3.
The Impact on the Practice:
As an equal owner/partner in his dental practice,
his disability also impacted his practice, partner and
support staff. In addition to owning 50 percent of the
dental office, he was also responsible for developing
and building his practice. He had equity in both the real
estate owned by the practice, as well as the goodwill
developed over the course of the partnership.
Moreover, his production represented 50 percent of the
practice’s revenue. His production was used to pay for
his overhead, as well as that of the practice. His work
stoppage resulted in a 50 percent reduction in revenue
and a struggle to find another dentist to assume his
position. This caused significant stress on his partner
and support staff.
He also had a partnership agreement with a disability
buyout provision. While the buyout provision provided
the details of his partnership assets, the practice lacked
the liquidity to honor the agreement. This issue further
strained his relationship with his partner and the
practice.
These issues could have been mitigated had the partners
purchased Business Overhead Expense and Disability
Buyout policies. Business Overhead Expense policies
are designed to help cover the overhead and expenses
needed to run a dental practice should a covered dentist
become disabled. This type of policy would have mitigated
some of the financial hardship faced by the practice
when he became disabled.
Similarly, Disability Buyout policies are designed to cover
a percentage of a partner’s buyout if they become disabled.
While the coverage amount is designated at the time
the policy is purchased, a Disability Buyout policy would
have mitigated the financial burden on his partner and
the practice. Moreover, it would have ensured the funds
were there when he was entitled to be bought out.
For my client and his partner, the sudden economic
consequence of his disability began to affect their 15-year
relationship and friendship. They were able to work
together and compromise on key issues that allowed the
practice to honor its obligations and stay in operation.
And while my client and his partner were able to address
these issues, many of the issues and hardships they faced
could have been mitigated had they purchased Business
Overhead Expense and Disability Buyout policies.
MAY/JU N E 2019 | P EN N SYLVAN IA DEN TAL JOURNAL
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