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Succession and Estate Planning for Physicians

News & Blog Feb 09, 2017

Succession planning is extremely important for physicians looking to maximize the return on their considerable investment in fostering and growing their practice. Establishing a succession plan provides peace of mind for physicians so they can consider new adventures in retirement. Without a well-thought-out succession plan in place, a physician risks straining a long-term relationship with his or her partners and dismissing the potential for a large pay-out when he or she exits the practice, due to death, illness or retirement.

A succession plan is a roadmap for the transition of ownership and practice management of a medical practice which includes timing, financing, identifying buyers and a fair price. Working in advance to ensure a smooth transition to a new owner negates the potential for a “fire sale” when a practice must be transitioned suddenly or unexpectedly.

It’s important to start a succession plan well in advance of your last day on the job. Succession planning can be quite complex—there are aspects of taxation, property, contracts, lease agreements, and employment law considerations—along with emotional decisions and your obligations as a licensed professional.

If you start to get bogged down with creating a plan, remember that the fact that spending the time to create a solid succession is indicative of a well-run practice. That sends a strong positive message to potential buyers, many of whom may be your counterparts and younger partners.

Creating a Succession Plan

The transfer of a medical practice to a new owner is a very emotional decision, but those emotions shouldn’t get in the way of a wise succession plan that creates a win-win for both parties.
The succession process has several steps:
1. Finding a successor for the medical practice;
2. Drafting a Buy-Sell Agreement or other contractual agreements identifying key sale terms;
3. Coordinating with your family estate plan and/or irrevocable trust(s) for long term family asset protection
4. Identifying finance options, including insurance or a Promissory Note owed to you or your estate;
5. Ensuring compliance with all regulatory requirements for licensed professionals;
6. Establishing a valuation formula;
7. Transitioning patients to the new doctor.

Physicians should meet with an experienced planning attorney with a strong background in business succession planning to discuss the best options for a transition of their most valuable asset. Solo practices need succession planning, however, in a multi-physician practice, the succession plan, non-compete agreements, and other details about leaving the practice are typically determined at the initial buy-in. If that’s the case, those plans should be reviewed by an attorney as you prepare to leave for any changes in personal, business, economic, and regulatory conditions and circumstances.
A large part of a successful succession plan is the physician’s own underlying estate planning so there is not a gap between the implementation of the business succession plan and any loved one’s rights under an estate plan.

Planning your exit is infinitely easier and more valuable when it has been arranged prior to any problems arising, at which stage it is already too late to reap the full benefit of your years of building goodwill and a thriving practice.


Another important element of a successful succession plan is an accurate valuation of other assets that may be a part of the medical practice, including equipment, goodwill, real property, and patient lists. There are often various ways to capitalize on these investments which do not necessarily have to be sold part and parcel with a practice, but may be used as a way to diversify value for you in retirement or to your estate when you are gone.

Contact Us

Succession planning for your medical practice should start today. Contact NM Law, APC (949-253-0000) to speak to a succession planning attorney about your practice and your plans for the future.


Disclaimer: This article is intended to provide a general summary of laws in the State of California and should not be construed as a legal opinion nor a complete legal analysis of the subject matter. Noelle Minto is an attorney at NM Law, APC in Tustin, California, a law firm specializing in Trusts & Estates and Business Transactions.


Ms. Minto has been a business and estates transactional attorney based in California since 2003. Her practice is now located in Tustin, CA but represents individuals and entities based throughout the United States and abroad. Phone: (949) 253-0000, Email:


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