“Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” ~ Benjamin Franklin, in a letter to Jean-Baptiste Le Roy, 1789.

Death and taxes…together a rather morbid idiom (separately…rather morbid words as well). In this podcast we venture out into the roughest of waters for some: estate planning. In this episode, we speak to Ms. Katherine Vessenes, CFP®, RFC, Founder and President of MD Financial Advisors, about a rather sobering topic and one of the most essential for any physician to consider. Take a listen to part one of this two part series.

About Ms. Vessenes:

Ms. Vessenes works with over 300 physicians and dentists from Hawaii to Cape Cod. Her firm uses a team of experts to provide comprehensive financial planning to help doctors build their wealth and protect their wealth while reducing taxes now and in the future. Katherine is a longtime advocate for ethics in the financial services industry; and has written three books on the subject of investment strategies. She has received many honors and awards including: numerous tributes from Medical Economics as a top advisor for doctors, multiple 5-Star Advisor Awards, honored as a Top Woman in Finance, in addition to being selected to be on the CFP® Board of Ethics. Katherine can be reached at: Katherine@mdfinancialadvisors.com or 952-388-6317. Her website: www.mdfinancialadvisors.com.

Estate Planning for Doctors – Part I

Currently all assets at the time of death are subject to state estate tax (aka inheritance tax - most states have them but not all!) and federal estate tax

- Currently federal estate tax does not apply until estate value exceeds $22 Million however expect that to change w upcoming proposed changes to tax laws

Do you need a will?

- Maybe not - as a resident as you have no assets and only debt however that changes with marriage and with children.

- Be prepared for the possibility of you and your spouse dying and thus need a plan for your children – who will be the guardian? Who will look out for their education and material needs?

- A trustee is dedicated within the will and work as the financial supervisor (IN general trustee should not be the same person as the guardian.)

- Be sure to update your will periodically, certainly when circumstances change –Additional children etc.

If you do not leave a will then the state will write a will for you “Dying in testate”.

- Generally state statutes will take effect. Typically assets go to spouse, then children etc.

What is probate?

- Probate is the process of getting your assets retitled – time consuming (can be years), expensive, can involve sig attorney fees done when there is no will/trust in place

- One can avoid probate by creating a revocable living trust – no particular tax advantage, the assets are in the trust and can bypass probate and give your heirs immediate access to the asset.

Would I want a Living trust?

- can be good way to manage assets

- can help to protect privacy,

Be sure to have a Health care declaration in place to outline your wishes for end of life care when you are unable to speak on your behalf.

Power of attorney - gives another person the right to execute financial matters on your behalf, buy sell real estate, manage your portfolio when you are unable to manage your own affairs. Be sure to only execute with someone you trust.

Beneficiary designation – 401k, IRA etc. will trump your will or your living trust. Important to keep up to date.

** A note on student loan debt - Generally student loans , certainly not federal student loans, do not go to spouse/children unless spouse etc. has cosigned for that debt.

Other debts, tax debt etc., are paid by the estate and those are always paid first before beneficiaries receive their portion.