Is Your Dental Practice Financially Naked?
Why Building Wealth Is Only Half the Job for a Successful Dental Practice Owner
Dentists spend decades learning how to build wealth. We learn how to increase production, improve profitability, grow a practice, invest, buy real estate, and eventually create enough financial security that work becomes optional. What we tend to spend much less time thinking about is how to protect everything we have built. I was guilty of this myself. I had built a successful dental practice, accumulated assets, invested, and done many of the things we are told successful business owners should do. Yet when I started looking more seriously at asset protection and estate planning, I realized there were areas where I was far less protected than I assumed.
The reason so many of us procrastinate on this stuff is pretty obvious. Nothing feels urgent. Updating a trust does not increase production tomorrow. Reviewing how your assets are legally structured does not fix a hole in the schedule. Nobody wakes up excited to spend the afternoon discussing lawsuits, death, taxes, or what happens if they become incapacitated. There is always something more immediate demanding our attention, so we tell ourselves we will eventually get around to it.
The problem is that asset protection and estate planning are two areas where "eventually" can become "too late" very quickly. Once the lawsuit happens, the accident occurs, or your family is suddenly forced to make decisions without you, many of the planning options you had before the event may no longer be available. That was one of the biggest ideas that came out of my conversation with asset protection consultant Gary Harker. You have to build the protection while things are going well, not after something goes wrong.
Your Risk Is Bigger Than Malpractice
As dentists, most of us think about liability through the lens of malpractice. We carry professional liability insurance because we recognize that practicing dentistry creates risk, and it is easy to assume that means we are adequately protected. The reality is that owning a dental practice and accumulating wealth can create exposure well beyond the clinical dentistry we perform. Employment disputes, wrongful termination allegations, harassment claims, business disagreements, and other issues can arise simply because you own a company with employees. Then there are all the risks that have absolutely nothing to do with your practice. You drive a car. Your spouse drives. Eventually your teenage children may drive. You own property, travel, invest, and live a normal life outside the four walls of your dental practice.
This became much more real to me after someone I know was involved in a serious automobile accident in which another person died. This was a high-net-worth individual, and watching what followed made me think very differently about my own situation. We spend so much time protecting ourselves from the obvious professional risks that we can overlook the fact that one completely unrelated event can create enormous financial consequences. Insurance is obviously an important part of protecting yourself, but insurance and asset protection are not necessarily the same thing. Policies have limits, exclusions, and specific circumstances they are designed to cover.
That is where the legal structure around your assets becomes important. Gary explained asset protection as essentially looking at what you own, how you own it, and whether certain assets can appropriately be separated from certain liabilities through legal entities and other structures. The details are going to vary significantly based on state law, the type of asset, the owner's circumstances, and the advice of qualified attorneys. The takeaway is not that every dentist should go create a pile of LLCs tomorrow. It is that once you have accumulated meaningful wealth, you should know what is actually exposed rather than simply assuming you are protected.
Make the Decisions While Life Is Going Well
Estate planning is another one of those things most of us know we should do but find incredibly easy to postpone. Gary shared a story about his brother that changed the way I thought about this. His brother was killed by a drunk driver at only 39 years old. His family suddenly found themselves in a hospital dealing with end-of-life decisions during one of the most emotional moments imaginable. His wife and his mother both loved him deeply, but that did not mean they necessarily had the same perspective about what should happen. Fortunately, he had already put documents in place establishing who had the authority to make those decisions. Gary described the lesson with a phrase that stuck with me: you don't want to make decisions in the valleys of your life. You want to make them on the peaks of your life.
That is really what estate planning is about. We tend to think of a will or trust as paperwork that determines who gets our money after we die, but the larger purpose is removing ambiguity before the people we love are forced to make important decisions during a crisis. Who can make medical decisions if you cannot? Who has authority over your financial affairs? What happens to your business interests? How should assets be distributed? If you have children, who is responsible for them? These are much easier questions to answer calmly today than during the worst week of your family's life.
I have some personal experience with what can happen when that planning is not there. My father passed away when he was 49. There was very little planning in place, and some of the assets he owned were held jointly with his new wife. My brother and I ultimately received nothing from some of what he had accumulated. We explored our options with attorneys afterward, but there was very little we could do. Families can remember intentions differently, disagree about what is fair, and become completely divided when significant assets are involved. A good estate plan cannot eliminate every possible family conflict, but it can make your wishes much clearer before anyone has to interpret them for you.
