group can be coordinated by one or more advisors. The group should meet several times per year and discuss operation of each other’s practice, length of service, and whether members will be paid when covering the other’s practice. It is essential that the group be governed by an agreement signed by all of the members. The agreement may address protection of the patient base and include a covenant not to compete and nonsolicitation agreement. In some cases, the agreement may even include an option to purchase the practice.
The plan should also include the steps to determine whether it will be necessary to sell the practice and the urgency. The plan should include the advisors to contact, in which order and related contact information. Include in this plan the practice operational overview. It may include instructions to the financial advisor modifying your investment asset allocation due to the new circumstances. Include where key information is kept such as insurance policies, etc. You may also consider a letter of direction to your family regarding the broker to use to sell the practice and a copy of the most recent valuation of the practice and current financial statements.
There are many additional considerations to consider protecting your family. Taking the time to make a plan is truly the greatest gift of love you can give your family. While I know a few of you will actually take the time do so, most of you won’t. As a minimum, devote at least one staff meeting per year to discuss a contingency plan and rehearse the outcome. You will be glad you did!
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