Visit Us
1350 Euclid Ave., #280 Cleveland, OH 44115
Every adult should have an estate plan, even with limited or no assets. However, medical professionals have significant potential liabilities, higher earning potential, and complex asset structures that can make estate planning even more important. As such, you must also consider unique estate planning strategies to ensure that your assets are as fully protected as possible. Additionally, as doctors, you may want to complete healthcare-related documents to ensure you maintain some control over your healthcare even if you are incapacitated by injury or illness. In this post, we’ll go over certain estate planning strategies that doctors should be aware of.
Estate plans have several components. Some of these components work together to protect assets, such as trusts and wills, while others work together to protect the individual’s health. Depending on the individual’s assets, health status, and other factors, they may add additional components or decline to include others. However, there are some basic documents that are essential estate planning strategies for anyone. Medical professionals will likely want to complete these essentials, at a minimum.
A Last Will and Testament, or will, outlines the individual’s (testator) wishes for distribution of their assets after they have died. A will designates beneficiaries for all of the individual’s assets, including real estate, investment accounts, and personal belongings. The exception to this is any assets that are included in a trust or that share ownership with another individual and therefore cannot be passed through the will, such as home that is jointly owned with a spouse.
A will also designates the testator’s choice for the executor of their estate. The executor is the individual who will submit the will to the Ohio probate court and handle the estate once the testator has died. The testator can also use their will to appoint a guardian for any minor children. A will can minimize family conflict and confusion after the testator has passed. Without one, the individual is said to have died intestate, which means that the state must determine how to distribute the estate. This can lead to frustration for the family and is often not the way the individual would have wanted their estate distributed.
A durable financial power of attorney (POA) allows the principal (the person granting the POA) to empower an agent (the person the principal names) to manage their financial affairs if the principal is incapacitated by injury or illness. A financial POA ensures that the principal’s financial obligations are met, their investments are managed effectively, and their bills are paid. The principal can grant a financial POA that allows the agent to handle all of their financial affairs, or they can grant one that only allows the agent to handle specific tasks. These specific tasks may be one-time tasks, such as selling a piece of property, or a specific task that is ongoing, such as paying their monthly bills.
Medical professionals should choose someone with strong financial skills whom they trust to handle these matters as they will not be able to revoke this POA if they are incapacitated. Additionally, it is important to ensure that the POA is durable. This means it must include a statement that the POA remains effective even when the principal is incapacitated or incompetent. Without such a statement, the agent will not be able to use the POA to act on the principal’s behalf when it is needed most.
One of the most essential estate planning strategies that is often overlooked is protecting the individual’s healthcare decisions. There may come a time when the individual is unable to make their own decisions due to incapacitation by injury or illness. A comprehensive estate plan includes documents to ensure the individual’s wishes are still known and there is someone to speak for them. The first document is a durable power of attorney for healthcare. This POA empowers the agent to make medical decisions for the principal. This only takes effect when the principal cannot make decisions for themselves, such as being unconscious, in a coma, or in surgery. The principal can use this document to specify their desired treatments in various scenarios to assist the agent in respecting the principal’s wishes and aligning their decisions with the principal’s values.
Another document that relates to healthcare is a living will. This document allows the individual to document their wishes for life-prolonging treatments in the event of a terminal illness or permanent unconscious state. The individual can indicate which treatments they want or do not want, or at what point they wish to have particular treatments discontinued. Many medical professionals want to include a living will in their estate plan after seeing many patients whose families struggled to decide what the patient would want in these situations.
A revocable trust is a valuable tool to manage and distribute a medical professional’s assets during their lifetime and after their death. Trusts may also avoid probate. Individuals can place assets such as investments, real estate, or their medical practice in the trust to both protect the assets from probate and fund the trust. Funding the trust is a crucial part of the process, as the trust is not considered established until it is funded.
With a revocable trust, the individual retains control over the assets while they are alive. The trust’s designated trustee manages the assets per the individual’s instructions, if the individual is not acting as the trustee. Whether the individual chooses themselves or someone else as trustee, they should also name a successor trustee to handle the trust when the original trustee no longer can. Once the individual has died, the trust’s assets are distributed per the trust’s terms. A revocable trust allows the individual to add or remove assets or beneficiaries until the individual’s death, which creates significant flexibility to make changes as life circumstances change.
