Estate Planning For Doctors
Estate planning for doctors differs from estate planning for other professionals. While the basics are the same, such as allocating assets to particular beneficiaries and creating legal protections should the doctor be incapacitated, physicians face some unique challenges. The experienced Florida and Minnesota estate planning attorneys at Roulet Law Firm, P.A., help physicians and their families create custom estate plans to protect everything they have worked so hard to achieve. Contact us today at our Florida office at 941-909-4644 or our Minnesota office at 763-420-5087 to get started.
Estate Planning Challenges for Doctors
Unlike many other professionals, doctors have a delayed timeline for accumulating wealth. The length of time they spend in school and residency means that they do not start earning a high income until they are around 30 years old, or beyond in many cases. Even after a doctor completes residency and starts working in a practice with relatively high revenue, they may still not have as much money to invest as other high-earning professionals because of their extensive school debt.
A doctor who owns their own medical practice may be subject to personal liability for medical malpractice, which can complicate estate planning further. Although physicians typically do carry, are covered by, malpractice insurance, an estate plan that includes a trust can provide an additional layer of protection to safeguard assets from a lawsuit.
What Are the Key Elements of an Estate Plan for a Doctor?
Estate plans are sets of legal documents designed to allocate your assets after your death to the beneficiaries you designate, protect everything you have earned during your life, and ensure your wishes are honored if you cannot advocate for your healthcare or make financial decisions on your own. These estate planning documents may be divided into two categories: death time documents and lifetime documents.
Deathtime documents are those which allocate assets, like the contents of your bank and investment accounts, real estate, and other valuable property, to beneficiaries. Documents in this category typically include a Last Will and Testament and a Revocable Trust. Some doctors may prefer a simple will, while others may opt for the greater protection a revocable trust offers and use this in combination with what the American Bar Association explains is known as a “pour-over” will, which simply transfers any and all estate assets not otherwise accounted for at the time of death into a trust designated for that purpose.
Lifetime documents protect an individual’s wishes in the event that they become incapacitated. Documents in this category include:
Lifetime documents name someone you trust to make decisions about your medical treatment if you cannot make your wishes known, authorize trusted individuals to access your protected healthcare information, or designate an agent to make financial and business decisions on your behalf. Physicians preparing a Durable Financial POA may wish to include a clause that authorizes an agent to deal with matters regarding the doctor’s practice should the doctor become incapacitated. When a doctor is the sole owner of their practice, then the POA should include provisions for how the practice will continue, or if it will be sold.
Considerations for a Physician’s Estate Plan
There are four general estate planning issues any physician may encounter. Other estate planning issues may also apply, depending on the circumstances and field of specialization, as well as the laws applicable in their area. An experienced estate planning lawyer from Roulet Law Firm may be able to advise physicians in Minnesota and Florida.
Considerations for Doctors Who Own a Medical Practice
Running a business has a multitude of complexities, but the nature of a physician’s practice or partnership comes with even more complications. Doctors are one of a select number of professionals who may form a professional business entity:
Professional entities add another layer of protection in the event that one member of the practice is sued for medical malpractice. The other members of the professional association are protected from shared liability. Doctors in Minnesota can form a professional firm under Minnesota Statute 319B.40; in Florida they may incorporate as a professional service corporation or limited liability company under Title XXXVI, Chapter 621. Both states require all members of the professional firm or corporation to be licensed to practice at least one of the professional services the business offers.
Planning for Unlimited Personal Liability for Medical Malpractice
Doctors have unlimited liability for malpractice, so unlike members of other professions they may not be protected by an LLC in the event of a lawsuit. Medical malpractice insurance can protect a doctor from having their personal assets seized in a lawsuit.
Forming an LLC may help protect certain assets, though, and limit a petitioning creditor to a charging order. Alternatively, the estate plan can include gifting assets to the non-physician spouse or creating an asset protection trust.
Planning for the Natural Delay in Wealth Accumulation
Doctors experience a natural delay in earning compared to other professionals, so their estate planning attorney needs to take into account the projected timeline of the doctor’s wealth accumulation. While a newly-minted doctor may not need extensive trusts or asset protection planning immediately, as their practice grows or as their salary increases, they likely will in the future.
High Earners Have High Exposure to Hefty Estate Taxes
As doctors begin earning higher salaries or as their practice becomes more profitable, they increase their net worth and, consequently, their tax burden. Many may take advantage of a Gift Tax Exemption, a maximum that can be given to others in a given year without incurring a 40% tax. The maximum amount of the gift tax exemption changes each year, though, so there is no way of knowing what tax laws will be in effect in the year a physician passes away. An estate planning lawyer can analyze a doctor’s financial situation and determine if they need to include estate tax planning in their estate plan.
Another consideration is how much the estate tax will be after a physician’s death. If an estate is valued over a certain amount, then its beneficiaries may not get as much as the doctor would like them to have. Trusts can provide a steady income for beneficiaries and protect a portion of an estate from estate taxes.
Experienced Minnesota and Florida Estate Planning Attorneys for Doctors
Are you a Florida or Minnesota doctor who needs asset protection planning and estate planning advice? Contact the experienced estate planning attorneys at Roulet Law Firm by calling our Minnetonka, Minnesota office at 763-420-5087 or our Florida office at 941-909-4644 or visiting us online to schedule a consultation. We can help sole practice owners, professional corporation partners, and physicians who work for healthcare facilities learn their options for protecting everything they’ve worked a lifetime to achieve.
And, if you would like to learn how to make it as easy and inexpensive as possible for your family to manage your affairs during incapacity and after passing, while ensuring your assets only go to whom you want and how you want, click here to register for our FREE online masterclass.
And, if you would like to learn how to protect your home and life savings from long-term care and nursing home costs, click here to download our FREE guide Save our Home: How to Protect Your Home and Life Savings From Long-Term Care and Nursing Home Costs.