By Amber Gutschlag
If you’ve never put much thought into planning for your eventual death, you’re not alone. Surveys consistently show that less than half of Americans maintain a legal will, and even fewer have considered creating an estate plan.
Maybe you took that first step and drew up a will. Did you consider your dental practice? You studied for years and put your heart and soul into your work. It is your livelihood and legacy and deserves the same, if not more, consideration as your other assets.
Whether you’re rich, poor, or somewhere in between, a properly crafted estate plan can benefit you and your heirs.
The Basics
There are a few documents that most people know they need to execute for estate planning, so follow through if you haven’t worked on this yet! A legal will is a top priority, followed by a durable power of attorney (which allows someone to act on your behalf if you are disabled or incapacitated), medical power of attorney and guardianship designations for your children.
If your will was drawn up before a marriage/divorce or before your dental practice began, you may need to consider drafting a revision to reflect your current situation.
Other basic estate planning points to consider:
- Designate or update beneficiaries on your retirement accounts and life insurance policies;
- Make tax-free gifts during your lifetime (up to $14,000/person during 2017);
- Create a list of important account names, numbers, online logins and passwords so your executor or family can access electronic records if necessary.
Protect Business Transfers
As a dentist owning your practice, an estate plan is the most effective way to ensure the business continues according to your wishes. Whether you want an heir to take over your business completely (if he or she is a dentist) or prefer your business to take a new form after you’re gone, an estate plan will set out detailed instructions and ensure they’ll be followed.
Your current business structure may already address succession planning, as partnership and LLC agreements typically have clauses that address the death or disability of a partner. If you aren’t sure, check your organizational documents and ask your accountant or attorney for an explanation of anything you don’t understand.
Estate Plans Bypass Probate Courts
Anytime you’ve heard a story about a family torn apart by conflict over a loved one’s inheritance, the chances are that battle played out in probate court. Probate courts are notoriously slow, and it’s not unusual for a case to last a year or more before it’s closed. Such proceedings can quickly become very expensive, so simple court and legal costs might eat up as much as 5 percent of your estate’s value before your heirs ever receive a cent.
Probate courts only get involved when an estate is disputed or doesn’t have a legal plan for its fate after the owner’s death. There are many tools available, such as living trusts and accounts owned as joint tenancy with rights of survivorship (JTROS accounts) that could allow you to bypass probate court entirely with a properly constructed estate plan.
Estate Plans Can Preserve Privacy
Probate courts are public legal institutions, and that means all the records of your estate and any legal battle attached to it become public record once the case is taken up by the court. Any person can request those records, creating the opportunity for anybody from curious strangers to vindictive family members to pore over every detail of the estate you’ve left behind.
In contrast, the provisions of a nondisputed estate plan are only revealed to the relevant parties, allowing you and your heirs to keep personal and financial matters out of the public eye.
Tax Planning
Estate plans are a complex endeavor — and the last chance you’ll have to guarantee your wishes are accommodated. Sound assistance from a qualified accountant and attorney is the best way to ensure your estate will meet the needs of you and your heirs.
Contact Goldin Peiser & Peiser for further information on estate planning or general tax planning strategies.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.
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