LETTER OF THE LAW

Where There’s A Will, There’s Still Much To Do

It may seem too early to plan your estate, but as a new ophthalmologist, you have much to protect.

By Joseph W. Gallagher, Esq., LL.M.,
and Mark E. Kropiewnicki, Esq., LL.M.

Do you have an estate plan — a written arrangement for the disposition of your property? We find that most new ophthalmologists don’t, at least not a plan they helped create. They’ve been too busy completing their training, finding jobs and maybe even starting families.
Like it or not, even if you don’t have a will, you do have an estate plan. It’s a plan provided for you, but without any input from you, under the intestacy laws of your state. In other words, without a will, choices are made for you. As a new M.D. who is, or will be, part of a growing practice, it’s more important than ever for you to actively plan for the future.
If you view an estate plan as merely a method for distributing your assets to your loved ones, intestacy certainly does that. But it almost certainly won’t do it the way you would want. Moreover, you may have an estate or family situation that makes the tax consequences of not planning quite expensive. So let’s take a look at what happens if you don’t create your own estate plan.

... all the fancy planning in the world will make no difference if you don’t follow through and pay attention to the small details.

Your Default Will — Intestacy
If you die intestate (without a will), most states split your assets between your surviving spouse and your children. This is true whether your children are age 3 or age 30. And it’s true if you’d prefer all of your property go to your surviving spouse, your children or neither.
Indeed, intestacy hardly constitutes a plan, because you’re not involved in determining what happens to all that you’ve worked to obtain. Many people assume that wills (and estate plans) are just for people with lots of money, lots of children or both. But that’s a risky assumption. You likely own more than you realize, and if you die intestate, your property will be divided according to the laws of your state — not according to your wishes.

Preparing Your Estate Plan
A well-drafted will is a fundamental element in any estate plan, but getting to the stage of executing a will requires a good deal of information-gathering and goal-defining.
If your goal is to pass on as much of your estate as possible to your chosen beneficiaries, then it’s important to go through these steps before having a will prepared. What constitutes a good will for one person may not be appropriate for another.
A will is fundamental to any well-prepared estate plan, but it’s frequently only a minor part of that plan. A well-prepared estate plan can include separate trusts (revocable and irrevocable), dur-able and medical (health care) powers of attorney, a living will, lifetime family and charitable gifts, asset reallocation and the like. You may not need all of these legal documents right now, but you’ll only know for sure if you ask an experienced attorney.

How to Prepare
Drawing up a will doesn’t have to be complicated or expensive, although most new ophthalmologists will need more than a basic will. You should hire a lawyer, preferably one who specializes in estate planning, to draw up your will (and your entire estate plan).
However, even before hiring a lawyer, you can and should do the following:
Make a complete inventory of everything you own. Include your practice (if you are an owner), homes, other real estate, vehicles, savings, investments, life insurance, IRAs and retirement plans. Include as much information as possible about each item, such as value, acquisition date, etc.
Update the beneficiaries on your life insurance, IRAs and retirement plans. Most people list their spouse as their beneficiary, but that’s not always best. If you do designate your spouse as beneficiary, you should include a contingent beneficiary. That way, if you and your spouse die in an accident, the benefits will go directly to the contingent beneficiary without probate complications.
Assemble lists of personal and sentimental items and decide whom you want to inherit them when you die. Outline your list in a letter and include a provision in your will to have your executor follow your letter of instructions.

Check the Details
You can pay lawyers and other advisors a great deal of money for complicated estate plans that are designed to distribute your estate to your heirs in accordance with your wishes and to save you considerable taxes. However, all the fancy planning in the world will make no difference if you don’t follow through and pay attention to the small details.
For example, as you get older, you may decide to use life insurance to fund one or more of the trusts in your estate plan. How-ever, the life insurance policies themselves are simply made payable to a surviving spouse, not to the trust. You need to make sure to change your beneficiary designations at the time you sign your wills and trusts.
Similarly, a trust you create as part of your estate plan may need to “own” your life insurance policy. If the trust is to acquire the policy by transfer from you, you have to make sure the transfer actually takes place. That means contacting your life insurance company to obtain a change of beneficiary designation and a change of ownership form, then completing those two items and returning them to the company.
Finally, your estate plan and documents must be completed and signed to take effect. Too often, busy professionals will instruct their attorneys and advisors to develop sophisticated plans, but then they allow the final documents to languish, unreviewed and unsigned. The financial consequences of such laxity could be substantial.

Protect Your Heirs
Estate planning may not be a pleasant undertaking, but it’s important to make sure those you love receive what you have worked hard to acquire.
By taking advantage of tax-saving opportunities, a carefully prepared plan can minimize the bite the government and others take out of your estate. But recognize that the specific details of document preparation are important and follow-through is critical. Without it, the best-drafted documents achieve nothing.