As a physician, you’ve spent your career taking care of others. While thinking about “the endgame” is not always the most pleasant subject, it’s worth doing so now so your loved ones will not have to go through unnecessary stress later on. For most physicians who have been practicing for years, a more comprehensive estate plan is necessary.
This is especially true if your practice is still active. After all, you will not only have to cover asset division and protection, but you will also have to go over personal liability for medical malpractice (which your estate may have to deal with as a whole, even after you’re gone) and tax planning for higher wage earners (those with larger estates).
Estate planning for anyone can seem pretty daunting, least of all for those in the medical field. After all, you’re a busy person with a lot on your plate! Fortunately, estate planning for physicians doesn’t have to be such an arduous task.For most current physicians, it’s wise to break up your estate planning into four different objectives: Naming Beneficiaries, Naming Guardians (for children who are minors), Appointing People to Control Your Assets, and last but not least, Avoiding Probate.
- Naming Beneficiaries – As you probably already know, you’ll need to name people who will receive your assets (income, personal items, etc.) in the event of your death or you becoming otherwise incapacitated. For most people, this will be your close friends and family. However, you may have others to whom you want to leave things.
- Naming Guardians – If you have children who are under the age of 18, you will need to name guardians who will care for them if you are no longer able to. This is a big decision to make, but it is an important one nevertheless. If you do not name guardians in your estate plan, then the state may appoint them in your absence (and it may not be who you would want). Your children may also end up going into foster care as a result. Those who have pets may also want to name caretakers for their animals, although sometimes pets are viewed as “assets” in an estate plan.
- Appointing People to Control Your Assets – For physicians, this is a big one. You have to consider both your personal assets and your practice, so you may want to appoint multiple people to take control of these things.
- Avoiding Probate – Probate is a legal process that determines whether or not a will is authentic. This process can be long and drawn out, and as such it can prevent your loved ones from receiving what you left behind for them. Fortunately, proper estate planning can hasten the process and may even avoid it entirely.
Estate Planning Options for Physicians
The good news is that doctors have a range of solutions available that make estate planning easier and more efficient. It’s also important to be aware of these options so that your estate does not succumb to high taxes or legal discrepancy.
- Revocable Trust – This is the foundation of your estate plan. As a physician, you will need to set it up so that a trustee can take over control of your medical practice (at least until it is sold). Your revocable trust does not come with asset protection, but you can add this in a separate “asset protection trust”.
- Buy-Sell Agreement – If you have a partnership, you will need to set up an agreement with them that determines your portion (value) of the practice and ensures that it will be part of your estate, not simply consumed by them once you are gone.
- Division of Assets – As a physician, you may be able to achieve greater asset protection by dividing your business assets between the practice itself and office supplies/equipment. You will need to work with an attorney to structure this in your benefit.
The Bottom Line
Estate planning can seem daunting, but there’s no better time to do it than the present. Take care of things now, so you and your loved ones won’t have to worry later on.