Creating a personal estate plan gives you peace of mind. It guarantees your loved ones are cared for after you have died or become incapacitated. 

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A professional estate plan for your therapy practice does the same thing, but in this case, it’s your clients and colleagues who benefit from your foresight.

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Hopefully, you’ll never need to rely on your professional estate plan and your clinical will. But taking care of them now means you no longer need to worry about what could happen to your practice and your clients if you pass away.

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Here’s everything you need to know about estate planning for your therapy practice.

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What is estate planning for your therapy practice?

Estate planning consists of more than writing a final will and testament. It includes the extra steps you need to take to make sure your wishes are carried out in the event you die or become unable to manage your affairs.

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With that being said, your professional will (also called a clinical will) does play an important role. It’s the guidebook others—most importantly, your professional executor—will use to manage the transition once you are no longer practicing. Key elements of your clinical will, and the steps you need to take to create one, are covered later in this guide.

Professional vs. personal estate planning

Professional estate planning has to do with your practice and how it’s managed once you are gone. 

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Personal estate planning, on the other hand, has to do with your personal life—your personal relationships and assets. That includes:

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• The executor of your will
• Power of attorney (POA) for controlling long-term assets like investments
• Plans for the guardianship of children or other dependents
• How your savings, house, car, personal belongings, and other assets are disposed of
• Your life insurance, 401(k), and their beneficiaries
• Funeral or memorial arrangements
• Public announcements of your death (ie. obituaries)
• Charitable gifts

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Importantly, the executor of your personal will is different from the executor of your clinical will.

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Your personal executor may be a family member or close friend, or a professional you have hired to do the job.

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Your professional executor is responsible for managing your practice. That includes dealing with patients—notifying them of your incapacitation or death, and if necessary referring them to new therapists.

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Because of this, your professional executor should be a qualified psychotherapist. They should understand the ins and outs of how a practice is run. And they should have the clinical skills necessary for informing your clients of your passing and potentially counselling them through their grief.

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Why do you need a professional estate plan?

Whether you run a group practice with a commercial lease that employs multiple therapists, or whether you run a part-time, fully remote practice out of your home office, you should have a professional estate plan.

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Here are the most important reasons why:

It allows you to take care of personal estate planning

Your professional estate planning and your personal estate planning are interconnected.

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If your practice is a sole proprietorship, then its assets are part of your personal holdings after you pass away. If it’s a limited liability company (LLC), terms set out in its operating agreement determine what happens to control of the company and its assets.

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Your personal estate plan needs to include information about what happens to your professional assets, and that’s a question only your professional estate plan can answer. Your professional executor can work with your personal executor to make sure your wishes are carried out and all your assets go to the right people.

It protects your colleagues

If you’re the only employee of your therapy practice, then in all likelihood you will make plans to close your practice once you’re no longer able to run it.

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But if you have contractors or other employees working for you, their livelihoods are at stake. It’s your responsibility to take them into account—whether that means putting someone else in charge once you’re gone, or planning the closure of your practice in a way that makes the transition easier for them.

It ensures your clients get the support they need

Your clients may still need treatment after you’re no longer able to treat them. 

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In the event you retire from practice, you can personally refer clients to other therapists and help them find the treatment you need. But in the event of sudden death or disability, you won’t have that luxury.

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As a result, a client may find themselves suddenly left without a therapist during an important stage in their treatment. For clients with severe mental health challenges, the result can be devastating.

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Besides that, you need to account for the mental and emotional impact your death or incapacitation could have on clients. They may need grief counselling to help them process the loss.

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A comprehensive estate plan for your therapy practice ensures your clients continue to get the professional support they need.

It takes care of the future so you can focus on the present

Knowing you have a plan in place for the future of your practice frees you up to focus on the present. It can relieve any anxiety you may have about what will happen to your practice when you’re gone, which lets you prioritize your practice and your clients.

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Even though your estate plan is all about the future—a future without you in it, which may be uncomfortable to picture—it gives you freedom to focus on the here and now.

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What should you include in an estate plan for your therapy practice?

As a term, professional estate planning refers to all the work you do to prepare your practice for the future. 

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But to simplify things, it can be broken down into three parts: 

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1. Your limited power of attorney (LPOA)
2. Your discontinuation of practice plan
3. Your professional will

What is limited power of attorney (LPOA) for a therapy practice?

