Estate planning is essential to protecting your wealth and passing assets to loved ones. However, estate planning for medical professionals can be more complex and legally complicated. Some physicians and medical professionals may have delayed wealth accumulation, while others carry the financial burden of personal liability from malpractice claims. All these issues should be addressed when it comes time to create a comprehensive estate plan. Consider scheduling a consultation with the experienced Georgia estate planning attorney at Siedentopf Law by calling (404) 736-6066.
What Is Estate Planning?
According to the American Bar Association, estate planning will determine property transfers and address other concerns with a person’s assets and liabilities. With estate planning, an individual can ensure that the estate will follow all their wishes in the event of incapacitation or death. Generally, people want to provide for their surviving spouse and children while minimizing tax burdens and avoiding probate. Some physicians might think they must have multiple properties or large mansions to create an estate plan. However, any asset, even a bank account, is considered a part of an estate. An estate is a balance between the person’s assets and liabilities. Without a plan, the medical professional’s family will have to make all the decisions regarding their assets and liabilities.
Estate planning involves creating legal documents that detail the individual’s wishes concerning liabilities and assets. If these decisions are not clearly outlined, then the courts could step in to divide assets. The most common legal documents and pieces of information in an estate plan include the following:
- Last Will and Testament
- Healthcare proxies
- Power of attorney
- Trust documentation
- Bank account numbers
- Mortgage documents
- Investment account information
- Business ownership documents
- Loan documents
- Tax returns
- Vital documents, such as birth, marriage, or divorce certificates
Special Considerations When Estate Planning for Medical Professionals
Medical professionals could face special challenges when it comes time to plan for their estate. For example, many doctors own their practice, operating under a partnership, C corporation, S corporation, or limited liability corporation (LLC). Most individuals form an LLC or corporation to avoid personal liability, especially medical malpractice claims. While those protections can help doctors during their lifetime, they can present a few challenges to the estate. A medical professional may want to have a provision in the power of attorney documents that allows an agent to act on behalf of the physician’s ownership in the business. With that, the appointed individual can make decisions regarding the practice. Also, the medical professional may want to ensure that all assets are protected from any malpractice claims even after death. As mentioned, establishing an LLC or corporation can help, but setting up an asset-protection trust or gifting assets could be another way to keep personal wealth safe from creditors.
Wealth Accumulation for Medical Professionals
Additionally, medical professionals tend to accumulate a large amount of wealth over their lifetimes. As someone earns more, it increases their net worth, leading to concerns about taxes. Estate taxes can be challenging to understand. While gifting assets could be a solution, many professionals create trusts to protect their wealth. Gifts can lead to taxes for the beneficiaries. According to the Internal Revenue Service, a gift tax applies when a property is transferred from one individual to another without paying the full market value. As a result, the beneficiary may have to pay a tax on the assets. Protecting assets from high taxes can be a complex process. Please consider scheduling a consultation with Siedentopf Law to discuss estate planning for medical professionals.
Estate Planning Tips to Avoid Probate
While everyone’s needs and concerns are different, there are a few steps to take to protect your assets and avoid the probate process.
The medical professional’s last will outlines who should receive certain assets. Additionally, a will specifies how to distribute your property by naming an executor. At the very minimum, a medical professional should have a will in place, but more is needed to keep the estate out of probate.
Draft a Net Worth Statement
Another essential document is a net worth statement. This document will include a list of assets and liabilities, such as:
- Bank accounts
- Cash holdings
- Real estate
- Life insurance policies
Many medical professionals may want to create a revocable trust. With that, the trust may protect assets from heading to probate. In some cases, the estate could be over the tax exemption threshold, meaning the individual may want to consider another strategy to protect their assets. Also, any medical professional who owns their practice should consider appointing a trustee who can manage the business until sold. Remember that a revocable trust will not safeguard those assets from medical malpractice claims.
Draft a Buy-Sell Agreement
Many medical professionals have partnerships with other providers. In that case, an agreement should determine how the partners will determine the value of the practice. With an agreement in place, it could prevent other partners from taking over the practice without giving compensation to the estate.
Establish an Asset Protection Trust
Sometimes, a revocable trust will only offer partial asset protection. Since many medical professionals can face malpractice claims in their careers, they should look at ways to protect assets. Some providers will place their assets in a private retirement trust, LLC, or family limited partnership to keep them safe from potential lawsuits.
Divide Business Assets
Tax breaks can change on a yearly basis. Many medical professionals should consider finding ways to benefit from existing income tax cuts. Dividing assets can help meet income thresholds for a more significant tax break and provide additional asset protections for the practice.
Make Provisions for Spouses and Children
In many cases, the medical professional is the sole provider for the family. With that income discrepancy, a doctor may want to create pre- or post-nuptial agreements to separate assets. Medical professionals should consider purchasing life insurance to help replace any income the family could lose after the person passes away.
Consult With an Experienced Georgia Estate Planning Attorney To Ensure Your Legal and Financial Rights Remain Protected
Estate planning for medical professionals can include a comprehensive approach that will ensure that all legal and financial rights remain protected. Doctors, nurses, and other healthcare professionals will want to find ways to reduce the tax burden on beneficiaries and protect their wealth from any personal liability. Consider scheduling an appointment with our compassionate and dedicated Georgia estate planning attorney at Siedentopf Law by calling (404) 736-6066 today.