Here are five key steps physicians should take in order to protect their estate.
Doctors not only tend to accumulate more wealth and at a faster rate than most people, but also are in more danger of getting sued because of the nature of their job. As a result, estate protection is an urgent need because it not only helps protect the physician’s assets, but also provides direction for unwinding the practice in the event of the doctor’s death.Here are five key steps that every physician should take in order to protect their estate.
Create a will
The will dictates how assets are distributed after death and to whom. It also establishes the executor who will administer the estate.
The will should address how to administer the estate if a spouse survives the doctor or dies prior, and what to do if there are children. For physicians who own their practice, the will should outline whether ownership will be sold or transferred, or if the practice will be closed. The will should also designate someone to close down or transfer social media accounts, websites, and other digital assets.
A will only controls assets in the individual’s name. Any assets held jointly with a spouse, such as the title to a home, are not governed by the will.
Establish a financial power of attorney
A financial power of attorney grants an assigned person the authority to manage the finances of a doctor who is alive, but incapacitated.
Practice owners need this so that the designated person can control what happens with the practice while the owning doctor is unable to perform his or her duties.
Establish a medical power of attorney
The medical power of attorney designates someone to make healthcare decisions about the doctor should he or she become incapacitated. This could range from granting permission for additional surgery if required to directing care for someone who has become mentally incompetent.
Strategically title assets
Using this strategy, the physician puts the title of assets in his or her name and that of another person or trust. Doing so will help protect those assets from creditors.
While a trust offers some protection, it requires trustees and a separate tax return, which can be cumbersome.
Take action now
The sooner protective measures are put in place to protect the physician’s assets, the better. Waiting until there is a lawsuit before moving assets can result in accusations of fraudulent conveyance.
A regular review of all estate plans is also a necessity, and should always be done after a significant life change, such as marriage, divorce, or the birth of a child.