The other important point is that estate planning is not something you necessarily complete once and forget forever. Think about how much a dentist's financial life can change over a decade. You may create a will or trust when you are a young associate with a home, a retirement account, and a couple of kids. Fifteen years later, you may own a multimillion-dollar practice, investment properties, additional businesses, and significantly more assets. Your family circumstances may have changed too. Gary pointed out that sometimes the problem is not that someone created a bad plan. It is that they created a plan twenty years ago and never updated it. Different family circumstances can also require different types of planning, including situations involving special needs. Your estate plan should evolve as your life and wealth evolve.
Tax Preparation and Tax Strategy Are Not the Same Thing
The other part of this conversation that caught my attention was taxes. Almost every successful dental practice owner I know feels like they pay a lot in taxes, yet many of us have never stopped to ask whether the person preparing our taxes is also proactively strategizing around them. Those are not necessarily the same service. A CPA may do an excellent job accurately preparing returns and keeping a business compliant while providing relatively little proactive tax planning. The important thing is understanding what you are actually getting and whether anyone is looking forward instead of only documenting what already happened.
Most dentists have experienced the year-end conversation where someone suggests buying equipment because it can create a tax deduction. I have always found this logic a little strange when you do not actually need the equipment. If the practice genuinely needs a $100,000 piece of technology and there is a legitimate tax benefit available, great. If you are buying something you do not need solely because spending $100,000 reduces your taxable income, that is a very different decision. You are still spending the money. A tax deduction should make a good business purchase better. It should not automatically turn an unnecessary purchase into a good business decision.
Gary's larger point was that proactive tax planning can extend beyond ordinary deductions. Depending on the owner's circumstances, business entities, retirement planning, family employment, available tax credits, and other strategies may deserve consideration. He gave examples involving employing children through certain business structures and evaluating whether qualifying business activities could be eligible for research and development tax credits. Those are not strategies a dentist should hear about and immediately implement. Tax rules are specific, documentation matters, and what applies to one business may not apply to another. These are exactly the types of ideas that should trigger a conversation with qualified tax and legal professionals who understand your individual circumstances.
For me, the important lesson was not any one tax strategy. It was the difference between having someone who files your taxes and having someone who is proactively looking at your financial life and asking what opportunities may exist. As your practice grows, your income increases, and your financial life becomes more complicated, the strategies that made sense ten years ago may no longer be the best strategies today. That does not necessarily mean you need a dental-specific CPA either. Understanding dentistry can certainly be valuable, but I would also want advisors who understand entrepreneurs, business ownership, investments, legal entities, and the complexity that comes with accumulating significant wealth.
Protecting Wealth Requires the Same Intentionality as Building It
As dentists become more successful, their financial lives often become too complicated for one professional to handle everything. You may have a CPA, financial advisor, estate-planning attorney, asset-protection attorney, and insurance professional. The challenge is making sure these people are not operating in completely separate silos. A change to your business structure can affect your taxes. Purchasing real estate can affect your asset-protection plan. Selling a practice can affect your estate and tax planning. Major changes in your family can affect almost everything. Gary described a model where estate planning, asset protection, and tax strategy are coordinated with the client's existing CPA. Regardless of which professionals you choose, the underlying concept makes sense: the more complex your financial life becomes, the more important it is that the people advising you understand how the pieces fit together.
This is also why I do not think the purpose of asset protection should be fear. You can make anyone terrified if you spend enough time talking about lawsuits, accidents, death, taxes, and everything that could possibly go wrong. That is not the point. The reason we build wealth in the first place is to create security and freedom. I have spent years building systems and leaders in my dental practice because I do not want to create a successful business that still requires me to be there every day. Protecting your wealth is really an extension of that same idea. You want the things you have built to support your life instead of becoming another source of anxiety.
At some point in your career, the financial question has to expand beyond how much you can produce, how profitable you can make the practice, or how quickly you can grow your net worth. You also need to ask whether the wealth you already created is structured appropriately. Is your insurance adequate? Is your estate plan current? Does your family know what should happen if you become incapacitated or die? Have your business interests been addressed? Do you know which personal assets could potentially be exposed? Are your tax advisors helping you plan proactively? Most importantly, are the professionals helping you with these decisions looking at your current financial life or a version of it that existed ten years ago?
Dentists tell patients every day that prevention is easier, less expensive, and less stressful than waiting until something becomes an emergency. There is probably a lesson in there for us. If you have spent decades building a successful dental practice and accumulating meaningful wealth, protecting it deserves some of the same intentionality you used to create it. Get the right professionals around you, review what you already have in place, identify the gaps, and revisit the plan as your life changes.
None of that is as exciting as growing the practice or making another investment. That is probably why it is so easy to keep pushing it to someday. The problem is that you do not get to choose when the event happens that makes all of this suddenly important.
You worked too hard to build everything you have to wait until then to find out whether you protected it.
