Why do doctors and lawyers need specialist estate planning in Victoria?

High-income professionals such as doctors, surgeons, lawyers and executives face a unique combination of personal liability exposure, complex entity structures (company, trust, SMSF), large superannuation balances, and practice goodwill that standard estate plans do not adequately address. A medical practitioner can face a negligence claim years after treatment; a lawyer may carry professional liability exposure beyond the expiry of their indemnity cover. Without deliberate asset protection structures and a properly coordinated estate plan — covering Will, testamentary trust, SMSF binding death benefit nomination, and enduring powers of attorney — personal assets and family wealth remain at risk. Specialist estate planning addresses each of these layers.

What asset protection structures are most effective for medical practitioners in Victoria?

For Victorian medical practitioners, asset protection typically involves a combination of legal structures: a discretionary (family) trust to hold investment assets separate from personal ownership; a corporate trustee to operate the trust; and, where practice income is derived through a service entity, a properly structured service trust arrangement. The family home may be held in the lower-risk spouse's name or a separate trust, subject to stamp duty and CGT considerations. A self-managed superannuation fund (SMSF) can also provide a protected accumulation environment. The effectiveness of any structure depends on it being established and funded before any claim arises — retrospective transfers may be challenged under the Bankruptcy Act 1966 (Cth). You should seek specific legal advice from a qualified Victorian solicitor and discuss tax implications with your accountant.

Does professional indemnity insurance replace the need for asset protection in estate planning?

No. Professional indemnity (PI) insurance is an essential complement to — not a substitute for — asset protection structures. PI insurance covers claims arising from professional negligence or errors in the provision of services; it does not protect personal assets from uninsured claims, claims that exceed the policy limit, or claims arising after the policy lapses or the practice ceases. 'Claims-made' PI policies (common in legal and medical practice) only respond to claims notified during the policy period — a claim notified after you retire or the practice is wound up may not be covered without adequate run-off cover. Estate planning must account for the gap between what PI insurance covers and what it does not.

How is goodwill in a professional practice valued for estate planning and succession purposes?

Professional practice goodwill is typically valued using the capitalisation of profits method, which multiplies normalised earnings (adjusted EBITDA or net profit before tax) by an appropriate multiple that reflects the practice's risk profile, growth prospects, and the degree to which goodwill is transferable to a new owner. Medical and dental practices commonly attract multiples of 2–6 times adjusted EBITDA, depending on patient base stability, reliance on the principal, practice location, and specialty. Legal practice goodwill is generally more difficult to value and transfer due to the personal nature of client relationships and the regulatory restrictions on non-solicitor ownership. A buy-sell agreement should specify the agreed valuation methodology in advance to prevent disputes at the time of a trigger event. We recommend obtaining an independent valuation from a qualified accountant with experience in professional practice valuations.

What happens to my SMSF when I die as a professional with a large superannuation balance?

Superannuation does not form part of your estate and does not pass under your Will. For SMSF members, a Binding Death Benefit Nomination (BDBN) directs the SMSF trustee to pay death benefits to a nominated dependant or to your estate. Without a valid BDBN, the trustee has discretion over how benefits are distributed — which may not align with your intentions. For professionals with large SMSF balances, the tax treatment of death benefits paid to non-dependants (such as adult children) can result in a tax liability of up to 17% on the taxable component. Directing benefits via your estate into a testamentary trust may offer planning opportunities, but the legal and tax implications are complex. We recommend discussing SMSF succession with both your solicitor and your accountant or financial adviser.

Do I need a buy-sell agreement for my professional practice in Victoria?

If you co-own a professional practice — whether through a partnership, a company, or a unit trust — a buy-sell agreement (also called a business succession agreement) is essential. Without one, your co-owners may find themselves in practice with your estate's beneficiaries — family members who have no professional registration, no industry experience, and no desire to participate in the practice. The agreement sets out what happens if a partner dies, becomes permanently disabled, retires, or otherwise exits the practice: who buys their interest, at what price, and how the buyout is funded (typically through life and TPD insurance). In professional practices, goodwill valuation and restrictive covenants are particularly important elements to address in the agreement.

How should senior executives deal with unvested RSUs and equity in their estate plan?

Executive equity compensation — including restricted stock units (RSUs), options, and deferred compensation — presents unique estate planning challenges because the rights and entitlements may not vest until after death, or may lapse on death depending on the plan rules. The first step is to review the terms of each equity plan to understand what happens on death: does the estate receive unvested units? Is there accelerated vesting? Are options exercisable by the estate? These plan rules vary significantly between employers. The taxable value of vested RSUs at the time of vesting is assessable as ordinary income in Australia under the employee share scheme provisions of the Income Tax Assessment Act 1997 (Cth). Estate planning must account for the potential tax liability arising from vesting events, as well as for the location of equity assets across multiple jurisdictions for internationally mobile executives. We recommend discussing the specific terms of your equity plan with your accountant and financial adviser.

What is an enduring power of attorney and why does it matter for professional practice operations?

An Enduring Power of Attorney (EPOA) is a legal document under the Powers of Attorney Act 2014 (Vic) that authorises a nominated attorney to make financial and legal decisions on your behalf if you lose capacity. For professionals, the EPOA has direct operational relevance: without it, no one has immediate legal authority to sign contracts, pay staff wages, authorise practice expenditure, or deal with financial institutions on behalf of the practice if you become incapacitated. For incorporated practices, a corporate power of attorney may also be needed to authorise an attorney to exercise powers on behalf of the company. The EPOA for personal financial affairs and the corporate power of attorney for practice operations are complementary documents — and both should be in place as part of a complete estate and incapacity plan.

Estate Planning Professionals VIC

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