Estate plans are not one-size-fits-all; a strategy that works for a car dealer may not work for a doctor. Thus, it’s essential for everyone to look into the specifics of their situation and goals to develop a plan well-fitted for them. If you are a physician in California, here are some issues that may be unique to you.
Your medical practice
The law requires you to structure your medical practices as a sole proprietorship, LLC, corporation or partnership. For other people, an LLC or corporation can protect them from liabilities that come with lawsuits or creditors. However, doctors have unlimited liability for medical malpractice claims. Hence, no matter how your business is structured, you can be held personally liable for any damages a patient may experience.
It takes doctors longer to accumulate wealth
A person has to go to college for four years before starting medical school. After graduation, it takes an additional four to seven years to complete a residency. This means that the average doctor is around 30 years old when they finally start earning a real income.
With this in mind, your estate planning strategies should be focused on accumulating wealth and protecting it for the long term. This may include investing in the life insurance or setting up a trust.
You may have student loans
Doctors often have sizable student loans to pay off. In fact, the average medical school graduate has around $200,000 in debt. If you have this type of debt, you need to factor it into your estate planning strategy.
One option is to set up a trust that will pay off your loans after you die. You could also try and pay off your loans while you’re still alive so that your loved ones are not burdened with them after you’re gone.