Death and Disability Planning


Many of you are members of an organized Death and/or Disability Group, but there may be some of you reading this article who are unfamiliar with them. Basically, a Death and Disability Group is normally composed of six to 12 individual dentists who agree to work a member’s practice in the case of death or disability. If you are a part of one of these groups, you are to be congratulated. Although these groups are extremely useful and provide a critical function in keeping a practice active and productive, it is usually not in their area of expertise to market and sell a dental practice. Consequently, they provide an immediate function to fill in for the deceased or disabled member, but marketing and selling the practice is still a major issue. Being part of an established Death and/or Disability Group is only the start. There are seven major “pitfalls” if a complete planning program is not in place: Pitfall #1: Your spouse is not prepared. You have not discussed the possibilities with your spouse and he or she is unfamiliar with the operation of your practice. A letter of instruction will assist in alleviating this problem.

Pitfall #2: Individuals who are members of a Death and Disability Group assume they have a plan in place and everything will be taken care of if they becomes disabled or die. The sale of the practice is not the group’s expertise, nor do group members have time to devote themselves full-time to accomplishing this task. Develop a plan of action and select a transition specialist to represent you.

Pitfall #3: There is no office manual to guide the staff or group members in the absence of the owner or, more importantly, to assist the future buyer of the practice. An employee/staff manual should be developed and kept current.

Pitfall #4: The owner-doctor is the only authorized signature on the business checking account. What happens when bills and payroll (if no payroll service is employed) are due and there is no one who can sign checks for a period of time? The simple solution is for an owner doctor to have his or her spouse as an authorized signature on the business account.

Pitfall #5: The staff is ill-prepared to deal with the situation. Either they are long-time staff members, who are in mourning, or they are new members of the staff with no direction. Develop a letter of instruction for your staff.

Pitfall #6: Production is lost due to no prior arrangements being made, the unavailability of replacement Dentists, or staff who are not sure where to turn. The solution here lies in a Death and Disability Group and having a clear plan in place for your staff through a Letter of Instruction.

Pitfall #7: Doctors assume their attorneys will know what to do and how to handle a practice sale. Most family attorneys are ill-prepared to handle the sale of a dental practice. Recognize that even those attorneys who specialize in working with dentists and who are familiar with dental transactions are not prepared to market the practice in most instances. Select an attorney who has expertise in dental practice transitions who will be available to advise the transition specialist you select.

What can you do now to prepare yourself and your spouse?

  • Become a member of a Death and Disability Group.
  • Develop and implement a well thought-out plan for the practice.
  • Be sure you have a current will in place that addresses this issue.
  • Talk to your attorney about a durable power of attorney.
  • Write a Letter of Instruction for your spouse and your staff.
  • Select a transition specialist /broker.

John M. Cahill, MBA, of John M. Cahill Associates has over 30 years of experience in the dental industry, including all aspects of appraisals, sales, purchases, and buy-ins in connection with dental transitions. Cahill is a member of American Dental Sales, Inc., and can be reached at (510) 844-0330 or by email at dental@jmcahill.com. See the classified ads for names and addresses of ADS members in your area.

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