Estate planning for doctors is often more complicated than for the general population, due to a range of specific issues. In this article I want to highlight what doctors need to consider when preparing their estate plan.
Medical professionals often have multiple personal entities (trusts, companies, SMSFs, etc.) and business structures (service trusts, etc.), set up for tax purposes or asset protection. This complicates not only the personal estate plan, but may also require that particular attention be paid to the succession objectives of potential business partners.
Wills only deal with assets held in personal names; however, medical professionals would generally hold significant assets in trusts or through companies (for tax and asset protection purposes), and also self managed super funds.
It is important to note that family trusts do not allow assets to be passed on to a particular beneficiary by way of the Will. As such, a comprehensive estate plan would need to cater for the transfer of control of such an entity through the Appointor provision.
Therefore, it is important to review any trust deeds that may exist, to ensure that an appropriate succession mechanism for the Appointor is in place.
Self managed super funds
A similar issue may arise with Self Managed Super Funds, where the Executor (also being a Beneficiary) or a surviving member of the fund may seize control of the assets for their own benefit.
Consequently, the personal estate planning process will need to include an in-depth review of all the entities and their related deeds/constitutions. This may lead to some of the documents having to be amended to achieve the desired outcome.
Also, choosing an Executor (i.e. the person or people who will carry out the deceased’s wishes, pay all the debts, collect and distribute all the assets) may not be an easy task. Some people (including the medical professional’s spouse or children) may not be comfortable with, or have the expertise to deal with a complex estate plan comprising different entities, in particular in such a time of emotional distress.
In the Will, it would therefore be advisable to at least suggest to the Executor that they seek professional advice and work closely with the medical professional’s team of advisers.
The size of your estate
Due to your income earning capacity, and generally long careers, medical professionals have the potential to accumulate a significant asset base. Often there is a strong desire to keep these assets within the ‘bloodline’, for the benefit of future generations.
Many parents could relate to the fear that the legacies they have worked hard to provide will be ‘lost’ because a beneficiary is declared bankrupt, gets divorced or is sued a few years down the track.
Other concerns include leaving a legacy to a potential spendthrift or a child with poor money management skills, or more serious issues such as drug or alcohol-dependence. Potential threats like these often lead to a desire to preserve the estate for the immediate ‘bloodline’, so that intergenerational wealth transfer plays into the hands of the right people, at the right age/time.
This can be achieved via the use of ‘testamentary trusts’, for which a provision is made in the Will, given that they are only established upon death.
There are many different ways in which these trusts can be structured, but the main benefits remain the same: more certainty and security regarding assets being passed down to future generations, and tax efficiencies, in particular for minor children.
Estate planning for doctors requires an in-depth review and understanding of your personal and financial circumstances, and is much more comprehensive than simply preparing a Will.
I have a wealth of experience in assisting my medical clients prepare a comprehensive estate plan and have a team of legal specialists I collaborate with. Most importantly, I will continue to follow up and project-manage your plan, until the documents are implemented.
I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.
As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.
My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.
Please contact me on email@example.com or call me direct on 08 9381 2704. You can follow me on Twitter @YvesSchoof or connect with me on Linkedin to receive new articles.
Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.