Estate planning: A must-do for all medical professionals

As medical professionals, you may have encountered patients with serious illnesses and asked yourself the following questions: What if I was in that situation? Where will my assets go when I die? What will happen to my loved ones, and will they be taken care of? Who would handle my affairs if I became ill? These important questions can only be addressed through effective estate planning.

Everyone needs an estate plan regardless of age, health, and financial or family situation. An effective estate plan provides for the orderly management and disposition of your assets upon your death. In addition, as medical professionals may appreciate, an effective estate plan appoints individuals to manage your financial affairs and make health care decisions for you in the event that you become physically or mentally incapacitated.

The most common estate planning tool is a will, which dictates how your assets pass at death. In addition, a will identifies the personal representative of your estate (that is, the person who will see that your assets pass in accordance with your wishes) and, in many states, identifies the guardian of any minor children. Although a court will make the ultimate determination of who is appointed as the guardian, courts typically give significant weight to the person named in a will.

If you die “intestate,” meaning that you died without a valid will, your assets will be distributed in accordance with your state’s intestacy statutes, and any interested person (as opposed to the individual of your choice) may be appointed as the personal representative of your estate. Therefore, to ensure that your property goes to the individuals of your choice and that your final affairs are handled by the person you trust, a will is essential.

In many states, a revocable living trust can be equally beneficial. Like a will, a revocable living trust will dictate how your property passes at death and appoints a trustee to see that the property is distributed in accordance with your wishes. Revocable living trusts can be great tools for incapacity planning and, unlike a will, are not required to be recorded, so the trust agreement can remain private. The assets that are held in a revocable living trust also avoid the often lengthy and expensive probate process, which generally includes the preparation and filing of a petition to open the estate, an inventory identifying the assets of the estate, and an accounting that details all assets received and distributed, followed by the payment of fees based upon the value of the probate estate.

In many situations, leaving assets to young, disabled, or troubled children would result in catastrophic consequences, such as disqualification for government benefits, dissipation of assets for inappropriate uses, or attachment by creditors. Further, for wealthy individuals, outright distributions to spouses could lead to unnecessary estate tax. Wills and revocable trusts can protect against these issues by requiring that, at death, the decedent’s assets are held in further trust for these individuals.

There are various types of trusts that can help ensure that your assets are used for the benefit of your loved one while avoiding any unintended consequences, some of which include the following:

• Special needs trusts, which allow the trustee to use the trust funds for the benefit of the disabled beneficiary without disqualifying the beneficiary from important government benefits.
• Spendthrift trusts, which can protect the trust assets from claims of creditors or property division in a divorce action.
• Marital trusts, which can be used to reduce taxes and ensure that property will be distributed pursuant to your wishes upon the death of your spouse.
• Dynasty trusts, which can be used to protect assets for many generations and, in doing so, reduce the amount of federal and state transfer taxes.

Whether you use a will or revocable living trust, it is critical to coordinate the beneficiary designations of assets such as retirement accounts and life insurance policies, as well as any other account that passes by beneficiary designation. These beneficiary designations trump the provisions of your will and revocable living trust. Likewise, property owned jointly with another person as joint tenants with the right of survivorship, or with a spouse as tenants by the entirety, will pass directly to the joint owner and not pursuant to the terms of your will or revocable trust.

An effective estate plan involves not just planning for death, but also for your incapacity. A durable power of attorney allows you to select an agent or agents to manage your property during your lifetime. The power of attorney can become effective immediately so that the agent can act on your behalf upon execution of the document or the power of attorney can become effective only if and when you become incapacitated.

A durable power of attorney for health care (or advance health care directive) permits you to appoint an agent to make health care decisions on your behalf in the event that you cannot make your own decisions. In addition, should you become permanently unconscious or in a terminal condition, it permits you to appoint an agent who can withhold or withdraw life-sustaining treatment. With a living will, you can express in writing the circumstances under which you do or do not want artificial life-sustaining measures.

With respect to these powers of attorney, the persons that you appoint as your agents should be people that you trust. It is also important to have conversations with your designated agents to ensure that they understand their responsibilities and your wishes. Without these powers of attorney, in the event of your incapacitation, a court will appoint a guardian. The guardian may not be the person you would have appointed, and it will result in annual, and burdensome, court filings.

As busy medical professionals, it may be difficult to find time to develop an estate plan and you may believe that there is plenty of time to do it in the future. It is important to begin thinking about your estate-planning goals and to speak with an attorney to help develop and draft your estate-planning documents. If you already have estate-planning documents, it is important to review those documents periodically to ensure that your estate-planning objectives have remained the same and, if they have changed, to update your documents.

No one knows what the future will hold, so it is important to consult with a local attorney to establish or review your estate plan now. If you do, you will be comforted by the fact that you and your loved ones will be taken care of in accordance with your wishes if you are unable to do so in the future.
 

Mr. D’Emilio is a managing member and Mr. Riley is an associate at McCollom D’Emilio Smith Uebler, Wilmington, Del.

