Estate Planning

The Minimalist Guide to Estate Planning for Doctors

Doctors despise two things: lawyers and paperwork. Not surprisingly, many physician families are short on life insurance, lacking a will and have no plan to make sure their spouses and children will be financially secure when they die prematurely.

Estate planning may seem morbid and time consuming but there are a few easy things you can do to start getting on track with a bare bones estate plan.

1. Get $6 Million in 20-Year Term Life Insurance

Term insurance is the purest, simplest and cheapest form of life insurance and it’s the only kind of life insurance most physician families  need. It covers you for a period of time (the “term” of the policy) and pays a benefit in the event of death. A 20-year term is adequate for most physician families since it covers the time between now and when your kids should be ready to go off to college. It also buys you time to accrue substantial equity in your home while you start building a retirement fund and a college fund.

Since life insurance benefits are free from income tax in most cases, a six million dollar benefit is enough to purchase or pay off a reasonably-priced home, send two kids to a top notch college and provide an income of $8,000 per month for the next fifty years, an amount comparable to the after-tax income of a primary care doctor. Premiums for a healthy young doctor who doesn’t smoke run about $10 a day.

Almost any licensed life insurance agent will do when it comes time to buy term life. The product is practically a commodity since the price is governed by your state’s insurance commissioner. You will have more options if you use an agent that represents more than one company, and you are likely to get a better deal. However, if the agent offers you “permanent” or “cash value” life insurance, particularly variable universal life (VUL), take your business elsewhere.

2. Make A Will

If you have an estate of $2 million or less (which is most young doctors), you can get away with a “simple” will that determines who will raise your children, who will handle any assets you leave them, and who gets the rest of your “stuff.”

While all states have “intestate laws” that determine what happens when you die without a will, these laws vary from state to state and may leave very important decisions in the hands of the court system.

Ideally, you and your spouse would carefully select a competent, caring attorney, have them custom-craft all of your estate planning documents and give you counsel over the coming years to keep everything on track.  However, if you are pressed for time and you wouldn’t otherwise seek legal counsel, you can make a DIY will using software products from LegalZoom or Nolo to get the job done.

3. Check Beneficiary Designations

Some assets—retirement accounts, college savings plans, health savings accounts and property held in joint title can pass to your heirs and beneficiaries by a process called “will substitute.”

Assets transferred by will substitute have a built in mechanism that determines what happens to them upon death. Joint assets pass to the surviving joint tenant. Retirement accounts pass to the named beneficiary and so do health savings accounts. College savings plans pass to the “successor account owner” (not the child, in most cases).

If you haven’t reviewed these beneficiary designations and titles in the past three years, it’s time to check into the matter. You can login to your retirement accounts (401k, 403b, Roth IRA). You can call the company that holds your 529 plan. You can find out exactly who owns your house by visiting your county's recorder, tax assessor or appraisal office online. No attorney required.

While this may seem redundant, you might be surprised by what you find: no beneficiary designation at all, accounts left to minor children, property held with ex-spouses, etc.

4. Make Things Accessible

There’s nothing like the convenience of an online bank account. You can login any time you like, check your balance, move money around and pay your bill. However, if your spouse cannot access your online accounts, the hours and days after your demise will be difficult and scary for them.

To make life easier for your survivors, put your usernames, passwords and other login credentials (including the secret answers to account verification questions) in one secure place where you can grant access. Password management software like Lastpass makes it easy to keep this information secure while allowing you to share it with people you trust.

While this “one size fits none” approach to estate planning will not reduce estate taxes or avoid probate, it’s better than nothing and it goes a long way toward easing the post-death transition for surviving family members.

If you are interested in a custom-tailored estate plan that can protect your assets and keep your family on track with their finances even if you die, contact us for help or check out our guide to estate planning for doctors.

7 Steps to a More Financially Secure 2016 | Oncology Practice Management

It is a new year. That means you have another chance to start over again, to take a fresh look at your finances, and to get on track for the future. So, where should you begin? Every physician should take several steps when moving toward financial security, and we want to share a few of them with you at the beginning of 2016.

1. Delve into Your Disability Insurance Policy

When was the last time you reviewed your disability insurance for doctors policy? If it has been more than a few years, it has been too long. Things change, and your coverage should keep pace. If your earned income is higher now than when you originally purchased your policy or last updated your coverage, chances are very good that you are underinsured.

Next, sit down and read through each of your policies. Pay special attention to the definition of disability. Ideally, your policy should include a true or pure “own-occupation” definition of total disability, which specifically states that you will be considered totally disabled if you are unable to perform the material and substantial duties of your occupation.

