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Why Prepare for the Worst?

It DOES Happen.
By Phil LoGrippo, DMD

Buying and getting established in a new practice will naturally take most of a dentist’s time and energy initially. But even those who are just starting out should not delay planning for unexpected events that can derail the best-laid plans.

Although for many dentists, the road to retirement will be mostly a straight run with some predictability, some of us will face sudden twists and curves from unexpected events for which we are ill-prepared. With little or no warning, we may be left unable to practice our chosen profession. Physical illness, accidents, and emotional disabilities are among the most common events that render a dentist unable to practice. In the most tragic situations, premature or sudden death occurs.

For most dentists, your practice is either one of your most valuable assets or it is THE most valuable. “Expecting the unexpected” can make the difference between financial survival and financial ruin for the dentist and his or her family when disability or death strikes. This is most pronounced in the case of death. Although every dentist needs to be prepared for the unexpected at every stage of their practice life, many of us are not. Now is the time to act, when you seem to have the least need but the most ability to prepare. Unfortunately, it is human nature to be complacent when all is well in our lives, so dentists and their families continue to suffer unnecessary financial ruin following disability or death.

One Dentist’s Experience
Sometimes disability sneaks up on you rapidly. In my situation, degenerative spinal pathology progressed rapidly to create permanent motor function damage, precipitating an almost immediate need to cease practice. When it became urgent, I was able to transition expediently, as my comprehensive practice information was already on file with ADS Florida. This facilitated a match of my practice with an appropriate buyer almost immediately. In this case, the buyer had also been proactive while waiting for the ideal opportunity to arise, having bank financing pre-approval and updated contact information with ADS Florida. The practice retained its value and the proceeds of that sale have been invaluable for my family and me. The practice continues to remain strong and profitable for the buyer, and I had the additional peace of mind knowing that the patients had no interruption of care.

You can choose to be proactive and “expect the unexpected” in several ways. First and foremost, if you haven’t already done so, align yourself with a competent dental transition specialist. Having a true and accurate appraisal for your practice is not only an integral part of your financial and retirement planning, but will be invaluable in case you become impaired, disabled, or deceased. ADS Florida can provide a true appraisal for your practice, and this appraisal should be updated annually.

Forget About It, Until You Need It
You can carry this one step further with ADS Florida’s Death and Disability Program. The Death and Disability Program is a product we have developed to protect doctors and their families from facing problems that we see far too often when planning has not occurred. As the value of your practice is largely a function of your goodwill, the drastic decrease of that goodwill after a tragedy can force a major, rapid reduction in value that could have been prevented if planning allowed prompt actions to be taken.

The documentation for the program encompasses what we need to establish an opinion of value (letter appraisal). Once completed, this will provide you a current snapshot of your practice value and will function as the basis of a future transition. This document will be reviewed annually and updated with the most current information available to keep the practice value up-to-date. The program includes consultation time, as well as essential information including checklists and documents for you have on hand, describing the steps for you or your family to take in the case of your disability or death.

Standards for Appraisals
A critical consideration in this process is the transition specialist’s ability to perform an appraisal. According to Hy Smith, author of Dental Practice Transactions Handbook, the government has established standards that should be met when an appraisal is performed. These standards are known as the Uniform Standards of Professional Appraisal Practice (USPAP) and must be adhered to during the appraisal process to assure that relevant facts and information have been analyzed and interpreted properly. In his book, Hy goes on to explain that in addition to USPAP, the Institute of Business Appraisers (IBA) and the American Society of Appraisers (ASA) have universally accepted and required standards that the appraiser be knowledgeable in the area of the appraisal. Therefore, it is essential that the appraiser have specific dental practice experience, as do each of the transition specialists at ADS Florida.

Unfortunately, most of “the unexpected” is not preventable. Therefore, now is when you should be proactively taking the steps necessary to minimize financial losses in the case of disability or death. One of my colleagues at ADS Florida, who instantly went from being a fully-functioning practitioner to being unable to practice again as a result of injuring his hands during a skiing accident, has summed it up best. The closing sentence of an article he recently co-authored states, “Remember, serendipity is not a plan. Prepare now.” I believe this most accurately summarizes the need to expect the unexpected.

To request more information on the ADS Florida Death and Disability Program, click here.

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