When was the last time you checked on your estate plan? Whether it’s been one year or a decade, it may be time to take a look and ensure that everything is in order. 

Estate planning can seem rather mundane. It’s so easy to put it off for another day, but planning now may give you and your loved ones peace of mind knowing your assets and legacy have a landing zone. Here are 5 essential things we believe doctors should have squared away in their estate plan.

1. An Updated Will And Trust

We believe a will is the cornerstone of your estate plan. It’s an official document outlining how and to whom you want your assets distributed after your death. 

Wills go through probate, which can be a long, expensive court-supervised process of authenticating the will. Without a will in place, your estate will go into probate. To avoid that headache, you may be able to streamline the wealth transfer process by using a trust.

You may also need an updated trust—a fiduciary relationship that helps you control asset transfer. You can create beneficiary guardrails, select a third party to manage the funds, and place assets within the trust. Many physicians opt for a revocable trust—a flexible will replacement that avoids probate and helps you retain control over your assets.

If you don’t have these documents, the court and local law will mandate decisions regarding your estate. Wouldn’t you rather make those choices instead of a judge?

If you have these items already, we suggest you ensure they are regularly updated. As you advance in your career, your financial situation will alter and your beneficiaries may change, so you want to make sure your estate plan reflects those changes.

2. All The Important People

There are a lot of boxes to check off when creating or reviewing your estate plan, and the people within your plan play a major role. 

Like your will, we suggest you should review beneficiary designations regularly, especially after a major life event such as marriage or starting a family. Official beneficiary designations simply state who receives what asset(s). Additional designations you may need include joint ownership, payable on death, transfer on death, and deeds. 

It is not uncommon for us to meet with a doctor who spent a lot of money designing an estate plan, but then time got away from them and they didn’t update their beneficiary designations and account titling to coordinate. Meaning their estate plan likely won’t work they way they intended it to! 

You may also want to designate a medical and financial power of attorney. A medical power of attorney controls any healthcare decisions on your behalf if you become unable to do so. A financial power of attorney does the same thing but with your finances. 

Your medical and financial power of attorney can be the same person, but we believe you need to consider the strengths of the person taking on this role. With your health and finances at stake, you want to choose the best possible person for the job.

Vestia Pro Tip: Have conversations with each person who will play a role in your estate plan. You don’t want to catch your executor or power of attorney by surprise. By speaking early, you can let them know your wishes, and they can better carry them out. 

We believe it is  also important to speak with your loved ones about how you plan to divide your estate. Conversations upfront may be difficult, especially if your news will come as a surprise to some people. You don’t want to cause arguments and friction later. 

3. A Plan for Taxes 

You may be surprised how quickly taxes pile on in the estate planning process.

Many tax-efficient strategies can help lower your overall tax bill—the most popular being transferring assets as a gift. For 2023, an individual can transfer up to $17,000 annually and $12.29 million over their lifetime, tax-free.

If the total value of gifts you make to a single person exceeds the yearly limit, you must fill out a 709 gift tax form. However, you won’t have to pay gift tax until the total amount reported on your 709 forms exceeds the lifetime gift tax exclusion of $12.29 million. That’s a lot of money to work with!

To that point, you may want to consider giving more money away while you’re alive. It could be helpful from a tax and personal perspective. 

Don’t forget about taxes for your planned inheritance. For example, if you give your daughter your IRA, she can take the IRA money in a lump sum or required minimum distributions within 10 years of the account owner’s death. The downside with the lump sum is that she will have to pay income tax and it could bump her into a higher tax bracket. 

There are a lot of things to consider when it comes to tax planning, so it’s important to work with a professional.

4. A Vision for Your Legacy

Estate planning and legacy planning go hand in hand. 

How do you want your memory carried out and honored after you’re gone? What values helped guide your financial plan and do they impact your legacy?

Your values should guide the estate planning process. If you value education, perhaps you’ll have part of your estate donated to a cause that helps people get access to quality education, or you’ll set up a college fund for your great-grandchild.

Suppose family is a top priority for you and you want to ensure that they can spend quality time together. In that case, even when you’re gone, you may consider leaving a vacation property to the family. 

Whatever you decide, we suggest you lead the estate and legacy planning process with your values. 

5. Meet With Your Chosen Professionals

We believe estate planning is a team sport. You might consider discussing your plans and wishes with your estate planning attorney, financial planner, and tax professional to ensure that you can leave the legacy you want for future generations.

Whether you need to start from scratch or make sure that your estate plan is up to date, our team at Vestia can help. Get in touch with us to learn more about the options for your estate plan and how you can create an everlasting legacy.

Disclosures:

Investment advisory services offered through Vestia Personal Wealth Advisors, Vestia Retirement Plan Consultants, and Vestia Advisors, LLC. Securities offered through Ausdal Financial Partners, Inc., 5187 Utica Ridge Rd, Davenport, IA. 52807 (563)326-2064. Member FINRA/SIPC. Vestia Personal Wealth Advisors, Vestia Retirement Plan Consultants, Vestia Advisors, LLC, and Ausdal Financial Partners, Inc. are independently owned and operated.

This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.  This information is not an offer or a solicitation to buy or sell securities.  The information contained may have been compiled from third-party sources and is believed to be reliable. All investing involves risk, including the loss of principal.