This definition allows you to work in another occupation or medical specialty and to receive full benefits, regardless of the income you earn from another occupation or medical specialty. Some companies will even go as far as to state that if you have limited your practice to a professionally recognized specialty in medicine, that specialty will be deemed your occupation.

Look for medical exclusion riders. Were you suffering from low back pain when your policy was issued?

Were you seeing a psychologist while you were going through a divorce? If so, you may have a rider on your policy that excludes these preexisting conditions. But if that divorce is far behind you and your back is much better now, you can ask your insurance company to reconsider those exclusion riders to close the gaps in your coverage.

Last, but not least, see if your policy includes a “multilife” or association discount. Although this can provide male physicians with a savings of only 10% to 15% off of their policies, female physicians can save as much as 60% of the normal female rates, if a gender neutral or a “unisex” rate is available. Therefore, if you are still healthy, and your policy does not include any discounts, it may make sense to “shop” the marketplace to see if you can obtain a similar policy for a lower premium relative to when you first purchased your policy.

2. Lift Your Umbrella to Cover Your Assets

The past 7 years have seen a dramatic rise in stock prices and home values, so there is a good chance that your net worth has increased. That is the good news. The bad news is that you are now a bigger target for lawsuits than ever before. Although your malpractice coverage may protect you from bad outcomes in the clinic, there are plenty of dangers lurking in your everyday dealings, so you need to make sure that all those risks are covered too.

The liability coverage under your homeowners and automobile policies is your primary layer of protection. However, if you need additional protection, you should purchase an excess liability or “umbrella” policy. Personal umbrella liability protection is secondary coverage that works in conjunction with your primary policy. When the liability limit of your primary policy is exhausted, the umbrella policy will pay the balance of a liability claim against you up to the umbrella policy’s limit.

You should also avoid structuring your automobile and homeowners policies with low deductibles. Low deductibles will cause your premium rates to rise substantially. Therefore, it is best to increase your deductibles to at least $1000 and to devote the premium savings toward increasing your liability limits and/or purchasing an umbrella or excess liability policy.

3. Establish an Emergency Fund

When you look into your bank account, what do you see? Typically, we see physicians with 2 accounts, a checking account and a savings or a money market account. Although that is acceptable, it means that your emergency fund, if you have one, is pooled with all the other monies you use to pay your expenses, go on vacation, and pay your taxes. So, how much of that money is really reserved for bona fide emergencies? There is no way to tell.

You, your spouse, and your loved ones can gain great peace of mind by simply segregating your emergency fund into its own separate account, such as a checking account, savings account, or money market account, which can be easily accessed without penalty. This is a fund to be used for unforeseen or overlooked expenses. Although the size of the fund is a personal decision, suggestions range from 3 to 6 months of your living expenses. Either way, keeping this fund separate from all your other accounts makes it easier to see, so that everyone knows that the safety net is real.

4. “Max Out” the Match

You would not walk away from free money, would you? Of course not. Nonetheless, we routinely see physicians who miss out on their employer’s matching retirement plan contribution by failing to max out their own elective deferrals.

To make the most of your retirement plan, contribute all you can. The maximum elective deferral into Section 401(k), 403(b), 457(b), and government thrift savings plans remains unchanged for 2016, at $18,000 for most physicians and $24,000 for those aged 50 years or older this year.

While you are thinking about your workplace retirement accounts, take a look at the investment options in your plan. Have they changed? Each year, your plan fiduciaries (the people who put together the list of mutual funds from which you can choose) are supposed to review the options you have to choose from so you have ample opportunity to diversify your holdings. The key word here is “opportunity,” because it is your job to actually make the final decision about how to invest.

5. Do Not Tolerate High Interest Rates

Banks and financial institutions are bending over backward to win physicians as customers. After all, you earn 6 figures in a 5-figure world, and you are the pillar of your community—both of these make you a good risk for lenders. Make them earn your business.

Review all your loans—your student loans, your mortgage, your car loans, and your credit card balances—and then ask yourself, “Is this the best they can do?” Then call up your lender(s) and at least one other bank or financial institution, and ask them the exact same question.

When you get an offer from one, compare it with the other offers you have received. Ask if you can qualify for a lower interest rate and, if you do not, ask if they can waive an origination fee or see if you can qualify for less restrictive terms. Maybe one wants your spouse to cosign, whereas another does not. Do not forget that you are the customer and deserve only the very best.

6. Raise Your Deductible to Lower Your Taxes

Health savings accounts (HSAs) have been in use since 2003, but many physicians are just now learning how they work. If you have a qualifying high-deductible health plan, you can open an HSA for yourself or your family and contribute $6750 in 2016 (for family plans) or $3350 for individual plans, plus an additional $1000 for those aged ≥55 years.

