Informed Perspectives

An Introduction to Estate Planning

Knowing where to start when planning your estate can be a daunting task. Depending on your career and life stage, how you plan your estate may look very different. Once you break it down, planning your estate doesn't have to be as complicated as you think.

An Introduction to Estate Planning

Knowing where to start when planning your estate can be a daunting task. Depending on your career and life stage, how you plan your estate may look very different. Once you break it down, planning your estate doesn't have to be as complicated as you think.

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Table of Contents

What is estate planning?

Simply stated, estate planning is a method for determining how to distribute your property during your life and at your death. It is the process of creating a master plan that facilitates the distribution of your property after your death and according to your goals and objectives.

At your death, you leave behind the people that you love and all your worldly goods. Without planning, you have no say about who gets what, and your property may be distributed between relatives and the federal government. If you care about how and to whom your property is distributed, and ensuring that your property is preserved for your loved ones, it’s important to plan your estate.

Do physicians need estate planning?

Estate planning can be important for physicians no matter their career stage or estate size. In fact, it may be more important if you have a smaller estate because the final expenses will have a much greater impact on your estate. Wasting even a single asset may cause your loved ones to suffer from a lack of financial resources. That’s why it’s important to get started on estate planning early on in your career.

Initially, your master plan can consist of strategies that are simple and inexpensive to implement (e.g., a will or life insurance). As your career progresses and your estate grows, the planning process can be more complex and expensive.

Implementing most strategies will probably require you to hire professional help of some kind, an attorney, an accountant, a trust officer, or an insurance agent, for example. If your estate is large or complex, you should consult with an estate planning expert.

In deciding on your course of action, you should always consider whether the benefit of the strategy outweighs the cost of its implementation. Your Forme Financial team can help you assess these considerations.

Certain circumstances make estate planning more important 

You may need to plan your estate especially if:

  • Your estate is valued at more than the federal gift and estate tax applicable exclusion amount or your state's death tax exclusion amount
  • You have children who are minors or who have special needs
  • Your spouse is uncomfortable with or incapable of handling financial matters
  • You own a practice
  • You have property in more than one state
  • You intend to contribute to charity
  • You have special property, such as artwork or collectibles
  • You have strong feelings about your own health-care decisions
  • You have privacy concerns or want to avoid probate

What are estate planning strategies?

An estate planning strategy is any method that facilitates the distribution of your assets and the settlement of your estate according to your wishes. There are several estate planning strategies and paths, some can be used together to create the right plan for you and others, like intestate succession, default options for when you don’t have a plan. Here is an overview of some of the different strategies you can use as you start planning your estate.

Intestate succession

Intestate succession is a strategy by default and is a means of transferring your property to your heirs if you have failed to make other plans such as a will or trust. When you don’t have a plan in place, state law controls how and to whom your property is distributed, who administers your estate, and who takes care of your minor children. Without directions, your opinions and feelings are not considered. If making those decisions yourself is important to you, one of your primary goals in planning your estate may be to avoid intestate succession.

Last will and testament

A will is a legal document that lets you declare how you want your property distributed after you die, who shall administer your estate, and who will care for your minor children. This is probably the most important tool available to you. Anyone with property or minor children should have a will.

Will substitutes

A will substitute  - for example, a Totten Trust or payable on death bank account - allows you to designate a beneficiary of certain property. That property will automatically pass to that beneficiary after you die and avoids passing through probate, a court-supervised proceeding to validate and execute a will. 

Trusts

A trust is a separate legal entity that holds your assets and are then used for the benefit of one or more people (ie. you, your spouse, or your children). There are different types of trusts, each serves a different purpose, and include marital trusts and charitable trusts. You will need an attorney to create a trust.

Joint ownership

Joint ownership is holding property in concert with one or more people or entities. There are different types of joint ownership, such as tenancy in common and community property, each with different legal definitions, requirements, and consequences.

Life insurance

Life insurance is a contract under which proceeds are paid to a designated beneficiary at your death. Life insurance plays a part in most estate plans.

Gifts

A gift is a transfer of property that you make during your life to family, friends, or charity. Making gifts can be personally gratifying as well as an effective estate planning tool.

Tax exclusions, deductions, and credits

There are several important estate planning tools you can use that are offered by the federal government. These include the annual gift tax exclusion, the applicable exclusion amount, the unlimited marital deduction, split gifts, and the charitable deduction.

Estate planning is an important part of securing you and your family’s financial health and well-being. You might use any combination of the above strategies to create your personal estate plan. If you’re just starting out in your medical career, purchasing life insurance and drafting up a will are a great place to start. If your estate is large, or you own a practice, you may want to start incorporating more strategies into your estate plan. If you’re unsure of where to start, a Forme Financial advisor can help you understand your estate plan, and identify what changes may be needed.

General Disclaimer

The information provided herein was prepared for educational purposes only and is not a solicitation to buy or sell any security or insurance product, nor an offer to provide investment advice. All examples are hypothetical and for illustrative purposes only. Nothing contained herein should be construed as legal or tax advice and is not intended to replace the advice of a qualified tax advisor or legal professional. The information contained herein may have been compiled from third-party sources we believe to be reliable but cannot guarantee its accuracy or completeness.

Forme Financial is an SEC-registered investment adviser. Additional information about Forme Financial, including its services and fees, is available online at http://adviserinfo.sec.gov/.

Past Specific Recommendations

This communication contains past specific securities recommendations for illustrative purpose only.  Forme Financial makes no assurances, nor should it be assumed, that recommendations made in the future will be profitable or will equal the performance of the securities included in this presentation. Due to various factors including changing market conditions, such recommendations may no longer be appropriate; nor should any past recommendation be taken as personalized investment advice. You may request from us free of charge a list of all securities recommendation made within the immediately preceding period of at least one year accompanied by the following disclosures: (1) the name of each security recommended; (2) the date and nature of each recommendation; (3) the market price of the security recommended at the time; (4) the price at which the recommendation was to be acted upon; (5) the market price of each such security as of the most recent practicable date. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list. Any presentation of the performance of such past specific securities recommendation does not reflect the deduction of an investment management fee, or any transaction costs or custodial charges, the incurrence of which would have the effect of decreasing indicated historical performance results.  It should not be assumed that your account performance of the volatility of securities held in your account will of will correspond directly to the referenced past securities recommendations.

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