Physicians need to know about one of the most important legal documents physicians can use and those are wills. But in the financial planning process, estate planning and wills are naturally overlooked based on displeasure to talking about death.
I’ll be honest, writing about having a will gave me pause. Not because wills make me nervous because they don’t.
I like them. Everyone should have one.
I hesitate to write on the topic because I know that the subject of death, or worse – medical incapacitation – puts everyone a bit on edge.
It’s already hard enough to reach out to a financial advisor when you have six figures worth of debt to contend with. It takes a lot of courage for many people to make that first call or send that first email to ask for help. So many people think that finding themselves with a high level of student loan debt is their fault. That leads to thinking that you may not have any reason to have a will.
So, instead of starting with how wills are important and everyone should have one, instead, I’m going to start with this:
Having a lot of debt is not your fault.
There is something wrong with the system of lending in this country that leads people to find themselves with a much higher level of debt than they know how to deal with or can realistically afford.
And there is something even more wrong with our educational system because it simply shouldn’t cost so much money to get an education that you have you to spend the rest of your working life to pay it off.
Yet, here we are. The good news is that you are in very good company. The average American has about $38,000 in debt, with the average medical school graduate carrying roughly $190,000 in student loan debt.
You are also in good company by visiting this website. Because you’re here, I know that you are interested in learning more about your financial situation. I also know that you want to take control of your finances and your financial future.
Good for you! I hope that you are here to learn and to arm yourself with knowledge of all things financial.
Now, about those wills.
Let me be blunt: ten out of every 100 people between the ages of 55 and 64 will die in the next ten years, yet more than half of them do not have a will.
Let that sink in for a moment.
I certainly don’t mean to use scare tactics here at Financial Residency. In fact, my goal is just the opposite.
My intention is to provide information and empowerment so each individual can take control of their finances and live their best life. I focus on helping physicians in particular because of:
- the unique financial circumstances that physicians tend to experience, between student loans and higher than average national salaries,
- and the opportunity to own one’s own practice.
But back to needing a will. Are you wondering if you need to have a will? You’re in luck because we have the answer: you do.
Anyone with a job and a bank account should have a will.
How about your health? Do you have a body that you’d like to stay healthy for the next fifty to seventy or so years? As a physician, you know better than anyone that health can turn on a dime. You also know that you could find yourself on the patient side of things, incapacitated and unable to communicate your wishes and your needs.
Wills aren’t just about financial matters. They are about any type of legal decision that needs to be made when you can’t make it for yourself.
If you have minor children, property, a business, personal effects of monetary or significant personal value, a steady income, debt, a spouse or significant other then you have need of a will for both financial reasons and health reasons.
Okay, so I need a will. Now what?
A will is, at its simplest, is a legal document that states your financial and medical wishes.
A will ensures that your property, personal effects, and medical status are cared for in the manner of your choosing. More importantly, a will provides a quick resolution to your estate than if you don’t have a will. This is ultimately much kinder for your loved ones.
Step one: Have One
Everyone needs a will.
I’ll say that again: everyone needs a will.
They are easy to write and then adjust later when your circumstances change. Don’t fall into the trap of thinking that because you have a lot of debt means you don’t need a will. The reality is just the opposite. Because you have a lot of debt is one very important reason to have a will. There are taxes associated with that debt, and a will helps to ensure that your loved ones will not get surprised with a tax bill they are not prepared to tackle.
Not having a will means that your home, medical practice, minor children, heirlooms, personal effects, bank accounts, and retirement accounts could all get held up in probate for months or even years after you die. Or, worse, your assets could end up going to a person you did not choose or possibly didn’t even know.
Having a will does not speed up your demise or force you to confront your mortality. A will is about creating peace of mind. Life is always better when you have a plan.
Step two: Consider your Heirs
Don’t assume that your spouse, child, significant other, business partner, parent or anyone else will be your heir should you die without a will. The relationship most important to you may seem obvious to you, but in the eyes of the law, it may not be.
A judge will have to look for your closest blood relative in the absence of a will, even if you and your life partner have shared a home and a life for decades. You must put your wishes in writing in a legally bound document if you wish for the seemingly obvious relationship to stand.
The good part is that you get to decide who you wish to have your assets. As long as you create your will while you are alive and in full command of your faculties, what the law would consider your next of kin becomes irrelevant. Creating a will gives you the control to make any decisions you see fit.
Step three: Consider Charity
Do you plan to leave any money to charity after you die? This is a question that many people don’t consider, especially when they have a great deal of debt. Yet, your estate just may generate an amount of money, small or large, that you may wish to designate as for your favorite charity or charities.
You do not need to have a set dollar amount in mind at the writing of your will. You could simply declare that a certain percentage of the net amount of your estate goes to a specific charity. Depending on the amount of money, that could be a single payment or even money paid out over time.
Most charities have paperwork ready to assist with such planning. Leaving money to charity after you die is known as planned giving. Contact your favorite charity and ask to speak with a development representative. He or she will likely have information ready in the form of a brochure or perhaps a website that you can bring to your appointment with your attorney.
