Independent Trustees in Revocable Trusts for Doctors & Lawyers: Continuity Without Conflicts

If your estate plan named a loved one as your successor trustee and agent under a power of attorney without also giving them the ability to appoint an independent special trustee, your medical or legal practice could suffer.  Even if they could “figure it out,” you’ve left them a heavy lift that attorney-client privilege or HIPAA might preclude them from even trying. 

Allowing your successor trustee and agent under a power of attorney the authority to appoint an independent trustee—with the right powers—gives everyone clarity, preserves compliance, and protects your goodwill.  It also protects the people you care about the most – your loved ones, your clients/patients, and your business partner.

You’ve worked hard to build your reputation—and the systems that keep your practice or firm running every day. But if you are suddenly unable to manage things, who has the authority (and the competence) to step in? For many doctors and lawyers, the default assumption is that a spouse, partner, or colleague can figure it out. In reality, that creates risks: conflicts of interest, regulatory limits (HIPAA for physicians; confidentiality/Trust Account rules for attorneys), and operational strain on loved ones.

Every estate plan has to be viewed from the perspective of the person who has to execute it. If you lose capacity, throwing your loved ones into chaos, are they really the best suited to step in, even if they are qualified to do the necessary work?

A better approach is to include a provision for an independent trustee in your revocable living trust and your powers of attorney, and give them explicit powers to protect your patients/clients, staff, and business.

Why your spouse/partner isn’t always the best trustee

• Conflicts of interest. A spouse or partner may also be a beneficiary of your estate plan. Mixing fiduciary decisions with family dynamics can get messy fast – especially where you do have business partners.  Anyone who is not used to running a business might mix personal funds with business funds – making mistakes that could invite IRS scrutiny and impede liability protections down the road.
• Regulatory constraints. Unqualified loved ones can’t access patient records (HIPAA) or client files/IOLTA just because they love you.  
• Operational expertise. Running, winding down, or selling a practice or firm isn’t intuitive. It demands calm, documented authority, and experience.  Your loved one might be in charge of your personal assets, and letting them focus on you while a professional addresses your business is likely the best-case scenario.

What an independent trustee brings

• Neutrality. Their job is to follow your instructions and any business succession plans or operating agreements. Family preferences and partner pressures are outside the scope of their fiduciary obligations – they will not be swayed by aggressive tactics or tears.
• Continuity. They can quickly engage a qualified manager (medical practice administrator, law firm COO, or successor counsel) so calendars, payroll, and client/patient communications continue.  Your clients and your patients rely on you – and if you cannot be there for them, communication is key.
• Compliance. When your documents grant the right powers, the trustee can coordinate HIPAA-related or client-confidential notices, handle records properly, and align insurance and trust accounting.

The powers your trust should include (checklist)

Empower your independent trustee to:

1. Hire, supervise, or replace a qualified manager to run, wind down, or sell the practice/firm.
2. Access business accounts (operating, payroll) and execute contracts essential to continuity.
3. Communicate with regulators and stakeholders (medical board/bar, malpractice carrier, landlords, vendors).
4. Provide limited-purpose access to patient/client information strictly for continuity and legal requirements (e.g., appoint a records custodian; coordinate successor counsel).
5. Value and sell business assets, including goodwill, pursuant to agreed methods (valuation firm or buy-sell formula).
6. Maintain or cancel insurance, including disability overhead and malpractice tail, as appropriate.
7. Compensate themselves and engage professionals at reasonable market rates.
8. Document and retain records of all actions taken.

Tip: Add a short “Operating Memo” to your estate planning binder that names key contacts (practice administrator, COO, CPA, attorney, EHR vendor, bar/medical board numbers), critical logins (stored in a secure manager), and “What good looks like” for patient/client service during a transition. Click here for a sample form

For doctors: unique continuity considerations

• HIPAA still governs. Your spouse can’t call patients; your trustee/manager can coordinate outreach using properly limited permissions and notices.
• Records & custodian. Name the person who acts as your records custodian and how patients request records. Include retention timelines consistent with your specialty and jurisdiction.
• DEA & controlled substances. Clarify how inventory is secured or disposed of and who handles notifications.
• Insurance alignment. Review disability income and overhead expense coverage; ensure benefits actually reach the trustee/manager who’s paying your staff, rent, and EHR.
• Group practice coordination. Sync your trust powers with your buy-sell agreement (triggers, timelines, valuation method) to avoid stalemates.

For lawyers: unique continuity considerations

• Successor counsel & client notice. Your plan should designate successor counsel or a process to appoint one, and authorize client notification that preserves confidentiality.
• Trust accounts (IOLTA). Specify who may reconcile, disburse, and close matters under successor supervision, compliant with bar rules.
• File retention/transfer. Provide a policy (timelines, client consent, destruction protocols) and where it’s stored.
• Conflicts & confidentiality. Your independent trustee must have the authority to consult with designated ethics counsel without disclosing more than necessary.
• Malpractice & tail. Align policy renewal, tail coverage, and matter closure procedures.

Selecting the right independent trustee

This chart may be helpful as you think about who in your circle could serve in this role. Candidates often include: a corporate trustee with small-business chops, a trusted outside attorney, or a seasoned practice administrator/COO (sometimes paired with a corporate trustee to hold the fiduciary role while the manager runs operations).

Implementation in four steps (PACE)

P — People. Name your independent trustee, plus a qualified manager bench (practice administrator/COO, successor counsel), and confirm buy-sell alignment.
A — Authority. Update your trust and powers of attorney with explicit operational powers, HIPAA/client-confidential clauses, and banking authority.
C — Coverage. Coordinate disability income, overhead expense, malpractice tail, cyber/E&O, and bond requirements.
E — Exit. If a sale or wind-down is best, specify the valuation method, timelines, and who signs what.

FAQs

Can my spouse serve anyway?
Maybe. Many spouses can serve as co- or backup trustees. The key is avoiding conflicts and ensuring someone truly qualified handles operations and regulated communications.  If you are a lawyer, your spouse cannot violate the attorney-client privilege. If you are a doctor, your spouse cannot violate HIPAA.  

What if my partner wants to “just run it”?
That is fine, but your Trustee has a fiduciary obligation to ensure things are done correctly. Your documents should empower a neutral fiduciary to appoint the partner as a qualified manager under clear authority, with guardrails to prevent disputes.

How is the trustee paid?
Generally, a trustee is paid a “reasonable amount”.  Your attorney will help you determine what is “reasonable” based on the location and services rendered. 

If your plan assumes loved ones can simply “figure it out,” you’ve left them a heavy lift. An independent trustee—with the right powers—gives everyone clarity, preserves compliance, and protects your goodwill.

Download our non-gated one-page checklist: Independent Trustee Powers for Practices & Firms.
When you’re ready to talk, please contact us here to schedule a short consult—we’re here to help you protect your people and your work.

Author: Patricia De Fonte, JD, LL.M. (Estate Planning, Probate & Trust Administration), Founder & Principal Attorney, De Fonte Law PC.