The short answer is yes.

And for physicians who own their practice, the problem is more urgent and complex than for most other business owners.

If you’re like many physicians, your focus has been on patient care, clinical excellence, staffing challenges, reimbursement pressures, and keeping the doors open. Estate planning, particularly around the business you’ve built, often gets deferred. “I’m healthy,” “I’ll deal with it later,” or “my family will figure it out” are common refrains. But dying without a coordinated plan can create immediate disruption, destroy significant value, and leave your family navigating a legal and operational thicket during a time of grief.

Why A Medical Practice is Different

Your practice is not just another asset. It is almost certainly organized as a professional corporation (PC) or professional limited liability company (PLLC). State law restricts ownership to licensed physicians. Upon death, your ownership interest generally cannot pass directly to your spouse or children unless they are also licensed to practice medicine in your state.

Many state professional corporation statutes require the corporation (or remaining owners) to redeem or purchase the deceased shareholder’s interest within a defined window. In the absence of a contrary agreement, the default price is frequently book value, which typically excludes the substantial goodwill and going-concern value you have spent years building. Without planning, your family may receive far less than the practice is truly worth.

The practice also carries ongoing obligations that do not disappear with you, including, specifically, patient continuity of care, custodianship of medical records under HIPAA and state law, staff payroll and benefits, leases, payer contracts, accounts receivable, and potential malpractice exposure (including the need for tail coverage on claims-made policies).

What Happens Without a Plan

Without proper planning documents in place, several things will likely occur:

• Your ownership interest becomes part of your probate estate: This brings court supervision, public filings, delays, and added legal and administrative expense.
• Day-to-day operations can stall: Who has authority to access accounts, meet payroll, order supplies, or communicate with referring physicians and patients? Referring doctors and patients tend to move on quickly when continuity is uncertain.
• Practice values erode rapidly: Goodwill is fragile; once lost, it is difficult and expensive to rebuild.
• Your family inherits more than a complex asset: There are also potential liabilities and time-sensitive issues they are likely ill-equipped to handle.

How to Solve It: The Key Components

The good news is that this situation is highly manageable with targeted planning. The core elements usually include:

1. Core estate planning documents tailored to business owners: A revocable living trust helps avoid probate for many personal assets. Durable financial and healthcare powers of attorney are essential, as incapacity can sideline you from the practice long before death occurs.
2. Practice-specific instructions: A non-binding letter of instruction or memorandum can guide your executor or successor on patient notifications, record custodianship and transfer, recommended colleagues for referrals or potential purchase, and wind-down steps if no buyer materializes. This helps fulfill ethical and regulatory obligations to patients while reducing family stress.
3. A strong buy-sell agreement: For multi-owner practices, this is often the single most important document for practice owners. It should clearly address death, disability, and retirement, establish a fair and current valuation method (e.g., periodic independent appraisals, a revenue-based formula, or an annually agreed value), specify who may purchase the interest, and set payment terms. The agreement can also override default state redemption rules that would otherwise lock in an unfavorable book-value price.
4. A coordinated professional team: Work with an estate planning attorney experienced in healthcare and professional practices, your CPA, insurance advisor, and when appropriate, a valuation expert or practice transition consultant. Your plan should align with any retirement or sale goals you may have.

The Benefits Go Beyond Money

A well-designed plan lets you maximize the financial legacy for your family, protect the practice and reputation you built, maintain greater control over the transition, reduce the risk of family conflict, and support continuity of care for your patients. Many physicians also incorporate charitable planning or trusts for blended families or special-needs heirs as part of the process.

Take Action

If you own a medical practice and have not yet addressed what happens upon your death or incapacity, you do have an estate planning problem. But it is one with clear, proven solutions that are far less costly than the potential loss in value and family hardship that can result from inaction.

I encourage you to begin with a review of any existing shareholders’ or operating agreement and a conversation with professionals who understand both estate planning and the regulatory environment of medical practices. Your patients rely on you today. Your family will rely on your foresight later.

Greg Ferra, a Partner at Liff, Walsh & Simmons, leads the Estate Planning & Administration practice. His passion for estate planning and administration stems from the opportunity to challenge himself and devise innovative plans for his clients. He is delighted when he can provide his clients with novel and effective solutions that have not previously been considered.

At Liff, Walsh & Simmons, our Estate Planning & Administration practice area helps individuals and families protect their legacies and plan for the future. We provide personalized guidance in wills, trusts, powers of attorney, and comprehensive estate plans tailored to each client’s unique circumstances. Our attorneys are committed to making the estate planning process clear, manageable, and aligned with your goals, providing peace of mind and security for you and your loved ones. Please contact Liff, Walsh & Simmons at 410-266-9500 to schedule a consultation.