4 Important Considerations for Succession Planning

By Stacey Prince-Troutman, Broad and Cassel Senior Counsel

​You have worked tenaciously for the past 40 years to build your business and reputation in the community. Your business is a success, but recently, your passion for being involved in the day-to-day operations of the business and meeting with patients has dwindled. Instead, you dream of traveling more and spending time with family. You trust your younger associates to run the business while you are traveling and would likely sell the business to them once you retire. If you are in this situation, then now is the ideal time to formulate a business succession plan.

Planning to transition your business to your associates should start now, not when you’re three weeks away from retirement. An effective business succession plan takes years to successfully execute and should consider the following:

  • Mentoring the next generation of leaders. Your associates should be given the opportunity to be “mentored” into transitioning from skilled practitioners to business owners. Cross-training is the key to ensuring a successful transition. Associates should be trained in managing staff, dealing with insurance companies, vendors, accounting practices and more.
  • Obtaining a business valuation. You should retain a qualified business appraiser and accountant to determine the fair market value of the business. Once a valuation is obtained, a schedule for your payout should be discussed so that the associates will have the funds needed — at the appointed time — to acquire your business.
  • Preparing an agreement. Once an agreement is reached, an experienced attorney should be retained to draft an agreement that provides for the transition of the business to the associates. In addition to including the basic deal points, a properly drafted agreement should include certain safeguards for breach, death and other contingencies.
  • Updating your estate planning documents. It’s not unusual for your business to be one of your most significant assets, if not the most significant asset. Accordingly, you should update your estate planning documents to consider the receipt of your remaining interest in the business (or outstanding payments under the agreement) by your heirs following your death in the event you die before fully transitioning the business to your associates.

A proper business succession plan is crucial to the viability of your business after your departure, and there is much that goes into a well-structured and thoughtful plan. A qualified business appraiser, accountant and attorney make up the team that is an invaluable asset in this process — ultimately assisting in formulating a plan and overseeing its successful execution. As we kick off the New Year and plan for the future, this might make for a good resolution.


Stacey Prince-Troutman is Senior Counsel in the Orlando office of Broad and Cassel. She is a member of the firm’s Estate Planning and Trusts Practice Group and can be reached at
sprince@broadandcassel.com or 407.839.4200.

Personal Disability Insurance: The Topic No One Wants to Talk About, But Everyone Needs to!

By Dan Zottoli, Director of Sales – Atlantic Coast, FDA Services Inc.  

 

Choosing the right personal disability insurance policy is one of the most important decisions you will make. So much time, money and effort was spent preparing for your dental career. What if you became ill or injured, and could no longer work in your chosen profession? This question is the basis for the decision and the very reason for the need for personal disability insurance. Now that you have come to the conclusion that you need a policy, what policy do you buy?

I always say that the “devil is in the details” with personal disability insurance. Two policies may appear to be similar at first glance, but will have very different paths should a claim arise. One of the most important aspects of a personal disability insurance policy is the definition of disability. This definition will tell the policy when you are disabled (to them) and under what circumstances the insurance company should pay a benefit. The most comprehensive definition will read as follows (with small variations from company to company):

1. You are considered disabled if, based upon illness or injury, you are unable to perform the material and substantial duties of your own occupation.

This definition, referred to as “own-occupation,” is the most desired definition and obviously the most liberal. A disabled dentist that meets the requirements set forth in the above definition can return to work in another occupation and still receive their check from the disability insurance carrier. Now, here comes the “devil of details” — some companies will promote their policy as “own-occupation,” when it reads as follows:

2. You are considered disabled if, based upon illness or injury, you are unable to perform the material and substantial duties of your own occupation AND are not gainfully employed.

3. You are considered disabled if, based upon illness or injury, you are unable to perform the material and substantial duties of your own occupation DURING the regular occupation period.

The word “AND” in the second definition above is substantial. This type of definition essentially states that you will not receive a benefit if you go back to work in any occupation. The term “regular occupation period” in the third definition above will specify how long they will honor the “own-occupation” language. When the regular occupation period ends, the policy will base your qualification for benefits on what you can do based upon your education, skills or experience.

As you can see, there are many factors to consider when looking at personal disability insurance. The most important factor is finding the right agent to assist that can explain and clarify the details of each company. The FDA Services’ experienced staff is ready to get to work for you. For more information, contact FDA Services at 800.877.7597 or insurance@fdaservices.com.

 

Help Protect Your Retirement Security

By FDA Services

Long-term care is the inability to care for one’s self due to an illness, injury or disability. This care provides assistance with daily living activities and is provided in a variety of settings, including in-home care. The need for long-term care can last for a few months to many years.

Long-term care for an individual can cost from $60,000 to more than $100,000 per year. These costs can severely disrupt the financial security of affected families. Private health insurance and Medicare are not intended to pay for long-term care. Long-term care insurance is becoming a popular way to protect against financial hardship when the need arises.

Make sure you have a plan for you and your family. Call FDA Services at 800.877.7597 to learn about long-term care insurance or go to http://www.completelongtermcare.com/assoc/fda.aspx.

Disability Overhead Insurance — Protect Your Practice!

By Dan Zottoli, Director of Sales – Atlantic Coast, FDA Services Inc.  

How hard have you worked to build your business? I would assume that all of you answered that in your head and came up with, “I WORK HARD!” Now, what if you became ill or injured and could no longer work? So much time, money and effort was spent building your practice — how do you protect what you have built to ensure that your practice can survive if something should happen to you and prevents you from seeing your patients?

Disability overhead insurance is designed to pay the practice expenses in the event that the dentist becomes disabled. Unlike personal disability insurance, disability overhead insurance policies are shorter in term. They are designed to pay a benefit for 12-24 months (in most cases) to keep the practice current on its financial obligations in the event a dentist becomes disabled. The idea behind this type of policy is simple. If you became disabled, you need money coming in until you develop a strategy for your next move. The duration of a disability will vary from case to case. By having cash coming in from a disability overhead insurance policy, you will have the time to determine whether you will be back to work or in permanent disability situations, when you will be back to work, whether to sell the practice or get an associate to come in to see the patients.

There are many factors to consider when looking at disability overhead insurance. The most important factor is finding the right agent to assist that can explain and clarify the details of each company. The FDA Services’ experienced staff is ready to get to work for you. For more information, contact FDA Services at 800.877.7597 or insurance@fdaservices.com.