Peace of mind
It’s not uncommon for clients to think that the number one reason that they need a will is because they fear their will will be contested. The truth is that only about 3% of wills are challenged, with only 1% of them challenged successfully. This is because when wills are written properly, they are legally binding and are designed to protect you and your interests.
That can be dicey for your heirs, and for your estate. All of your hard-earned money could end up going to a distant relative you have never met, or be held up by legal red tape for years before getting into the hands of your loved ones.
But more importantly, a will is there to help you while you are still alive.
As a physician, you know perhaps better than anyone the reality of sudden medical issues that could render you incapacitated. Having a will in place ensures that you have already done your due diligence and have a legalized plan in place to ensure that your wishes are carried out for you while you may not be able to make decisions for yourself or your medical care.
Whether or not someone is of sound mind, and what that may constitute is tricky, even for professionals. Challenging a will on these grounds is difficult for a person to prove but it is also difficult for the estate of the deceased to prove otherwise. This legal ambiguity often results in a prolonged legal battle.
How family structures affect a will
The time of the nuclear family is long behind us. Today’s families come in all shapes and sizes. This is a wonderful thing, but it does create some new situations when it comes to heirs and how one writes a will.
Blended families combine spouses who were previously married and each brings their own children to the new relationship. Are stepchildren entitled to a stepparent’s estate in the same manner as the parent’s own children? Who gets to decide? (Hint: you do)
Marriage equality is now legal in all 50 states, but discrimination still exists. Is your marriage legal or common-law? Or have you opted to live as partners in every way outside of legal marriage, due to law or personal choice? Your significant other can still be your heir, but you would especially benefit from having a will in place.
Divorce can also throw a wrench into the finest laid of plans. The length of the marriage, whether or not you have children, and whether those children are minors or adults, whether the divorce was amicable or acrimonious – these are all factors that may come into place upon your death. Your best bet is to have a will in place to make sure that all details are laid out in writing, are clear, and are uncontestable.
Consider your children as well, including stepchildren, adult children, minor children, or children who are full-fledged grown adults. Your attorney will help you decide how to divide up your estate to make sure they are appropriately cared for and also treated the way that you wish as heirs. You may also wish to consider an adult child to serve as your proxy should you become incapacitated.
What doctors should know
As a physician, you surely know that it is crucial for every adult to have a document in place naming a proxy with power of attorney who knows your wishes. Do you want heroic measures? How long do you want to live on a ventilator or breathing tube? Who do you trust to make these important decisions for you and to carry out the decisions you have already made? What if the decisions you make today should change?
While you are surely aware of the importance of having such documentation in place, you might not know that only 7% of general practitioners, psychiatrists, geriatricians, or medical students near completion of training could answer basic questions about testamentary capacity. That is the mental ability to craft your own will and make legal decisions for yourself.
If trained physicians are not knowledgeable about our patients, how can we be knowledgeable about ourselves? It behooves us to understand what goes into making a will, including an advance directive.
What a doctor needs to know about estate planning and wills
A will itself can be simple or direct, depending on your situation and assets. In addition to a will, you should consider having these important documents. As a physician, it’s especially important that you look at the need for a will from a personal perspective as well as from the lens of how best to help your patients.
Living Will/Advance Directives
Life can happen to anyone, so an advanced directive is for people of all ages, regardless of the level of wealth. If you’re wondering whether or not you should have an advanced directive, the answer is simple: you do.
A living will, also known as an advanced directive, consists of written, legal instructions stating your preferences for medical care should you be unable to state those preferences or make decisions for yourself. This will include the type of care itself as well as your chosen person to make the decisions regarding the care.
This part of your will defines your choices for medical treatment. What are your choices regarding being kept on a ventilator? Do you want CPR or other life-saving measures? What about tube feeding, and for how long? What do you want with regards to end of life or palliative care? Are you an organ donor and do you have or want a do not resuscitate order, known as a DNR?
Power of Attorney
In addition to spelling out your wishes should you become incapacitated, you also need a person to make decisions for you under those circumstances. Designating someone as your power of attorney acts in conjunction with other legal documents because not all scenarios can be named in a static document.
As you know all too well, in times of stress, people don’t always make the best decisions. Your best protection against circumstance is to have everything you need in place and ready. Hopefully, you will never need it.
The Big Picture
Wills are simple and complicated at the same time. When it comes to the big picture, everything you need to know about a will is summed up with the simple advice that, if you’re not sure if you should have one or not, the answer is that you definitely do.
Every adult should have a will. The more complicated your financial situation, the more complicated the document. Your lawyer will be able to help you navigate this path and get everything you need in writing.
The details are where things can get complicated or at least more customized. The good news is that crafting a will only takes a few hours of your, and your attorney’s time. Then you can simply review and modify the document every few years or when you experience a major life event. The best part is that you can then sleep a bit easier knowing that your life’s work will be protected even after you’re gone.
So happy you’re here! Thank you for getting through the blog and would ask a teeny-tiny favor. If you haven’t subscribed to the show yet, it would mean the world if you did. Thank you again for making this community what it is!