We know some practitioners believe they are too busy to plan for medical or other emergencies, but it’s because you have a busy practice that you need to make a plan. Such a plan will provide support to your family should you become disabled or die unexpectedly. You might have told your clients that only death and taxes are certain in life, and you help them minimize the latter. So help yourself by making a plan for the former and preparing for other emergencies.
We remind practitioners that the role of the Assisting Accountant is limited to helping your family return client records. Assisting Accountants are not required to finish up any work in progress or take over your practice. Furthermore, CPABC does not have any authority or resources to continue your practice or help your family sell it.
Below are some items to consider for your personal practitioner emergency planning checklist:
- Do you have a will and is it current? When your will was last updated, did you destroy all previous versions?
- Does your executor, spouse, or another individual know where the will is kept?
- Does your will contain a complete list of assets and essential contacts (legal, banking, professional, and insurance) to allow for the smooth administration and distribution of your estate?
- Does your will provide any direction to your executor on matters concerning your public practice?
- Have you made any prior arrangements for the transition of your clients to another practitioner? If yes, does your will make reference to the proposed purchase and sale agreement, identify the key contacts of the proposed successor, and specify the details with respect to the disposition process (valuation of your practice, determination of purchase price, terms of payment, etc.)?
- Does your will provide clear directions to your executor on winding up your practice? This would include, but not be limited to, required filings with the Canada Revenue Agency, converting your current professional liability insurance into a discovery policy, notifying CPABC, dealing with other insurance policies, subscriptions, firm employees, etc.
- In the event you become incapacitated, do you have someone designated as your Power of Attorney (POA) to make binding decisions on your behalf during this period?
- Does your POA know your intentions with respect to the continuation and eventual disposition of your practice? Specifically, at what point should your POA start the process of selling your practice?
- Where and what are the instructions with respect to the continuation and disposition of the practice in the event of incapacity?
- How are the following issues regarding your practice addressed in the instructions to your executor or POA?
- The status of any employee of the firm: you should provide some direction with respect to how employees should be treated as a result of any transition (current compensation arrangements, severance on termination, etc.).
- The passwords to your various online accounts: as the majority of critical client information is now electronic, having ready access to the passwords will make it easier to deal with practice or client issues.
- A communication for clients: you should draft a notice advising clients of the situation and how their files will be handled along with contact information. This communication might potentially help preserve the value of the practice. If clients know their concerns are being addressed and needs maintained, they are more likely to remain for the transition to the successor.
- Clear direction with respect to collection of accounts receivable and payment of firm expense.
The above list of suggestions is not intended to be comprehensive or applicable to every practitioner, so you should edit as appropriate. As important as it is to prepare a plan, it’s equally important to review and update it regularly.
We thank CPA Alberta for sharing their practitioner emergency planning checklist with BC members.