Limited power of attorney (LPOA) allows an individual to legally act on your behalf within a limited set of circumstances. 

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As a part of your estate plan, your LPOA document determines who gets limited power of attorney to oversee your practice after you pass away or become incapacitated. Their job is to carry out your discontinuation of practice plan. Once the plan is carried out, they no longer act as your representative.

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Laws about who can be granted LPOA and what precisely they can do vary state by state. You may decide to grant LPOA to the executor of your professional will.

What is a discontinuation of practice plan for a therapy practice?

A discontinuation of practice plan lays out the blueprint for how your practice will be closed down after you pass away. Your LPOA carries out the plan.

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The plan includes steps such as:

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• Closing banks and credit accounts
• Terminating commercial leases
• Shutting down utilities accounts and monthly subscriptions
• Notifying staff or contractors
• Selling off or transferring assets
• Formally dissolving the LLC

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Your discontinuation of practice plan should be thorough and well-organized in order to make sure all essentials are covered and that your LPOA’s job is as straightforward as possible. 

What is a professional will for a therapy practice?

A professional will for your therapy practice, also called a clinical will, spells out exactly what should happen to your practice after you pass away or become incapacitated. To do so, it makes reference to your discontinuation of practice plan.

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It also assigns an executor, the individual responsible for carrying out the instructions in the will. This executor may be your executor, or your executor may work closely with your LPOA.

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Three people should each have a copy of your will:

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• You
• Your executor
• Your attorney

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Some confidential information necessary for the execution of the will—such as account passwords and PIN numbers—should be kept only by your attorney, and given to the executor and/or LPOA in the event of your death.

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To draft a comprehensive professional will, it’s best to work with an attorney. Estate law varies according to your state, and working with an attorney ensures you meet all the requirements and that your will is valid.

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If the courts determine your will is invalid, the result may be protracted legal disputes that ultimately leave your last wishes unfulfilled.

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What should a clinical will for a therapy practice include?

Before sitting down to work with an attorney, it’s a good idea to make sure you know what you’d like to include in your will and to have all the information you need at hand.

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Here’s what your clinical will should include.

Your executor’s name and information

The executor of your clinical will should be a certified therapist whom you trust and who is at least somewhat familiar with your practice. 

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You should also name a backup executor. It’s possible your executor will not be able to carry out their duties. For instance, when the time comes, they could be in another country attending a conference, dealing with a family emergency, or recovering from an illness. In that event, your backup executor will step in to handle the job.

Access to client records

Your will needs to clearly explain who will be granted access to client records after your passing; usually, it’s your executor.

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Client records include contact information and treatment history as well as notes.

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If all of your records are stored in an EHR platform or on a secured harddrive, this may be as simple as providing login credentials. In case of two factor authentication, make sure your executor has access to your phone or email account. They may need to work with the executor of your personal will to get this.

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If your records exist as hard copies, you may need to provide detailed records on how to access them: where they’re stored, and where you keep the keys for locked filing cabinets.

Client notification

Specify how clients will be notified of your death or incapacitation. As a general rule, your current clients should be notified as quickly and directly as possible. The news will not only impact their treatment and personal schedules, but will most likely cause a strong emotional response. 

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Nobody wants to learn about the death of their therapist from a post on social media. Specify how your executor is to contact patients and what type of support they should provide. This includes practical considerations, like working with patients to refer them to a new therapist. But it may also include emotional support, such as a session of grief counselling with your executor.

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Also consider how prior clients—ones who have finished therapy or moved on to different therapists—will be notified. A form letter or email may be appropriate, but it’s up to you to decide the best way of reaching out. 

Access to financial and other accounts

Provide your attorney with access information for all accounts you use in connection with your practice. That includes online banking, taxes, and business registration; bookkeeping and accounting services; and your professional website, therapist directory listings, social media, and email. 

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If any of these accounts—like your professional email—could include communications with clients, specify how this information should be handled. 

Professional contacts and notification

If you’re a client of any professionals who help to support your business, provide their contact information and steps for notifying them of your death of incapacitation. These professionals may include accountants, bookkeepers, attorneys (other than the one managing your will), and contractors or consultants.

