Is a Continuity Plan in Place?

May 10, 2007

By: Sean Tinsley

Planning can ensure that your family and medical practice (or any other healthcare entity) business are protected. The long term survival of any business like a medical practice—and the well-being of your family—are factors that you should consider if you haven’t already.

The main goals of creating an estate plan for your business are:

  • To establish a business continuation plan that can help provide benefits for your practice and your heirs.
  • To meet your objectives for asset distribution.
  • To potentially reduce taxes for your heirs.

To make sure that an business estate plan is up-to-date and effective, these are some of the concerns that you should document on an annual basis:

– Is there a business continuation plan in place? Does the plan identify the owner’s successors? If so, are these successors trained and ready to take over when necessary?

– Is the insurance coverage adequate to keep the business going?

– Are financial arrangements up-to-date? For example, are new sources of capital to fund expansion, purchases, new product lines and buy-sell agreements identified?

– Is the practice properly valued?

– Are employees informed about the future plans for the business? Knowing that the business has a continuity plan can help keep good employees on staff.

Make sure that you have issued detailed instructions to an executor. It is important to document everything relating to your medical practice and personal assets (e.g., the locations of all safety deposit boxes and investment accounts), even if your heirs will not actively run the business. This document should discuss management plans, shareholder agreements, buy-sell agreements and other issues vital to the company’s future. By keeping this information up to date, you will make it much easier for someone to take over or liquidate.

Planning today could go a long way in helping alleviate asset distribution headaches for your heirs and partners. Creating a proper estate plan requires careful planning and input from trained legal, tax and financial professionals.

Sean R. Tinsley is a member of AXA Advisors and can be reached at 512-703-4312 or by email at sean.tinsley@axa-advisors.com.

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