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Dental Contract (Part 4): Death, Incapacity, etc.

By May 21, 2011September 30th, 2019Employment Law

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice, contact me (Michael Carabash) or David Mayzel.

What happens upon the death or incapacity of the dentist or associate?

Now here’s something you don’t see in a lot of dental contracts: what happens if the dentist or the associate die or become mentally incompetent?  Shouldn’t the associate agreement contemplate something here?

That’s where David Mayzel (my law partner) and I decided to include some pretty neat stuff in the agreement.  After meeting with Tim Brown and Rob MacDonald of ROI Corp (an appraisal firm), we realized that dentists can lose their ability to sell their practice for fair market value if they become incapacitated, become sick, go on an extended leave of absence, or die.  That’s why they recommended that dentists have a locum in place.  You can read up more about locums here.

Duties and obligations on Associate

So, what should the associate agreement say then about these situations?  Well, in order to preserve the value of the dental practice without having the dentist available, it would be worthwhile to say that, upon the death or incapacity of the dentist, the agreement shall still remain in force (in other words, it’s not automatically terminated).  The next thing the agreement should say is that it will be the legal representative (i.e. power of attorney or estate trustee) of the dentist that will be able to terminate the agreement on behalf of the dentist. Next, you’ll want to state that the associate will be required to assist the legal representative in selling the practice and helping to maintain the practice until it is sold.  This will help preserve the goodwill in the practice and the fair market value of the business when it is sold.

Duties and obligations on Dentist

What happens if the associate becomes incapacitated or dies?  Well, in these circumstances, the dentist will not want to have any additional obligations to the associate’s power of attorney or estate trustee; hence, they will want to be able to terminate the agreement and be obligated to pay the associate (or their legal representative) for dental services rendered upon until the time that the associate become incapacitated or died.

DMC