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If you rent office space, you should also provide contact information for your landlord, as well as access information for any utilities accounts (water, heat, electric). Your executor may need to take steps to confirm the termination of your lease or close utilities accounts.

Billing records and pending payments

Provide instructions for your executor to access your billing records and payment platforms, and to shut down any accounts if necessary.

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Also provide instructions in the case of pending payments from clients. Explain the procedure for collecting fees and where the funds should be deposited.

Personal will contacts and executor information

Your professional executor may need to collaborate with the executor of your personal will. Provide their contact information and instructions for reaching them. If the attorney handling your personal will is different from the one handling your professional will, provide their information as well.

Liability insurance

Include contact information for your liability insurance provider in your will, so your executor can contact them and end the agreement.

Medical insurance providers

List every medical insurance provider you are paneled with and provide contact information with each. Your executor will contact them directly to terminate your contracts.

Business succession

If you have plans for another individual to take over your practice, you should provide the information your executor will need to oversee the handover.

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If your practice is an LLC, most of this process will be outlined in your operating agreement. But if your successor requires access to bank accounts or online services, or to be added to your office lease, it may be up to your executor to provide them with the information they need. 

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Since the exact process will vary according to how your practice is set up, work with your attorney to create a succession plan, and include both your executor and your successor in the discussion if necessary.

Practice closure

If you run a solo practice, you may wish to close your practice in the event you die or become incapacitated. 

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Outline any additional steps your executor may need to take in order to do this. In the case of an LLC, that may mean notifying the Secretary of State or equivalent in order to have the company dissolved. In the case of a sole proprietorship, it may mean shutting down your business bank account and transferring funds to a personal account.

Executor compensation

Many personal and professional wills designate a certain amount of funds to be paid to the executor of the will. This pays the executor for the time and effort they put into helping settle your estate, and may help to make up for time they have taken away from work in order to serve as your executor.

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Your clinical will includes extra tasks that a typical personal will may not. You may require your executor to personally notify clients of your passing, manage case referrals from your practice to another therapist, and even provide grief counselling to some of your clients. 

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There’s a good chance that the individual you ask to serve as executor will refuse payment. Remind them of the fact that some of their duties include working in their capacity as a therapist, and that it’s only fair they be paid for their time.

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Paying your executor helps motivate them to execute your will quickly and efficiently. It can also give them the financial leeway to take time away from their own practice so they can focus on settling your estate.

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How to choose an executor for your clinical will

The individual you choose to serve as executor of your clinical will should:

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• Be a certified therapist. With a personal will, it’s enough to choose a family member or close friend to serve as executor. But to ethically manage sensitive client data and to contact clients personally, as well as provide referrals, you need a professional therapist to serve as executor of your clinical will.

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• Have time. Take your executor’s personal and professional life into account when choosing them. A single, part-time therapist will likely have more time available in their schedule than the manager of a group practice with a family to look after at home. Make sure the person you choose has the flexibility and willingness to devote time to settling your estate.

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• Be familiar with you and your practice. You should aim to choose an executor with whom you are on close terms personally and who understands how you run your practice. They will be serving as your practice’s representative, and the better they know you both as an individual and as a therapist, the better they will be able to carry out your wishes.

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Professional will templates for therapists

An attorney can help you draft and review your will and ensure that it’s valid. They can also help you revise your will in case you need to make any changes.

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But to get the ball rolling, you may want to fill out a template. A good professional will template for therapists is tailored specifically to your profession, and it will include space for all the details you need to provide. You can think of it as a checklist to help you get organized before sitting down with an attorney.

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Some professional will templates for therapists from reputable sources:

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• The APA Sample Will for Therapists 
• The Oregon Psychological Association Professional Will Template
• Sample Professional Will from the California Association of Marriage and Family Therapists

Key points

• Professional estate planning is a blanket term for the steps you take to make plans for your practice in case you die or become incapacitated

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• Your estate plan should include a document assigning LPOA, a discontinuation of practice plan, and a clinical will

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• The executor of your clinical should be a certified therapist who is qualified to handle sensitive patient records and contact clients directly

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• Plan for your professional executor to collaborate with your personal executor when settling your estate

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• It’s best to work with an attorney to create a professional will, but a template or checklist can help you get the process started

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Planning for the future? Check out our guide to choosing a retirement plan for your therapy practice.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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