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Medical Practice Succession

Also known as: GP Practice Succession, Medical Business Succession

Definition

Medical practice succession is the planned transfer of a doctor's ownership share in their practice to continuing or new partners when they retire, become incapacitated, or die.

For GP partners, your partnership share is often your most valuable asset, typically worth £100,000-£500,000 depending on practice size and location. Proper succession planning ensures your family receives fair value while maintaining practice continuity and patient care.

What Does Medical Practice Succession Mean?

Medical practice succession combines business succession planning at the partnership level with personal estate planning at the individual level. For most UK GPs, this means planning for the transfer of their partnership share in a GP surgery operating under NHS contracts. The partnership agreement governs business-level succession through buy-sell provisions, valuation methods, and payment terms, while your individual will governs what happens to your share as an estate asset. Under the Partnership Act 1890, Section 33, death of a partner triggers automatic dissolution unless the partnership agreement states otherwise—most modern agreements include continuation clauses to prevent this disruption.

In practice, succession typically follows this process: you give notice (usually 3-6 months), the partnership decides whether to recruit a replacement or redistribute work, the practice is valued as of a specified date, your share is calculated, and payment terms are executed (often instalments over 1-3 years). For planned retirement, this allows orderly transition with scheduled recruitment and property transfer arrangements if you're a practice-owning partner. For unexpected death, the estate executes your will provisions while executors work with remaining partners to execute buy-sell agreement terms, with your family receiving payment for the share value. Emma, a 60-year-old GP partner, gave 8 months' notice to her three partners. Her 25% share was valued at £185,000 based on the last 3 years' average profits. The partnership agreement specified payment over 24 months, and her will confirmed her husband as beneficiary of all business assets.

GP partnership shares often qualify for Business Property Relief (BPR), potentially providing 50% or 100% relief from Inheritance Tax if conditions are met. For a £180,000 partnership share, 100% BPR could save your estate £72,000 in Inheritance Tax. Eligibility depends on factors including whether the practice operates as a trading business, the level of excess cash or investment assets, and minimum ownership period (2 years). Buy-sell agreements within partnership agreements ensure executors know how your share will be valued and paid. Many partnerships use life insurance to fund buy-sell obligations through cross-option agreements. Property-owning partners face additional complexity as surgery premises succession is handled separately from partnership share succession. NHS England requires 6 months minimum notice before retirement, and recruiting replacement partners typically takes 12+ months—some single-handed practices need 2-5 years for succession planning.

Common Questions

"Why do GP practice owners need succession planning in their will?"

GP practice owners need succession planning because their partnership share is often their most valuable asset. Without proper planning in your will and partnership agreement, your family may face delays in receiving payment for your share, uncertainty about business continuity, and potential disputes with remaining partners. A well-planned succession ensures your estate receives fair value for your practice share promptly.

"What happens to a GP partnership share when a partner dies?"

When a GP partner dies, what happens depends on the partnership agreement. Under the Partnership Act 1890, death triggers automatic dissolution of the partnership unless the agreement states otherwise. Most modern partnership agreements include buy-sell provisions requiring remaining partners to purchase the deceased partner's share at a predetermined valuation, with payment timescales specified in the agreement.

"Can I leave my GP practice share to my spouse in my will?"

While you can technically leave your practice share to your spouse in your will, most partnership agreements include pre-emption clauses requiring your share to be offered to existing partners first. Your spouse would typically receive the monetary value of your share rather than becoming a partner themselves. This protects both the practice continuity and ensures fair compensation for your estate.

Common Misconceptions

Myth: "There's plenty of time to sort out succession planning before retirement"

Reality: Recruiting replacement GP partners can take 12+ months, and single-handed practices may need 2-5 years to plan succession. NHS England requires 6 months minimum notice before retirement. Partnership agreements should be updated years in advance, and estate planning coordination should begin at least 5 years before intended retirement age. The Partnership Act 1890 default rules trigger automatic dissolution on death—without planning, your family faces immediate complications.

Myth: "My partnership agreement covers everything—I don't need to address my practice share in my will"

Reality: The partnership agreement and your will serve different but complementary purposes. The partnership agreement governs how your share is valued and transferred (buy-sell mechanics), but your will determines who receives the proceeds from your share sale. Without clear will provisions, your partnership share value may fall into intestacy or be distributed contrary to your wishes. Additionally, your will can optimise tax planning through Business Property Relief claims and appoint executors who understand your business affairs.

  • GP Partnership: The underlying business structure for which medical practice succession planning is required—understanding partnership basics is essential before planning succession transitions.
  • Business Succession Planning: The broader business planning discipline of which medical practice succession is a specialized application, sharing common principles like valuation methods and buy-sell agreements.
  • Partnership Agreement: The legal document that governs medical practice succession mechanics, including buy-sell provisions, valuation methods, notice periods, and payment terms.
  • Business Assets: The broader estate planning category that includes GP partnership shares, requiring specific succession planning to qualify for Business Property Relief.
  • Buy-Sell Agreement: The contractual mechanism within partnership agreements that ensures remaining partners purchase a departing partner's share at predetermined valuations with specified payment terms.

Need Help with Your Will?

Understanding medical practice succession helps you plan for your most valuable asset. Including your GP partnership share in your will with clear provisions ensures your family receives fair value while protecting practice continuity.

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.