Estate Planning for Doctors

Estate Planning for Doctors 

As a doctor, you have a lot to consider – patients, staff, insurance companies, and regulations. It can be easy to forget about estate planning, but it is an essential aspect of your life and career. Estate planning includes creating a will, financial power of attorney, healthcare directives, and trusts. These documents help ensure that your wishes are carried out in the event of your death or incapacity. 

Why is Estate Planning Important for Doctors? 

As a doctor, you have devoted your life to helping others. You have worked hard to build your career and provide for yourself and your family. An estate plan ensures that your wishes are carried out in the event of your death or incapacity. Without an estate plan, your family may have to make difficult decisions about your medical care and finances when they are already grieving. 

Estate planning also lets you control how your assets are distributed after death. You can designate specific amounts to go to certain people or causes that are important to you. For example, you may want to leave money to a charity close to your heart. Or you may want to set up a trust fund for your grandchild’s education. 

Top Reasons You Need an Estate Plan as a Doctor 

To protect your loved ones. 

Would your loved ones be taken care of if something happened to you? Do you have a plan in place for your medical or dental practice if you can no longer run it? Would they be able to keep the family home? These questions are challenging for your loved ones to deal with if you don’t have a plan. An estate plan can help take care of your loved ones.

To avoid probate. 

Probate is the legal process that happens after someone dies. With a properly drafted estate plan, you can avoid probate altogether. Your loved ones will be able to access your assets sooner after passing. 

To minimize taxes. 

Estate & income taxes can consume a large chunk of your assets if you don’t have a plan. Taking advantage of specific tax strategies can minimize the taxes your loved ones will have to pay on your estate. This will allow them to keep more of what you’ve worked so hard for. 

Creating an Estate Plan 

The first step in creating an estate plan is to create a will. A will is a legal document specifying how you want your assets to be distributed after death. You can also use a will to name a guardian for minor children and pets. 

The second step is to create a financial power of attorney. This document gives someone else the authority to manage your finances if you become incapacitated. 

The third step is to create healthcare directives. Healthcare directives specify what kind of medical care you do or do not want if you cannot communicate your wishes. 

The fourth and final step is to consider a Trust. Trusts can be used for various purposes, such as minimizing future estate taxes, protecting assets from creditors, or providing for minor children or grandchildren. 

Life Insurance and Estate Planning 

One of the main reasons to have term life insurance is to ensure that your loved ones are taken care of financially during your death. No one likes to think about their mortality, but the fact is that anything can happen at any time. If something were to happen to you, your family would be left with funeral expenses and other debts on top of whatever they may already be dealing with emotionally. Term life insurance can help ease the financial burden on your loved ones and give them one less thing to worry about during an already difficult time.

Another reason to have term life insurance as part of your estate plan is to ensure that your business interests are protected in the event of your death. If you are a sole proprietor, for example, your family will need to find a way to buy out your share of the business from your partners to keep the business running. If you have significant equity in a closely-held business, term life insurance can provide the liquidity necessary for a buyout and help protect your business interests.

What is Term Life Insurance?

Term life insurance is a type of life insurance that provides coverage for a specific period, typically 10-30 years. The “term” refers to the length of time that the policy is in effect. After the term expires, the policyholder can either renew the policy for another term or let it lapse. 

One of the main benefits of term life insurance is that it’s relatively inexpensive compared to other types of life insurance. The low premium makes it a good option for people who want to ensure their loved ones are taken care of financially in the event of their death but don’t want to pay exorbitant premiums with whole life or indexed universal life insurance. 

Another benefit of term life insurance is covering specific financial obligations, like a mortgage or outstanding debt. This can be helpful if you want to ensure your family won’t have to worry about these obligations in the event of your death. 

Adding Beneficiaries to Your Term Life Insurance Policy 

Adding beneficiaries to your term life insurance policy is a straightforward process. You’ll simply need to contact your insurer and provide them with the name(s) and contact information for the person (or persons) you want to name as beneficiary. 

Step-Up in Basis Tax Planning

The second step-up in basis is a tax planning strategy that may be used to minimize capital gains tax liability. Under this strategy, assets are held until the second spouse’s death, at which point the tax basis of the assets is reset to their current market value. This can significantly reduce the amount of capital gains tax owed on the sale of the assets. 

The second step-up in basis is often used in conjunction with other tax planning strategies, such as gifting assets to family members or placing them in a trust. When used correctly, a second step-up in basis can help to minimize tax liability and maximize the inheritance for your loved ones.

The Takeaways

Estate planning is an essential part of being a doctor. It helps ensure that your wishes are carried out in the event of your death or incapacity and allows you to control how your assets are distributed after your death. Creating an estate plan involves a will, financial power of attorney, healthcare directives, and trusts. These documents help protect you and your family from an unexpected illness or accident.

If you’re wondering where to get started or how to review your documents, we’re here to help. We help our clients determine the right estate plan for them and review it along the way. Having a deep understanding of our client’s goals and families, we can guide our clients through all estate planning challenges.

Author: Cecil Staton, CFP® CSLP®

Author: Cecil Staton, CFP® CSLP®

I'm a fee-only financial planner dentists & physicians with student loans give a purpose to their paycheck.

I left the large financial institutions to start my own RIA. I did it so people could pay for real planning and not just an agenda to sell a hidden product. As a fiduciary, Arch Financial Planning, LLC was built on that promise by delivering non-cookie-cutter plans that provide solutions to achieve their goals.

Who do I serve?

Age: Dentists & Physicians between 28-45 years old
Goals: Pay off student debt, start a practice, and grow their wealth
Target: High-earning doctors with student loans
Location: Virtually anywhere in the U.S.


This website (the “Blog”) is published and provided for informational and entertainment purposes only.  The information in the Blog constitutes the Content Creator’s own opinions and it should not be regarded as a description of services provided by Arch Financial Planning, LLC or Cecil Staton, CFP® CSLP®.

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.  It is only intended to provide education about personal financial planning.  The views reflected in the commentary are subject to change at any time without notice.

Nothing on this Blog constitutes investment advice, performance data, or any recommendation that any security, portfolio of securities, investment product, transaction, or investment strategy is suitable for any specific person.  From reading this Blog we cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you, so any opinions or information contained on this Blog are just that – an opinion or information.  You should not use this Blog to make financial decisions and we highly recommended you seek professional advice from someone who is authorized to provide investment advice.

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