After the essential documents have been addressed, medical professionals will want to explore more advanced estate planning strategies to protect their family, their business, and their assets. A knowledgeable estate planning attorney with Rhodium Law, LLC may be able to assist you with deciding if these or other strategies may be beneficial for your estate plan.
Life insurance offers financial security for the family left behind after the individual passes. Because there is a named beneficiary, these policies typically pay out relatively quickly after the death. This can help the family cover funeral expenses and pay household bills while they are grieving and trying to determine their next steps. Individuals can purchase term or whole life insurance and can also have multiple policies so that they can provide for multiple beneficiaries without having to try to split one policy between them all. Additionally, medical professionals can consider Section 79 plans for group-term life insurance, which provides an exclusion for the first $50,000 of coverage from the Internal Revenue Service (IRS).
In addition to life insurance, medical professionals may want to consider disability income insurance. Should they become injured or ill and be unable to work for an extended period, this insurance provides financial stability and peace of mind for the professional and their family. This insurance assists in paying ongoing expenses and maintaining the family’s current standard of living until the individual can return to practicing medicine. Individuals may also want to consider unique options for health insurance, such as captive insurance, which the National Association of Insurance Commissioners explains is a form of self-insurance where one company creates a wholly owned subsidiary which provides health insurance to the parent company.
Individual retirement accounts (IRA), 401(k)s, and investments often make up a significant part of a doctor’s wealth. These financial accounts can be passed on to beneficiaries after the doctor’s death through beneficiary designations. If the individual has not designated a beneficiary, or the beneficiary has died or cannot be located, the account typically reverts to the estate and is distributed according to the terms of the will.
Individuals should regularly review these beneficiary designations, and when necessary, update them. Specific times when individuals may want to review these designations include after marriage or divorce, the birth of a child, the death of a loved one, and relocations. In addition to reviewing and updating the primary beneficiary, individuals may also want to name a contingent beneficiary, or one who receives the account if the primary beneficiary has died or cannot be located.
Many medical professionals own their own practice, either solo or with partners. When they do, one of the most critical estate planning strategies they can engage in is business succession planning. Business owners need a clearly outlined roadmap for the future operation and ownership of their practice after they have exited, whether due to retirement, disability, divorce, or death. This planning may include buy-sell agreements or partnership agreements that outline what happens to one owner’s shares when they are exiting the business, if there are partners. If the medical professional is a solo practitioner, this may include details about another professional to whom they would sell, a plan for passing it to a child who has also gone into the medical field, or other plans. This is essential for the continued smooth operation of the practice.
While a revocable living trust may provide some protection for assets, an asset protection trust may potentially shield the included assets from lawsuits or creditors more effectively. These types of trusts are additional financial security for the individual and their family. However, asset protection trusts are not always right for everyone, so it is important that medical professionals consider consulting with an estate planning attorney to learn whether this is a suitable strategy for their needs. Other options for asset protection may include irrevocable trusts and family limited partnerships.
There are some additional considerations that doctors and other medical professionals should consider when looking at estate planning strategies. These considerations may or may not apply to an individual’s unique circumstances, and there may be other considerations not mentioned that the individual will need to think about. Consulting with an estate planning attorney can help the individual ensure that they are choosing the most appropriate strategies for their needs.
Federal estate tax applies to estates that exceed a specific threshold set by the Internal Revenue Service. In 2025, that threshold will be $13,990,000. If an individual’s estate exceeds this amount, they may want to explore options for minimizing their tax burden, such as gifting, maximizing their charitable contributions, and other strategies.
Ohio does not have estate or inheritance tax. This means that the estate will not need to pay any estate tax and the beneficiaries will not be required to pay inheritance tax.
Due to the complexity of a medical professional’s estate, they will likely want to assemble a team of other professionals to advise them. This team may include a business and estate planning attorney, certified public accountant (CPA), and financial advisor. These individuals each bring distinct knowledge and skills that can assist in ensuring complete protection of the individual’s estate, from their assets to their health.
Medical professionals have unique estate planning needs that require unique estate planning strategies. This means you want to work with an attorney who understands those needs and is familiar with those strategies. As both an Ohio business and estate planning attorney, Attorney Goodwin is uniquely prepared to review your estate and explain how we may be able to assist you in comprehensively protecting both your assets and your health with a properly structured plan. Call our Cleveland office at (216) 699-8145 to discuss your circumstances or self-schedule an initial consultation.
