Handling a DVM's estate challenging; plan now

You'll never witness any shortage of complaints and dismay associated with being the spouse or significant other of a practicing veterinarian. There are the long hours and late nights. There are lots of parties you show up at late. Then, there are those movies and theatrical performances you only see part of; whether you miss the first third or the last third depends on when the emergency call comes.

But as challenging as it may be to be part of a practicing veterinarian's life, it is even more difficult to have a major role in managing the doctor's affairs after his or her death. As the surviving life partner of a busy professional, the combination of sorrow and sense of loss coupled with new and daunting responsibilities can be overwhelming.

In this, the first of a two-part series discussing estate management for veterinarians, we will touch on some of the more common issues and problems faced by executors and administrators of veterinarians' estates. In the follow-up article, we will recommend some lifetime steps that can be taken to minimize the problems faced by a veterinarian's survivors.

It is human nature to want to delay or postpone indefinitely having to deal with change and trauma that happens during life. Without question, loss of a loved one is one of the most difficult events any of us can possibly face. The tendency of most people when faced with a loved one's loss, whether sudden or expected, is to focus on the grieving process and to put off the more mundane practicalities of settling the decedent's estate.

In today's highly regulated world, however, delay in estate settlement is a luxury available only to families whose lost member did significant pre-planning.

Why is this so? What would prevent a veterinarian's family from taking as long as necessary to deal emotionally with her death? Why couldn't a spouse wait, say, a year or two to deal with the financial and legal issues associated with the passing? The answer is simple: There are a number of parties who make immediate demands on the family and the deceased's personal representative, not the least demanding of which is the government.

Pressing issues

Notwithstanding, the recent Republican Congressional movement to eliminate or seriously curtail what is commonly referred to as the "death tax," it continues to exist little changed from its nature during the Clinton administration. In addition, many states have a similar tax with filing and payment obligations even more strict than those posed by the federal government. Let's look at ways in which the state probate process and taxes due at death can complicate the lives of a veterinarian's surviving relatives.

When an individual dies, no one can access any of the property, which was held in the name of the deceased party until a qualified person is given control over the estate of the decedent by a state court. While the filing need not be complicated or difficult, failure in planning for unexpected death can place a veterinarian's family in a position where it is faced with great hardship.

Tax complications

Take, for example, a middle-aged couple with grown children in which the husband is a solo veterinary practitioner and his wife is employed part-time. The sudden passing of the veterinarian husband from, for example, a heart attack or motor vehicle accident can place the wife in a serious financial debacle. Similar problems might even exist if an event were to leave the doctor mentally or physically incapacitated.

In this example, the spouse is suddenly faced with mortgage and credit care payments, estimated income tax and property tax bills and possibly other financial demands posed by extended-family obligations. If her husband had significant life insurance and his wife was the beneficiary, things will probably go fairly smoothly. Consider the situation if such careful planning were not undertaken.

After the funeral, the doctor's wife will contact the family's insurance agent and might be told that all the insurance names the veterinarian's estate as the beneficiary. Later, it may be discovered that all of the bank accounts except for one small one are in the doctor's name. Naturally, the doctor's wife is panicked and confused. There is a stack of bills piling up, and she can't get her hands on any money.

So now, though she may not have wanted to start dealing with lawyers immediately after the death, this veterinarian's wife must jump into the legal system with both feet and without delay. She must locate an attorney or have the court clerk detail the probate process for her at a time when the only people she really wants to see are family. The will must be located and submitted for probate. And God forbid that will is locked in a safe deposit box to which only the doctor had access.

If no will can be found, the wife must satisfy the court that a satisfactorily exhaustive search has been undertaken. Only then, or after a will is produced, can the spouse receive the official document she needs to access money. No bank or brokerage firm would release the deceased veterinarian's funds without receiving an official copy of either "letters testamentary" (when a will is located) or a similar court document stating that the wife may deal with the husband's estate in the absence of a will.

If it is not stressful enough to have to undertake these steps immediately after losing a partner, the tax authorities may have even more demands. Veterinarians who die with more than a few thousand dollars may leave their families with state and federal tax filings that must be satisfied within just a few months of death. And don't forget that a person who dies is still obligated to file and pay income tax for the year during which they died. The filing and paying obligation doesn't disappear - it simply passes on to others in the midst of their bereavement.

Probably the scariest scenario is one in which a practitioner passes away unexpectedly leaving a practice with several unpaid employees. The surviving family members often do not have a signature authority over the business bank accounts and yet practice workers desperately need paychecks. While those employees may be sympathetic and may even be family friends, the simple fact is that they rely on their salaries and can't afford to wait for the boss' family to work through their grief.

Another demanding group that insists upon nearly immediate satisfaction is the deceased veterinarian's creditors. Funeral homes and florists are often accustomed to waiting for payment until an estate is settled, but drug suppliers and equipment leasing companies are not. And it is not difficult to imagine how impatient a shopping center landlord might be when he stops receiving monthly rental payment on a storefront veterinary clinic that is "closed indefinitely."

More demands

In the second part of this series, we will explore a number of simple techniques and uncomplicated steps that veterinarians and their families can take to minimize the potential traps associated with unexpected loss. The concepts to be explored can assist a family not only in the event of a sudden death, but also unexpected disability or the discovery that the veterinarian in the family has a serious or even terminal illness.

While many people prefer not to think of the possibility that a tragic diagnosis or accident can jar an unprepared family terribly, it has been my experience that families who undertake pre-planning steps are more confident, serene and can enjoy life more as a result of the undertaking.

Dr. Allen is a partner in Associates in Veterinary Law, P.C., a law practice specializing in business and legal counsel for veterinarians and their families. He can be reached at www.veterinarylaw.com or call (607) 648-6113.