Watch: Estate Planning for Dentists — Protect Your Practice & Legacy

Video Transcript: Estate Planning for California Dentists

Below is the full transcript of this video. This is a general educational overview of estate planning for California dentists, not legal advice for your specific situation. For detailed information about our dentist-focused estate planning services, visit our California Estate Planning for Dentists page.

Why California Dentists Need Estate Planning

Today we will be discussing estate planning for dentists. Every professional, including dentists, should be thinking about estate planning. However, California dentists have unique considerations that make estate planning vital.

Estate planning for dentists extends beyond personal assets to include their dental practice. In California, a dental practice can only be owned by a licensed dentist with a few minor exceptions. As a dentist, your dental practice is likely one of your most significant assets, and it needs to be properly handled upon death or disability.

Let’s dive into why California dentists should have an estate plan.

What Estate Planning Is

To begin, let’s start by giving a definition of estate planning. Estate planning is the process of preparing for the management and distribution of a person’s assets, along with their health care decisions, during their life and after their death.

This is done through a series of documents that include:

• A living trust
• A last will and testament
• An advance health care directive
• A health care power of attorney
• A HIPAA authorization
• Documents that transfer property into your trust

Through this combination of documents, you gain control of your assets and health care decisions while you are alive and healthy, if you become incapacitated, and ultimately after you have passed away.

Goals of an Estate Plan for Dentists

A priority of most of the dentists we work with is their desire to ensure that their loved ones are cared for after they are gone. A well-drafted estate plan will allow you to predetermine:

• Who will inherit your assets
• When your beneficiaries will receive their inheritance
• Who will make health care and financial decisions on your behalf if you are unable to
• Who will act as a guardian for your minor children
• Who will manage your practice in a way that preserves its value until it can be sold

Planning Considerations Unique to Dentists

Dentists often spend years building their practices, investing substantial financial resources and time into them. They are not just businesses, but significant assets that need protection. Without proper planning, there is uncertainty about what happens to a dental practice upon the dentist’s death. The practice might be sold hastily and undervalued, mishandled, or shut down.

California law allows certain non-dentists, such as a legal guardian, trustee, or executor or administrator, to contract with another licensed dentist to continue managing the dental practice of an incapacitated or deceased dentist for up to 12 months. Keep in mind this is only allowed if the practice satisfies certain conditions, including a formal notification to the Dental Board of California.

While 12 months may seem like a long time, keep in mind that your loved ones will need time to grieve, prepare the practice for sale, find a buyer, and complete the sale, all before the 12-month period expires. The more you can plan ahead, the less stress your loved ones will have.

Avoiding Probate in California

Now let’s talk about probate in California and why dentists should avoid it by having a valid trust-based estate plan in place. Probate can be a lengthy and expensive process. By setting up a trust as part of their estate plan, dentists can help their heirs avoid probate, ensuring a quicker and potentially less costly transfer of assets.

In California, probate fees are set by statute (Probate Code §§ 10800 and 10810) and are calculated based on the gross value of the estate. Probate fees include compensation for both the executor or administrator and the attorney handling the probate process. The two sections apply identical sliding scales, so combined statutory fees on a given estate are double the schedule below.

Let’s look at a breakdown of the statutory fee formula for a hypothetical three million dollar estate in California that is required to go through the probate process. The formula for probate fees is calculated as follows:

• 4% of the first $100,000 = $4,000
• 3% of the next $100,000 = $3,000
• 2% of the next $800,000 = $16,000
• 1% of the next $2,000,000 = $20,000

This totals $43,000 for the attorney’s fees. The executor is also entitled to the same amount, which doubles the total to $86,000.

Other costs associated with probate may include court filing fees, probate referee fees, newspaper publication fees, bond premiums, and other miscellaneous costs.

To probate a $3 million estate in California could potentially cost upwards of $90,000 or more, plus any additional costs for extraordinary services rendered by the attorney or executor. This does not factor in the possible loss of value for any time the estate’s dental practice was unable to operate during the probate process.

In this example, if the deceased dentist had put in place a valid trust-based estate plan, his or her estate could have saved years of stress by avoiding probate and likely would have saved tens of thousands of dollars.

Patient Care Considerations

Even if you do not own a dental office, you still have a duty to your patients. In the event of sudden incapacity or death, it is prudent to make arrangements for patients to be able to continue receiving care. This might include specifying a successor who can take over your patients, or making arrangements for another dentist to access and take custody of your patient files and records.

Schedule Your Free Estate Planning Consultation

If you’re a California dentist and do not have an estate plan in place, it may be time to give us a call. To learn more about our dentist-focused estate planning services, visit our California Estate Planning for Dentists page. We’re here to provide compassionate and knowledgeable guidance, ensuring peace of mind for all of our clients.

To schedule a free, no-obligation consultation, give us a call at (760) 278-1116 or visit our website.