As medical professionals, you may have encountered patients with serious illnesses and asked yourself the following questions: What if I was in that situation? Where will my assets go when I die? What will happen to my loved ones, and will they be taken care of? Who would handle my affairs if I became ill? These important questions can only be addressed through effective estate planning.

Everyone needs an estate plan regardless of age, health, and financial or family situation. An effective estate plan provides for the orderly management and disposition of your assets upon your death. In addition, as medical professionals may appreciate, an effective estate plan appoints individuals to manage your financial affairs and make health care decisions for you in the event that you become physically or mentally incapacitated.

The most common estate planning tool is a will, which dictates how your assets pass at death. In addition, a will identifies the personal representative of your estate (that is, the person who will see that your assets pass in accordance with your wishes) and, in many states, identifies the guardian of any minor children. Although a court will make the ultimate determination of who is appointed as the guardian, courts typically give significant weight to the person named in a will.

If you die “intestate,” meaning that you died without a valid will, your assets will be distributed in accordance with your state’s intestacy statutes, and any interested person (as opposed to the individual of your choice) may be appointed as the personal representative of your estate. Therefore, to ensure that your property goes to the individuals of your choice and that your final affairs are handled by the person you trust, a will is essential.

In many states, a revocable living trust can be equally beneficial. Like a will, a revocable living trust will dictate how your property passes at death and appoints a trustee to see that the property is distributed in accordance with your wishes. Revocable living trusts can be great tools for incapacity planning and, unlike a will, are not required to be recorded, so the trust agreement can remain private. The assets that are held in a revocable living trust also avoid the often lengthy and expensive probate process, which generally includes the preparation and filing of a petition to open the estate, an inventory identifying the assets of the estate, and an accounting that details all assets received and distributed, followed by the payment of fees based upon the value of the probate estate.

In many situations, leaving assets to young, disabled, or troubled children would result in catastrophic consequences, such as disqualification for government benefits, dissipation of assets for inappropriate uses, or attachment by creditors. Further, for wealthy individuals, outright distributions to spouses could lead to unnecessary estate tax. Wills and revocable trusts can protect against these issues by requiring that, at death, the decedent’s assets are held in further trust for these individuals.

There are various types of trusts that can help ensure that your assets are used for the benefit of your loved one while avoiding any unintended consequences, some of which include the following:

• Special needs trusts, which allow the trustee to use the trust funds for the benefit of the disabled beneficiary without disqualifying the beneficiary from important government benefits.
• Spendthrift trusts, which can protect the trust assets from claims of creditors or property division in a divorce action.
• Marital trusts, which can be used to reduce taxes and ensure that property will be distributed pursuant to your wishes upon the death of your spouse.
• Dynasty trusts, which can be used to protect assets for many generations and, in doing so, reduce the amount of federal and state transfer taxes.

Whether you use a will or revocable living trust, it is critical to coordinate the beneficiary designations of assets such as retirement accounts and life insurance policies, as well as any other account that passes by beneficiary designation. These beneficiary designations trump the provisions of your will and revocable living trust. Likewise, property owned jointly with another person as joint tenants with the right of survivorship, or with a spouse as tenants by the entirety, will pass directly to the joint owner and not pursuant to the terms of your will or revocable trust.

An effective estate plan involves not just planning for death, but also for your incapacity. A durable power of attorney allows you to select an agent or agents to manage your property during your lifetime. The power of attorney can become effective immediately so that the agent can act on your behalf upon execution of the document or the power of attorney can become effective only if and when you become incapacitated.

A durable power of attorney for health care (or advance health care directive) permits you to appoint an agent to make health care decisions on your behalf in the event that you cannot make your own decisions. In addition, should you become permanently unconscious or in a terminal condition, it permits you to appoint an agent who can withhold or withdraw life-sustaining treatment. With a living will, you can express in writing the circumstances under which you do or do not want artificial life-sustaining measures.

With respect to these powers of attorney, the persons that you appoint as your agents should be people that you trust. It is also important to have conversations with your designated agents to ensure that they understand their responsibilities and your wishes. Without these powers of attorney, in the event of your incapacitation, a court will appoint a guardian. The guardian may not be the person you would have appointed, and it will result in annual, and burdensome, court filings.

As busy medical professionals, it may be difficult to find time to develop an estate plan and you may believe that there is plenty of time to do it in the future. It is important to begin thinking about your estate-planning goals and to speak with an attorney to help develop and draft your estate-planning documents. If you already have estate-planning documents, it is important to review those documents periodically to ensure that your estate-planning objectives have remained the same and, if they have changed, to update your documents.

No one knows what the future will hold, so it is important to consult with a local attorney to establish or review your estate plan now. If you do, you will be comforted by the fact that you and your loved ones will be taken care of in accordance with your wishes if you are unable to do so in the future.
 

Mr. D’Emilio is a managing member and Mr. Riley is an associate at McCollom D’Emilio Smith Uebler, Wilmington, Del.

