Biggest Estate Planning Mistakes Physicians Make

 

Estate planning errors might jeopardize your best attempts to protect your family's income after you pass. Everyone can benefit from an estate plan, which involves organizing your financial affairs so that your assets and possessions are passed down to the individuals or organizations you want to receive them.

 

Everyone makes errors. Of course, nobody is flawless. However, there are several mistakes that should be avoided, and they occur when structuring your estate plan. As a physician, you must adequately arrange your estate if you want your will to be legitimate and your intentions to be carried out after you pass. 

It's crucial to acknowledge that estate plans are not one-size-fits-all, and different tactics may only suit some. Without some experienced professional advice, anyone can make mistakes in decisions that appear insignificant at the time but might have far-reaching consequences for your family's financial future. Here are some of the most common mistakes you should avoid.

 

Why Are Doctors Different From Other Professionals?

 

The most common mistake doctors make is the same as for everyone else: failing to establish an estate plan. However, doctors face extra problems that many others still need to, such as having a significant net worth, running a business, and being sued. For these reasons, chiropractors, psychologists, podiatrists, dermatologists, and other medical practitioners should consult an estate planning attorney specializing in designing plans for physicians.

 

Biggest Mistakes You Should Avoid as a Physician 

 

Procrastination

 

You don't want to become incapacitated due to a health issue, such as a stroke or heart attack, and not have an estate plan. However, more than 40% of Americans who do not have a will intend to wait until they receive a medical diagnosis before creating one. Don't put off preparing your estate plan.  

 

Relying on joint tenancy to avoid probate 

 

Will only control the transfer of specific assets upon your death; many assets are transferred outside of wills. For example, assets titled under joint tenancy transfer to the surviving joint tenant, regardless of the contents of your will. Many people feel that titling property in this way prevents probate. That's not the case. Assets held in shared tenancy only avoid probate on the first death. When the surviving spouse dies, the assets usually end up in probate.

 

Not having a Plan 

Not having a plan is a complete disaster for your family and estate. Even a simple will is considerably superior to doing nothing. Ignoring the issue means that a probate court will decide your entire estate. That means the judge could distribute your assets to anyone who makes a compelling case in the obligatory probate hearing.1 Do everyone a favor and, at the very least, create an essential will that names a default beneficiary for all your possessions.

 

Titling assets incorrectly

You want your goals to be carried out across all assets, including your principal residence, secondary property, bank accounts, brokerage accounts, retirement funds, and even automobiles. Designate a beneficiary (or beneficiaries) for all IRAs, employer-sponsored retirement plans, and other eligible accounts. Confirm how different assets are titled to ensure they transfer properly.

 

Not incorporating income tax planning for beneficiaries.

Adult beneficiaries who inherit IRAs and 401(k)s must take annual RMDs, which can result in higher income taxes. Tax techniques such as second-to-die life insurance plans or Roth IRA conversions may help recipients pay less in income taxes.

 

Missing documents

When it comes to estate planning, people usually consider Wills and Powers of Attorney but sometimes overlook other critical documents that should be included. A variety of documents should be evaluated, and care should be given to ensure that these documents communicate with one another, keeping in mind that your complete life should be considered during this process That involves including records about your medical practice and business, as well as your circumstances.

 

Failure to include estate tax planning

Any assets remaining in an individual's estate after their death are subject to an estate tax, which ranges between 18% and 40%. An estate tax exemption excludes $13.1 million (double for married couples). However, future exemptions are likely to be lower. To decrease estate taxes, consult with an estate planning attorney and a qualified financial advisor about options such as putting assets into a revocable trust.

 

Everyone makes errors. Of course, nobody is flawless. However, several mistakes should be avoided, and they occur when structuring your estate. As a physician, you must properly arrange your estate if you want your will to be legitimate and your intentions to be carried out after you die. To accomplish this, you should check for estate planning mistakes that can jeopardize your estate strategy.