Physicians have demanding jobs that require absolute precision, careful attention to detail and years of intensive education. They can command competitive wages, especially if they have a skilled or in-demand specialization, like cardiac surgery.
The average person might assume that a doctor’s primary concern when planning their estate would be avoiding estate taxes and making sure the people they love receive the appropriate property. However, especially early in a career, physicians may have a different concern when planning their estate.
Specifically, they may need to focus their plan on minimizing debt issues. A savings account that they fund to support their children or equity in a home could all wind up claimed to repay student loans when a physician dies early in their career.
Becoming a medical doctor is not cheap
No matter how smart and dedicated a medical student is, they will still have to pay a lot for their education. The average physician in the United States graduates medical school with approximately a quarter of a million dollars in total student loan debt. It will likely take them a significant portion of their careers to repay those student loans.
In the meantime, they will also try to fund their retirement, establish equity in their home and provide for their families. The balances on their loans can become an issue for their estate unless physicians plan carefully to protect their property from claims by creditors and thereby ensure that all of their hard work benefits their loved ones, not a bank.
There are estate planning methods to protect assets
Those worried about debts or creditor claims against their estate, as well as those who need to qualify for Medicaid as they get older, may benefit from asset protection planning.
Changing the way someone holds ownership on key accounts or assets, like a home, can protect the property from claims by creditors, including student loan lenders. Establishing a trust can also be an effective way to prevent claims against certain property, depending on whether someone co-signed for your loans.
While you may have just started your career, debts from your education could have an impact on your current or future spouse, any children you have and even your parents. Estate planning can be a crucial step for those with major assets and those who carry significant personal debt.