Four Estate Planning Documents Every Physician Needs
Estate planning is like an 800-year flood. No one thinks the flood will happen to them. However, father time is undefeated; at some point, you will need to transition your assets to future generations. That said, there are four estate planning documents every physician needs to protect their wealth.
Whether you are 18 or 88, everyone needs an estate plan. In 2020, AARP conducted a survey that showed only 40% of Americans have a Will. The percentage has not materially increased over the last 30 years. There are many examples of wealthy, famous people who never had an estate plan. A few of these people are Sonny Bono, Michael Jackson, Pablo Picasso, and Abraham Lincoln. The problem is that the people left behind are the ones who must pick up all the pieces, and it is a BURDEN!
Begin with a Plan
An estate plan is a formalized plan that gets signed, witnessed, and notarized, showing the state where you live and your intentions with your financial and personal property. Also, it describes your wishes for your end-of-life healthcare. By having a formal plan, no one outside of yourself needs to guess what your wishes are. They are written and distributed to the parties involved so they can prove that what you want to happen happens.
We recommend that a person or family have four estate planning documents created at the minimum. They are a Will, a Living Will, Durable Power of Attorney for Property, and Durable Power of Attorney for Healthcare. Lastly, if you have small children (under 18), having a guardian assigned if you and your spouse die is vital. It might be the essential aspect of a Will.
Before we start, let us get the legal disclosure out of the way. We are not attorneys, nor do we play ones on TV. Each situation is unique, and each state has its nuances. The blog post will give you basic estate planning techniques so you can go to an attorney and tell them precisely what you want. If you have any legal questions, please consult with one.
Great, let’s review which documents you will need.
Essential Estate Document #1: WILL
Establishing a “Last Will and Testament” describes where you want your money to go after death. You can specify to which person or organization you want to inherit your property and what percentage of the total they receive. Usually, this is a family member such as your spouse, son, and daughter. But it is not limited to immediate family. You will want to list an executor of the Will to fulfill your wishes. This person should be someone you trust that will follow your every wish in the Will.
If you do not create a Will, your estate will go through Probate Court. Probate will cost you time and money; in the end, a judge will decide what to do with your assets. Also, if you do not have a written guardian for your children, the judge will appoint a guardian. I do not know about you, but I do not want the State of Texas to decide where my assets go and who raises my children.
Essential Estate Document #2: LIVING WILL
Wait, how is a Living Will different from a Will? Good Question! A Living Will is a document that gives guidance while you are alive but incapacitated. It states what end-of-life medical treatments you prefer to have and not have. Examples of instructions include whether or not to administer life-prolonging treatments, life support, feeding tubes, and do-not-resuscitate orders. A Living Will is not a fun document to create, but it is necessary when it comes.
If a Living Will does not exist, your spouse, children, brother, or sister are left to make an impossible decision. They will carry this decision for the rest of their life. However, if you have a Living Will, they do not decide. You have taken the burden off their plate.
A Living Will should be easily accessible for your family and primary doctor to review. The document should be shared and discussed, so everyone is on the same page at a moment’s notice.
Essential Estate Document #3: DURABLE FINANCIAL POWER OF ATTORNEY
This document is sometimes called a Financial Power of Attorney. It grants a person the ability to make financial decisions on your behalf. Whether you are in a coma from a car wreck or have a long bout with Alzheimer’s, this document will allow a trusted person to pay your bills or liquidate an asset. Usually, a power of attorney will do so when you become incapacitated.
Please think about whom you choose for your Financial Power of Attorney. The person will control your financial life in a time of need.
Essential Estate Document #4: DURABLE HEALTHCARE POWER OF ATTORNEY
We can sum up this document very quickly. Take everything from the Durable Financial Power of attorney above but substitute healthcare instead of financial decisions while you are incapacitated.
Make sure your family physician and family members can access this document quickly and easily.
The person you choose for healthcare can be the same as above or someone different. Ensure they will carry out your wishes.
These are the four estate planning documents every physician needs. Estate Planning can get much more complex; however, these documents will create a solid estate plan. Many people think they can write their Will on the back of a napkin at McDonalds, and it will hold up in court. Maybe it will, and maybe it won’t. Courts in many states have issued decrees that these will not hold up.
These four documents are vital. You might never understand how important they are when you are gone. The documents will save much emotional decision-making and clean up from your heirs.
Drafting a proper estate plan is easier than you think. Stop procrastinating on this and get these documents created. Waiting can only bring more severe pain to your family.
Remember, once you create the estate plan, you are not done. The estate plan is a living, breathing entity that can change as time goes on. Please review your estate plan every 3-5 years to ensure it agrees with your current wishes. Many life events, like marriage, divorce, children, grandchildren, and more, happen along the way. Also, significant financial changes like selling a business or buying a new home are noteworthy. These are excellent reasons to review your estate plan.
About The Author
Jordan Benold, CFP® provides fee-only financial planning and investment management services in Frisco, TX. Benold Financial Planning serves clients as a fiduciary and never earns a commission or sells a product.