Your estate plan is the comprehensive guide to your wealth and property when you pass away or become incapacitated physically or mentally. Whenever you experience big life changes – marriage, divorce, buying a home, death of a loved one, birth of a child, etc. – it’s important that you update your estate plan to reflect those changes.
As a physician, there are a few other areas to pay attention to when you’re working on your estate plan. If you haven’t updated your estate plan in awhile, here are some things to consider:
Physician Estate Plan: Including a Trust
Many physicians set up trusts to help dictate the way their finances should be handled after they pass. A trust offers more privacy than a will, and is more in depth. It is a legal arrangement that allows you to transfer wealth and property the way you want, with the help of a third party.
A trust can be revocable (able to be changed at any point of your choosing, as long as you’re alive,) or irrevocable (can not be changed or revoked by you once created.) Some people opt for irrevocable trusts because they are typically not subject to estate taxes, and they allow up to $17,000 for single filers, or $34,000 for married filing jointly (for 2023) to be contributed annually without incurring gift taxes.
If you do have a trust set up, check up on it every so often and make changes whenever necessary.
(Note: Make sure that any non-retirement assets are titled in the name of the trust in order for them to be valid. That would include your house, cars, savings and checking accounts, and brokerage accounts.)
More Accounts Isn’t Better
I occasionally find that my physician clients have many accounts set up at different institutions for their investments and savings. I’m all for diversification, but creating too many accounts leaves a lot of chaos for your family after you’re gone.
The next time you review your estate plan, see if there are any accounts you can move or consolidate if it seems like you have too many to keep up with. Or, if you’d prefer to keep your accounts as is, make sure you leave detailed instructions for how to access them in your estate plan. Put yourself in your loved ones’ shoes and try to make it as simple as possible for them to access those accounts.
Choose a Trustee/Executor and Power of Attorney for Your Estate
An executor is the person in charge of carrying out the wishes of your estate planning. They’ll help close your accounts, file your will and distribute your assets the way you’ve specified.
If you have a trust, you’ll also need a trustee. The trustee is responsible for acting as the legal owner of the trust and handles managing and distributing the assets. This tends to be a more long-term position, so make sure whoever you assign as trustee is up for the task.
The more money there is in an estate, the longer it can take to settle. So whoever you choose as executor needs to be organized, trustworthy and capable of spending the time required to settle things properly.
You’ll also need to have powers of attorney in place to make healthcare and financial decisions if you become unable to do so. Some people choose two different people to handle these roles.
Make sure that whoever you assign to these roles is ready and willing to do the job. Some of these roles can be long-term and require more attention, so you want to make sure that they are aware of what each role entails. You can also hire professionals to handle some of these tasks.
Choosing and updating the people who will help carry out your wishes after your death is a very important part of estate planning. Revisit your plan every few years or so to make sure you still agree with the people you’ve named in those roles.
Physician Estate Plan: The Basics
Everyone should have an estate plan. However, it becomes even more important if you have trusts, charitable donations, a more complex investment portfolio or business continuation plans involved. Here are some additional posts to help you create an estate plan that will give you and your family peace of mind:
Common Estate Planning Roadblocks (and How to Work Through Them)
Estate Plan Moves for Your 40s
Charitable Giving: How to Work it into Your Life, Budget and Estate Plan
About Your Richest Life
At Your Richest Life, physician-focused financial planner Katie Brewer, CFP®, wants to help you build a successful financial future. For more information on the services offered, contact Katie today.
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