As medical professionals, you may have encountered patients with serious illnesses and asked yourself the following questions: What if I was in that situation? Where will my assets go when I die? What will happen to my loved ones, and will they be taken care of? Who would handle my affairs if I became ill? These important questions can only be addressed through effective estate planning.

Everyone needs an estate plan regardless of age, health, and financial or family situation. An effective estate plan provides for the orderly management and disposition of your assets upon your death. In addition, as medical professionals may appreciate, an effective estate plan appoints individuals to manage your financial affairs and make health care decisions for you in the event that you become physically or mentally incapacitated.

The most common estate planning tool is a will, which dictates how your assets pass at death. In addition, a will identifies the personal representative of your estate (that is, the person who will see that your assets pass in accordance with your wishes) and, in many states, identifies the guardian of any minor children. Although a court will make the ultimate determination of who is appointed as the guardian, courts typically give significant weight to the person named in a will.

If you die “intestate,” meaning that you died without a valid will, your assets will be distributed in accordance with your state’s intestacy statutes, and any interested person (as opposed to the individual of your choice) may be appointed as the personal representative of your estate. Therefore, to ensure that your property goes to the individuals of your choice and that your final affairs are handled by the person you trust, a will is essential.

In many states, a revocable living trust can be equally beneficial. Like a will, a revocable living trust will dictate how your property passes at death and appoints a trustee to see that the property is distributed in accordance with your wishes. Revocable living trusts can be great tools for incapacity planning and, unlike a will, are not required to be recorded, so the trust agreement can remain private. The assets that are held in a revocable living trust also avoid the often lengthy and expensive probate process, which generally includes the preparation and filing of a petition to open the estate, an inventory identifying the assets of the estate, and an accounting that details all assets received and distributed, followed by the payment of fees based upon the value of the probate estate.

In many situations, leaving assets to young, disabled, or troubled children would result in catastrophic consequences, such as disqualification for government benefits, dissipation of assets for inappropriate uses, or attachment by creditors. Further, for wealthy individuals, outright distributions to spouses could lead to unnecessary estate tax. Wills and revocable trusts can protect against these issues by requiring that, at death, the decedent’s assets are held in further trust for these individuals.

There are various types of trusts that can help ensure that your assets are used for the benefit of your loved one while avoiding any unintended consequences, some of which include the following:

• Special needs trusts, which allow the trustee to use the trust funds for the benefit of the disabled beneficiary without disqualifying the beneficiary from important government benefits.
• Spendthrift trusts, which can protect the trust assets from claims of creditors or property division in a divorce action.
• Marital trusts, which can be used to reduce taxes and ensure that property will be distributed pursuant to your wishes upon the death of your spouse.
• Dynasty trusts, which can be used to protect assets for many generations and, in doing so, reduce the amount of federal and state transfer taxes.

Whether you use a will or revocable living trust, it is critical to coordinate the beneficiary designations of assets such as retirement accounts and life insurance policies, as well as any other account that passes by beneficiary designation. These beneficiary designations trump the provisions of your will and revocable living trust. Likewise, property owned jointly with another person as joint tenants with the right of survivorship, or with a spouse as tenants by the entirety, will pass directly to the joint owner and not pursuant to the terms of your will or revocable trust.

An effective estate plan involves not just planning for death, but also for your incapacity. A durable power of attorney allows you to select an agent or agents to manage your property during your lifetime. The power of attorney can become effective immediately so that the agent can act on your behalf upon execution of the document or the power of attorney can become effective only if and when you become incapacitated.

A durable power of attorney for health care (or advance health care directive) permits you to appoint an agent to make health care decisions on your behalf in the event that you cannot make your own decisions. In addition, should you become permanently unconscious or in a terminal condition, it permits you to appoint an agent who can withhold or withdraw life-sustaining treatment. With a living will, you can express in writing the circumstances under which you do or do not want artificial life-sustaining measures.

With respect to these powers of attorney, the persons that you appoint as your agents should be people that you trust. It is also important to have conversations with your designated agents to ensure that they understand their responsibilities and your wishes. Without these powers of attorney, in the event of your incapacitation, a court will appoint a guardian. The guardian may not be the person you would have appointed, and it will result in annual, and burdensome, court filings.

As busy medical professionals, it may be difficult to find time to develop an estate plan and you may believe that there is plenty of time to do it in the future. It is important to begin thinking about your estate-planning goals and to speak with an attorney to help develop and draft your estate-planning documents. If you already have estate-planning documents, it is important to review those documents periodically to ensure that your estate-planning objectives have remained the same and, if they have changed, to update your documents.

No one knows what the future will hold, so it is important to consult with a local attorney to establish or review your estate plan now. If you do, you will be comforted by the fact that you and your loved ones will be taken care of in accordance with your wishes if you are unable to do so in the future.
 

Mr. D’Emilio is a managing member and Mr. Riley is an associate at McCollom D’Emilio Smith Uebler, Wilmington, Del.