Estate planning is a crucial component of wealth management that should begin early in a physician’s career and be evaluated regularly as they age. Indeed, a physician’s estate planning may need to be updated every five to seven years, or whenever significant life events occur.
Estate planning for physicians is a complex subject to master. You’ve undoubtedly spent the better part of the last ten years of your life narrowly focused on one goal: becoming a doctor, and everything else has become secondary.
You went into medicine to assist people, but the long hours and high-stress levels take their toll, and caring for others can come at the expense of caring for yourself and those close to you. If you have a family and children, one of the most important things you can do to protect them is to arrange your estate. You can’t afford to be like nearly half of the Americans who “haven’t gotten around to it.” It’s not something you can put off till you have more time as a doctor.
Why is estate planning important for physicians?
Estate planning is difficult for anybody, but estate planning for physicians is complicated due to the substantial student loan balances that most physicians carry throughout medical school and beyond.
In the long term, a thorough legal plan to preserve your earnings, business, assets, and career will allow you to sleep better at night. When done correctly, estate planning for physicians will also work in unison with your financial plan to gradually pay off your school loan debt.
In addition to the ever-present reality of malpractice claims, physicians have complex business obligations if they manage a private practice, and those commercial needs add another degree of complexity to estate planning.
Steps to Create Right Estate Planning
1.Make a list of all your tangible and intangible assets:
Estate planning entails listing all of your tangible and intangible assets, including physical property like cars, furniture, as well as financial accounts.
It would help to consider everything you want to be taken care of after you are gone. It is an excellent opportunity to ensure that all of your bank accounts are well-documented for the executors of your estate, including any accounts that may have been lost along the road. Unused financial accounts might easily become forgotten in the sands of time.
2. Determine your Goals
One of the fundamental goals of estate planning is to determine how your possessions will be distributed after your death. This enables you to safeguard and provide for your spouse, small children, or other loved ones or charity close to your heart. However, you must protect yourself and others who rely on you while you are still living.
3. Create an Asset Protection Trust
Because a simple revocable trust does not provide asset protection, you require an instrument that will shield you from malpractice claims. A Family Limited Partnership, an LLC, or a Private Retirement trust are frequently linked with an asset protection trust.
4. Choose your beneficiaries and gifts.
Your organization’s efforts have paid off. Now, go over your assets and decide how you want them distributed to your heirs and beneficiaries.
Consider your beneficiaries’ current financial demands as well as their long-term wants. For example, you may want to pay for your children’s and grandchildren’s college tuition or specify what happens to assets if you die prematurely and your spouse remarries.
It’s critical to ensure the persons you want to receive the proceeds of your life insurance policy, retirement account funds, or other financial account assets are named as beneficiaries on those specific things. If you do not, those assets will become part of your entire estate and may end up in the hands of someone you did not intend.
5. Keep your estate plan up to date.
So you’ve made your estate plan and are ready to go? So, it’s good revisiting your strategy from time to time. You should check in every five years to ensure that everything is still as you intended and that no tax regulations have changed in the meantime.
Your plan may be outdated due to changes that occurred after you first developed it.
Mistakes you Should Avoid
It’s a train crash for your family and estate if you don’t have any form of strategy in place. Even a simple will is preferable to doing nothing at all. Ignoring the issue means a probate court will decide on your entire inheritance.
Don’t assume that the first person named as a beneficiary will still be alive when your estate plan goes into force. Life happens and does not stop just because an estate plan names one specific person as a primary beneficiary. If the first individual chosen is no longer available, go a second or third layer more profound and select one or two more.
Thinking about and discussing death and incapacity is emotionally charged for many people. However, starting the process is critical. Your loved ones may be relieved that you have taken these precautions and have a plan in place. It may even urge them to consider their estate plan.