Legal and regulatory proceedings
Estate planning — Prepare a will and make a plan
An article for physicians by CMPA General Counsel
Originally published December 2007
Certain practice management issues arise when a physician dies, and should be considered as part of estate planning.
Of interest to all physicians
Most of us are aware that estate planning is prudent for our own personal financial planning. As a physician, it is also important to ensure your medical practice is appropriately managed in the event of an unexpected illness or death.
Your first priority should be to ensure you have a valid will that is kept up to date. An essential aspect of estate planning is choosing the right person to administer your estate. In most provinces and territories, the person will be identified in your will as the executor. In Ontario, the executor is called an estate trustee and in Québec he/she is called a liquidator. Because the executor will have an obligation to make critical decisions about your estate, he/she should be chosen carefully.
You should also consider who would be best suited to manage the closure of your practice in the case of your sudden illness or death. This could be undertaken by the executor of your estate. However, you may also consider designating a person to assist you or your estate such as a business partner, a colleague, a trusted employee, a spouse or other family member to be responsible for closing the medical practice. It is a good idea to discuss the matter with the chosen individual to ensure he/she is willing to act and capable of undertaking the responsibility.
If arrangements are not made in advance, you should at the very least let family members and/or the executor of your estate know that the provincial or territorial regulatory authority (College) may be helpful in suggesting the name of a nearby colleague who might be willing to assist with the responsibilities of closing a practice in the event of your illness or death.
The CMPA article entitled "Considerations When Leaving a Medical Practice" gives some advice about the estate planning process. For example, the CMPA suggests members make arrangements for maintenance and/or transfer of their patient records. Record retention is required for medico-legal risk management, even when the physician has died.
You will also want to make arrangements for notifying patients of your death and to ensure family members and/or executors have a list of organizations (with telephone numbers and addresses) that should be notified. These organizations may include:
- provincial or territorial paying agency;
- other health professionals, clinics or agencies with whom you were regularly in contact; and
- the Canadian Medical Protective Association (CMPA).
Keep in mind that where the College has not been notified of a physician's death and notices for fee payment from the College go unanswered, the College may suspend the physician for non-payment of fees. The suspension for non-payment will be recorded in the College register and may be published in the College newsletter or on its website. For members who have been in good standing with the College in life, it is preferable to avoid a public suspension after death. Notification to the College upon a physician's death should avoid such a consequence.
In contemplating how the estate will be managed, members are also encouraged to consider certain issues with respect to CMPA membership.
The CMPA's occurrence-based protection means that even after a physician has died, his/her estate will be eligible for CMPA assistance with medico-legal difficulties arising from medical professional activities performed while the physician was a CMPA member.
Clinics and facilities
In addition to individual physicians, clinics and medical corporations can also be named as defendants in litigation. For a clinic to be eligible for CMPA assistance with medico-legal difficulties, all of its physician owners must be members (see CMPA assistance to clinics and facilities: General principles). If a member is a physician owner (or part-owner) of a clinic or facility and the member ceases to practice (e.g., through retirement), the member must dispose of all ownership shares or proprietary interest within three years from the date of retirement. However, the member must retain membership in the CMPA until his/her ownership shares or proprietary interest has been divested. If any of the shares were held by the member's family (such as a spouse, children, parents or siblings), these shares must also be divested within the three-year period.
Where a member is a physician owner (or part-owner) of a clinic or facility and the member dies, the member's estate is expected to dispose of all ownership shares or proprietary interest in the clinic within a reasonable period of time after the member's death. Similarly, if any of the shares were held by individuals in the member's family, these shares must also be divested within a reasonable period of time. The Association has not defined what constitutes a "reasonable period of time" in this context, because the time frame may depend upon how long it takes to administer the estate. The complexity of the estate, and whether there are any contested issues may influence the time frame. However, the clinic or facility may be ineligible for assistance where no steps are taken to divest the deceased member's interest in the clinic or facility within a reasonable time after the member's death. Similarly, the clinic or facility may not be eligible for assistance if the family members of a deceased member continue to have shares in the clinic or facility, after the administration of the member's estate is complete.
Members are encouraged to plan ahead and make the necessary arrangements to ensure, after death, their estate and/or family members can dispose of shares in their clinics/facilities as soon as possible.
They are also encouraged to consult with their financial and legal advisors to obtain expert advice on the preparation of their will, as well as issues relating to the transfer of assets, including tax matters. Estate planning information may also be available from provincial or territorial medical associations. Obtaining expert advice will be especially useful for physician owners of a clinic or for physicians who have incorporated their practice.