🏥 How to Structure Your Estate Plan If You Own a Medical Practice
If you’re a physician or healthcare professional who owns a private practice, your estate plan needs to do more than protect your personal assets—it needs to preserve the value of your business, ensure continuity of care, and minimize risk to your patients, staff, and family.
A generic estate plan isn’t enough.
Here’s how to structure your estate plan as a practice owner—and avoid the legal, tax, and financial pitfalls that can follow if you don’t plan ahead.
👩⚕️ Why Practice Owners Need Special Estate Planning
Your medical practice is:
A valuable business asset
A source of income for your family and employees
A regulated entity with patient care and compliance obligations
If something happens to you—whether incapacity or death—your estate plan must:
Transfer ownership efficiently
Comply with licensing and healthcare laws
Provide for your family without disrupting operations
Minimize tax exposure and legal risks
📌 Without a plan, your practice could be forced to close—or sold under pressure—leaving value on the table and your patients in limbo.
✅ 7 Key Elements of an Estate Plan for Medical Practice Owners
1. Revocable Living Trust
A trust allows you to:
Avoid probate
Appoint a successor trustee to manage business assets
Provide specific instructions for what should happen to the practice
Maintain control during your life (while preparing for the unexpected)
📌 Consider placing your practice interest into the trust so it can be managed without court involvement.
2. Buy-Sell Agreement (If You Have Partners)
A buy-sell agreement is critical for medical groups or co-owned practices.
It outlines:
What happens if an owner dies, retires, or becomes disabled
Who can buy the departing owner’s share
How the value of the business will be determined
How the purchase will be funded (e.g., life insurance)
📌 This avoids disputes, forced sales, and uncertainty for surviving partners.
3. Professional Corporation (PC) or PLLC Structuring
In Arizona and many states, licensed healthcare professionals must operate under a PC or PLLC (not a standard LLC or S-corp). Your estate plan should address:
What happens to shares or membership units
Whether family members or spouses can inherit or own shares
How those interests are handled if not transferrable (e.g., redeemable back to the business)
📌 Medical board rules often restrict ownership to licensed professionals—so careful planning is essential.
4. Durable Power of Attorney for Business Affairs
This document lets someone you trust:
Access business bank accounts
Handle payroll, leases, and vendor contracts
Sign legal documents if you're incapacitated
📌 Crucial for keeping the business running during a health emergency.
5. Advance Healthcare Directive & HIPAA Release
Even as a physician, you need to designate:
Who will make medical decisions for you
Who can access your medical information
What your preferences are for care
📌 This protects you—and gives your loved ones clarity during crisis.
6. Succession Instructions in Your Trust or Will
If you want to sell the practice, transfer it to a partner, or wind it down after your death, your trust or will should:
Identify who should handle the transition
Appoint professionals to assist (e.g., attorney, broker, CPA)
Provide authority for appraisals and legal filings
📌 The smoother the transition plan, the more value your family and staff retain.
7. Life Insurance + ILIT (Optional)
Life insurance can fund:
Buy-sell agreements
Debt payoff
Income replacement for your family
If estate tax or asset protection is a concern, an Irrevocable Life Insurance Trust (ILIT) can keep the policy outside of your taxable estate.
⚖️ Special Considerations for Medical Practices
HIPAA compliance: Patient records must be handled according to privacy rules even after your death.
Licensing laws: Unlicensed heirs cannot own or operate your practice.
Malpractice coverage: Ensure continuity of coverage or “tail” policies are addressed in succession planning.
Debt obligations: Consider how loans or equipment leases will be handled in a transition or wind-down scenario.
🧠 Final Thoughts
As a physician and practice owner, your estate plan has to serve two goals:
Protect your family’s financial future
Preserve the value of your business and continuity of care
A one-size-fits-all estate plan won’t cut it. You need a tailored strategy that integrates personal planning, business law, and healthcare regulations.
Need help building a comprehensive estate plan for your practice? Let’s make sure your patients, staff, and family are protected.
Hurley Law Group
Estate Planning & Business Succession for Healthcare Professionals
📞 308-383-1867
🌐 hurleylawgroup.com
✉️ eric@hurleylawgroup.com