Medical school teaches a host of things, but not financial planning and estate planning. This is quite ironic, given the high-risk nature of the medical profession. An estate plan is a crucial financial tool for physicians in the event of death. Here are five estate planning tips for physicians.
1. Hire an Attorney
An attorney specializing in estate planning can be quite resourceful. Meet up with an attorney for a consultation to determine if you’re a good fit. Once you’ve found a good attorney, you may end up paying a flat fee upfront or a retainer. Alternatively, you could use a digital estate planning firm where you pay it a fixed flat fee.
2. Have a Will
A will ensures that you decide who gets your assets in case you pass away. In the will, you can distribute your property among all your dependents, name guardians for your children, and even name an executor. Every physician needs to have a will. Unfortunately, a will may not always be enough to avoid probate.
Before creating a will, it is important to have a net worth statement. The net worth statement lists all your assets such as bank accounts, life insurance policies, cash holdings, mortgages, debts, and real estate. The statement is important, as it provides you with an idea of your current financial standing. You will therefore be able to split your assets well amongst your dependents.
3. Set Up a Revocable Trust
Every physician needs to have a revocable trust. This ensures that your assets will not go through the probate process. Therefore, your family is cared for quickly and efficiently in case of your death. Remember that a revocable trust will not protect your assets from malpractice claims. As revocable trusts don’t offer asset protection, you can consider an asset protection trust combined with an LLC, Family Limited Partnership, or a Private Retirement trust. This is an important point you can discuss with your attorney. Your attorney can also provide you with additional estate planning strategies if your estate is over the tax exemption threshold.
4. Choose an Executor
An executor is extremely valuable for estate planning. The executor will handle the estate once a person becomes deceased. As a physician, you can choose anyone to be your executor. The executor ensures that your stated wishes written down in your estate plan are carried out. He or she does not have to be a legal expert or even a lawyer. However, you must trust the person and he or she must know you well.
5. Read Everything
After drafting everything, read it thoroughly and pay attention to detail. It’s not your attorney’s job to read over everything. No one knows your financial situation better than you do. Review the estate plan as you take notes and ask questions on any vague areas.
Final Comments
An estate plan represents your money and life’s work as a physician. Ensure that you have a will, and set up a revocable trust. You could hire an attorney to draft the will for you while an executor ensures that your wishes are enforced should you die. Finally, ensure you carefully read through your estate plan.
