Physicians should have estate plans.
Doctors undergo long years of schooling and residency to practice medicine.
This requires incredible focus and dedication.
As they begin their practices, these physicians shift this attention to building and maintaining their practices.
According to a recent Medical Economics article titled “Physicians, get your estate in order or the court will do it instead,” doctors often overlook estate planning early in their careers despite being personally exposed to varying degrees of illness, injury, and death in their patients.
Unfortunately, this can be a costly oversight for physicians.
Although everyone can benefit from estate planning, those who have greater wealth and liability should prioritize meeting with an experienced estate planning attorney.
Because doctors tend to accumulate money more quickly than the general population (just as they are paying down daunting school debt) and because their field places them in positions where they are more likely to get sued than others, estate planning is essential.
Those who work in the medical field should understand how estate planning does more than simply designate who inherits what after a person dies.
Estate planning attorneys can develop a comprehensive estate plan to help protect the loved ones and assets of physicians.
“Basic estate planning” includes a general durable power of attorney, advance health care directive (consisting of a health care treatment directive and durable power of attorney for healthcare decisions), and a last will and testaments.
Often those in the medical field require planning beyond the mere basics.
In most states they will still need a last will and testament to designate a guardian for minor children, in addition to an executor under that last will to administer the estate (if any assets are subject to probate) and trustees appointed under a revocable living trust to avoid probate itself.
Although the guardian by default is the surviving parent, successor guardians can be other family members or even friends.
When it comes nominating an executor and appointed a trustee, the candidates are typically the surviving spouse, another family member, friend, or even an institution.
It is wise to have successor executors and trustees, too.
Without a last will and testament or a “fully funded” revocable living trust, all assets may be directed through probate using the intestacy laws of the state.
This means the person who died has no say regarding who will rear any orphaned minor children to adulthood, administer the estate assets, and, eventually, who will inherit the assets.
Listing all assets and liabilities (whether business interests, bank accounts, retirement plans, life insurance policies, or real estate) will be an important step in estate planning.
Assets with beneficiary designations, jointly owned assets, and those titled in a revocable living trust are not under the authority of a last will and testament.
Instead, you must be sure to keep these account designations and titles updated.
Those physicians who own their own practices will also require business as well as personal estate planning.
What is involved in business succession planning?
The physician/practice owner will need to consider who will can take over the practice or how it is to be sold.
With professional practices, business succession has special aspects to address and consider.
Working with an experienced estate planning attorney is key.
As previously mentioned, physicians often require estate planning beyond the basics.
Many medical professionals will find they desire to incorporate a trust into their plan.
Depending on the type of trust and its design, as trust may protect assets from complex family dynamics and also from creditors.
Because doctors have a greater chance of being sued, it is wise to create and strategically fund a trust prior to any legal action.
Doing so after a lawsuit has been filed can be disallowed as a “fraud on creditors” (i.e., transferring assets to avoid creditors).
Once you create an estate plan, you cannot set-it-and-forget-it.
Doctors should review their plans every couple of years, as well as after major changes financially or relationally.
Births, deaths, marriages, divorces, relocation, or changes in salary are common triggers for estate plan revisions.
Physicians should not delay reaching out to an experienced estate planning attorney to create a comprehensive estate plan.
The stakes are too high.
Reference: Medical Economics (Feb. 22, 2022) “Physicians, get your estate in order or the court will do it instead”