Estate Planning for Dentists Selling Their Practice in Illinois

Estate planning for dentists doesn’t need to be complicated. What happens to your dental practice—and your wealth—when you decide to sell or retire?

For Illinois dentists, selling a dental practice isn’t just a business decision—it’s a key moment in your estate and tax planning. The sale can impact your retirement, your family’s future, and even your liability exposure long after you hang up your white coat. Whether you’re selling to an associate, merging with a larger group, or transitioning ownership to a family member, the structure of the sale and your estate plan must work together.

Why Dentists Face Unique Estate and Tax Concerns

As a dentist and business owner, your practice is likely one of your most valuable assets. But unlike stocks or real estate, a dental practice comes with complex layers—patient goodwill, equipment, lease obligations, and sometimes real estate ownership. When it’s time to sell, your financial and estate planning decisions can affect:

• How much you keep after taxes
• How your family benefits from the sale
• Whether your estate faces unnecessary probate or tax issues
• What happens to patients, staff, and partners after your exit

Dentists near the Illinois–Wisconsin border often face additional complexity with multi-state tax exposure and business filings.

What Happens to My Dental Practice When I Retire or Sell?

The outcome depends on your transition plan and how the sale is structured. Let’s break it down.

Transition Timeline

Ideally, start planning 3–5 years before retirement or sale. Early planning helps reduce taxes, improve valuation, and align your estate documents (trusts, wills, and business succession clauses).

Timeline Stage	Key Actions
3–5 Years Before	Review estate plan, update trust and buy-sell provisions
2 Years Before	Obtain practice valuation, plan tax-efficient sale structure
1 Year Before	Meet with attorney, CPA, and financial advisor for coordination
At Sale	Finalize documents, transfer assets, confirm successor agreements
After Sale	Update estate plan to reflect liquidity, tax strategies, and gifting

Asset vs. Stock Sale: What’s the Difference?

Type of Sale	Dentist’s Perspective	Buyer’s Perspective
Asset Sale	You sell the practice’s assets (equipment, goodwill, etc.), often more tax-efficient for buyers but may trigger higher taxes for you.	Buyer gets fresh depreciation and avoids inheriting liabilities.
Stock Sale	You sell ownership of the entity (e.g., S-corp shares). Simpler and often better for the seller, with potential capital gains treatment.	Buyer inherits business liabilities and accounting records.

Tax & Liability Management

• Capital Gains Planning: Selling stock instead of assets may allow lower tax rates.
• Installment Sales: Spreading payments can reduce immediate tax burdens.
• Charitable Remainder Trusts (CRTs): Offset gains while benefiting a cause and your retirement income.
• Liability Protection: Ensure your trust or LLC structure shields your personal assets post-sale.

Family vs. Third-Party Buyer

If you’re selling to a family member or associate, blend business planning with family estate goals:

• Draft a buy-sell agreement aligned with your estate documents.
• Address gift tax exposure if the sale involves discounts or partial transfers.
• For third-party sales, focus on valuation transparency and confidentiality during negotiations.

Top 5 Estate Planning Tools for Dentists Selling a Practice

1. Revocable Living Trust – Avoids probate and simplifies management of sale proceeds.
2. Buy-Sell Agreement – Controls ownership transition and prevents disputes.
3. Grantor Retained Annuity Trust (GRAT) – Transfers future appreciation with reduced estate tax.
4. Charitable Remainder Trust (CRT) – Converts a large gain into lifetime income and tax savings.
5. Power of Attorney for Property & Healthcare – Ensures continuity if you’re unable to make decisions during or after the sale process.

Case Scenario: Illinois Dentist Selling to an Associate

Dr. M, a Libertyville dentist, decided to sell her practice to her longtime associate. By planning three years ahead, she:

• Structured a stock sale to qualify for capital gains tax rates.
• Used a charitable remainder trust to offset taxes while generating income for retirement.
• Updated her estate plan to include a trust that managed sale proceeds and minimized estate tax exposure.

Result? A smoother transition, a happy associate, and long-term financial security for her family.

Schedule a Strategy Session for Dental Practice Succession Planning

Selling your dental practice is more than a business exit—it’s a personal milestone that affects your financial legacy. Our firm helps Illinois and Wisconsin dentists integrate succession, tax, and estate planning for the most efficient transition possible.