Your Heir May Not Be Able to Own the Practice
If you own a professional practice, your estate plan needs to account for something most families do not have to think about: the person inheriting the value of your business may not be legally qualified to own or operate it. Your spouse might be the right person to receive the financial benefit, but that does not mean your spouse can take over treating patients or directing professional services. The plan needs to connect your family’s inheritance with a lawful and workable transition for the practice.
Start With the Structure and the Rules
The first step is understanding the legal structure and the rules of your profession. A professional corporation has different ownership considerations from an ordinary business, and dentists, physicians, and other licensed professionals do not all operate under identical requirements. Under Massachusetts law, a professional corporation’s shares generally must be redeemed by the corporation or transferred to a qualified person within twelve months of a shareholder’s death, unless the corporation’s documents set a shorter time. The professional corporation statute is one reason we need to review the business documents alongside the will and trust.
Everything to My Spouse Is Not a Plan
A general instruction leaving “everything to my spouse” does not settle those issues. We want to know what happens to the practice interest, who can act during the transition, and whether a purchase agreement already controls the outcome. If you have partners, their rights need to be understood before making promises elsewhere in your estate plan. If you practice alone, the absence of a qualified person ready to step in may affect whether the practice can continue long enough to be sold.
Patients and Records Cannot Wait
Patient care creates responsibilities that cannot wait for the estate to be settled. Someone needs an appropriate plan for appointments, ongoing treatment, referrals, and access to records. The exact requirements depend on the profession and circumstances, but the records cannot simply be locked in an office indefinitely. For physicians, the Board of Registration in Medicine publishes medical records obligations. Your family should know whom to contact and who can lawfully handle these matters without being expected to learn the rules during a crisis.
Protecting the Value of the Practice
There is also the value of the practice to consider. A professional practice may depend heavily on the owner’s relationships, reputation, and continued availability. If patients leave, staff resign, and collections slow, the value available to your family may decline. A current valuation and a realistic transition agreement can help establish expectations. The colleague you casually discussed selling to five years ago may no longer be interested or financially able to proceed when the time comes.
Coordinating Your Insurance
Insurance should be reviewed with the professionals who handle that coverage. Life insurance may help fund a purchase or support the family during the transition. Disability coverage may matter if you survive but cannot return to work. Professional liability coverage needs attention too, including whether additional coverage is necessary when practice ends under a policy that responds to claims made during the coverage period. We want those decisions coordinated with the estate plan rather than discovered after a policy has been canceled.
Separate the Practice From Other Assets
Separate the practice from other assets you own. The office building may belong to a different entity, while equipment, retirement accounts, and life insurance may follow entirely different ownership or beneficiary arrangements. A child inheriting the building could become the landlord of the practice purchased by your partner. That may work well, but the lease and family plan should support it. We also need to consider taxes and available cash without assuming that the practice’s estimated value is money the estate can immediately spend.
Plan for Incapacity, Not Just Death
Your practice plan should address incapacity as well as death. The person handling your personal bills under a power of attorney may need help coordinating with someone qualified to address the practice. Bring us the ownership agreements, insurance information, and any existing transition arrangements so we can work with your business attorney, accountant, and relevant advisors. Your family should know what it is entitled to receive, while the people responsible for the practice have clear authority and instructions to protect patients and preserve what you built.
Start with a free 15-minute consult call with Nicole Ott, our Lead Intake Coordinator. Tell her how your practice is owned and who would step in if you could not. That is usually enough for us to say what to do next.
