Estate Planning for Physicians
By: John Farrell
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Estate Planning for Physicians
Marietta Estate Planning Attorney
Physicians who are planning their estate are often faced with unique circumstances. Doctors may be faced with estate tax issues and are almost always concerned with asset protection techniques. That’s why estate planning cannot be cookie-cutter. Each physician’s family and circumstance is one-of-a-kind. Estate planning for physicians offers several tools to address these concerns. But, there are some basics every physician should have.
Note: If you want to brush up on the basics of Georgia estate planning (Wills, Probate, Power of Attorney, Revocable Trusts, Irrevocable Trusts and Advanced Healthcare Directives) take a look at these free ebooks.
Basics – Every physician should have these estate planning documents in place for their family:
Advance Directive for Health Care – something every doctor should have in their estate planning portfolio is the Advance Directive for Health Care. Doctors and physicians should be very familiar with this document as it used in the healthcare sector to allow trusted people, perhaps a spouse or adult child, to make decisions for someone in the event they are unable to make decisions for themselves.
Financial Power of Attorney – like the Advance Directive, every physician should have a financial power of attorney. This document allows a trusted person to make financial decisions in case the person becomes disabled or incapacitated.
Last Will and Testament – One of the more important documents a doctor can have when it comes to estate planning is the Last Will and Testament, especially if there are minor children involved. In Georgia, the only way to name a Guardian for a minor child is through a Last Will and Testament so it is very important to establish one if you have minor children.
Because the practice of medicine is a profession with a lot of liability risk, physicians have special concerns when it comes to estate planning. Here are three tips for physician estate planning:
Insurance is the first line of defense – Liability insurance is something every doctor should consider when estate planning. This type of insurance provides a source of funds to pay for legal fees associated with lawsuits, judgments, and even settlement funds. While having liability insurance is important, physicians should consider other types of insurance, such as:
- Homeowner’s insurance;
- Property and Casualty insurance;
- Excess liability insurance (this is also known as having an umbrella policy);
- Automobile and other vehicle insurance, such as boats, motorcycles, and airplanes;
- General business insurance;
- Professional liability insurance; and,
- Directors and Officer’s insurance.
State exemptions can provide a variety of protections from lawsuits and judgments – Each state has a set of laws that partially or completely shield certain personal assets from the claims of creditors. While every state is different and Georgia is a very creditor-friendly state, certain assets may be protected, such as:
- Life insurance;
- Certain amount of wages;
- Qualified retirement plans, such as 401(k)’s and IRA’s;
- Social Security benefits;
- Disability insurance payments; and,
- Among other things.
Business entities protect business and personal assets from lawsuits – when it comes to estate planning for physicians, one of the more overlooked areas is protecting personal assets through the proper business entities, especially for doctors who are business owners. The right structure should take into consideration asset protection, income taxes, estate planning, retirement funding, and business succession goals.
Different types of asset protecting trusts for physicians
Beyond the basics of estate planning for physicians, which includes Advance Directives, Financial Powers of Attorney, and a Last Will and Testament, a well-rounded estate plan for physicians should include a Trust. Of course, there are several different types of trusts and I’ve written about the Top 10 types of Trusts in Georgia and you can access it by clicking here.
But, a couple of trusts doctors should consider are the QPRT and the DAPT.
QPRT stands for Qualified Personal Residence Trust. With the QPRT, you can eliminate your residence from your estate value and reduce its value as a gift. Transferring your home to the trust over a term of years means you can remain in the home with retained interest until the end of the trust. At that time, the ownership transfers to your beneficiaries as a remainder interest (of course, you could arrange to still live there at that point).
An additional benefit to the QPRT is for asset protection purposes. Because you no longer own your home (your QPRT does), your creditors cannot attach the home.
The DAPT stands for Domestic Asset Protection Trust. Unfortunately, Georgia law does not allow for the creation of a DAPT. Essentially, this is because Georgia is a very creditor-friendly state. But, I happen to be licensed in Tennessee which does allow for a DAPT. The DAPT works well for assets such as cash, but it doesn’t work to protect assets like Georgia real estate. You may be able to place the Georgia real estate into a Tennessee LLC and then place it into the DAPT, but cash works best for asset protection purposes. Think of it as a rainy-day fund.
Estate planning for physicians is unique in that doctors face circumstances that most people do not. Especially as it relates to asset protection and estate tax issues. That’s why it’s important to work with a Marietta estate planning attorney like The Farrell Law Firm.
Call Us to Start Your Estate Planning Process!
Our legal team at The Farrell Law Firm is able to help clients throughout the Marietta area and beyond since we are licensed to practice in Georgia, Tennessee, and Texas. We can help you if you have further questions about establishing your estate plan. Clients can receive thoughtful insight into physician estate planning and the other aspects that come with estate planning, such as wills, probate, and trusts.
Set up a free consultation with our Marietta estate planning attorney by calling us at (678) 809-4922.