Although $6750 may not seem all that much in the grand scheme of things, your HSA contribution can deliver permanent income tax savings plus years of tax deferral. For example, a physician in the top federal tax bracket can reduce his or her tax bill by $2673 when he or she makes the maximum family contribution.

However, many physicians who are using an HSA account are using it the wrong way. They will contribute to the account, get the tax break, and then spend the account down to zero on medical bills. A better strategy is to pay those bills out of pocket and invest the account balance, so that it can grow tax deferred for retirement, when it can be used to pay for healthcare.

7. Take a Second Look at Your Life

People are living longer today than ever before, so life insurance premiums have decreased steadily over the past several years. So if it has been many years since you reviewed your coverage, now is a great time to do so.

You should use the services of an experienced insurance agent who represents several companies to help you get the best rates, especially if your health is less than perfect.

The agent will know which carriers are likely to provide you with a better underwriting classification based on your height and weight, immediate family history, and/or other medical issues to allow you to secure a lower premium rate.

For example, if you are being treated for hypertension, certain companies will allow you to qualify for their best underwriting classification, but others will not. After all, using an agent or applying for the insurance product online will not cost you any additional money.


This article provides 7 steps to help you reach a more financially secure 2016. The key is to take the time to evaluate which of these concepts, if any, works for you in terms of your personal financial planning. After all, most people “don’t plan to fail, they simply fail to plan.”

W. Ben Utley, CFP, is the lead advisor with Physician Family Financial Advisors, a fee-only financial planning firm helping doctors throughout the United States to save for college, retirement, or other financial goals. He can be reached at 541-463-0899 or by e-mail at

Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF, is the founder of Physician Financial Services, a New York–based firm specializing in income protection and wealth accumulation strategies for physicians. He can be reached at 516-677-6211 or by e-mail at with comments or questions.

This article originally appeared in page 42 of the January 2016 print edition of Oncology Practice Management.

3 tips for financing medical equipment | Fierce Practice Management interviews W. Ben Utley CFP®

Fierce Practice Management tells physicians that can't or don't want to rely on a hospital for a major purchase to get a bank loan. W. Ben Utley advises them to shop around and let the banks compete but to "just be mindful of politics, saving money and relationships you have." Utley also encourages physicians to have an attorney go over the fine print before signing on the dotted line. "Spending $400 to have an attorney review it to save $5,000 on the loan contract is worth it.”

Read other tips in the article by Debra Beaulieu-Volk.

Latest Tax Changes a Bittersweet Bill for Physician Families

Since 2001, Congress has made nearly 5,000 changes to the Tax Code whose nearly 4 million words make it seven times as long as Tolstoy’s War and Peace but not nearly so easy to read. Congress’s most recent addition to this ongoing saga—the American Taxpayer “Relief” Act of 2012 (ATRA for short)—closes a chapter on tax uncertainty for many physician families at the expense of those earning more than $450,000. It’s a bittersweet bill that will bore you to tears so today I am sharing the cliff notes (yes, pun intended).

ATRA a Bitter Pill for Physician Taxpayers to Swallw

  • Medical specialists are hit hardest. While the Bush era tax rates on the first six marginal tax brackets were made permanent for all taxpayers, Congress (Obama, actually) added a seventh marginal tax bracket that applies to physician families earning  more than $450,000. In my experience, only medical specialists and double-physician families earn this much, so they’ll be paying 4.6 cents more in tax on every dollar they earn above $450,000.
  • Almost every physician will pay more tax. Even though tax rates were effectively frozen, the total tax burden for practically all physicians went up substantially. Families earning more than $250,000 will have their itemized deductions reduced and their personal exemptions will phase out. That means deductions for charitable donations, home mortgage interest and property tax become less valuable.

ATRA Brings Sweet Relief for Physicians in Both Life and Death

  • The "doc fix" is fixed again. Self-employed physicians escaped a 27% reduction in Medicare and Medicaid reimbursements. For some of you, this may be a huge win, particularly those whose census contains a greater proportion of elderly patients. The cuts will rear their ugly heads again on January 1 of 2014 since this is a temporary fix. If history repeats itself though, Congress will extend the doc fix again since they have extended it twelve times since the Medicare Sustainable Growth Rate (SGR) cuts became a part of law via the Balanced Budget Act of 1997. (Hospital docs may feel the pinch though since ATRA levied cuts to hospital reimbursements.)
  • The federal estate tax rules are finally final. With the federal estate tax rate rising from 35% to 40%, the new tax rules may not sound like much of a win for physicians until you consider that rates were set to jump to 55% and the size of a taxable estate was set to fall to only $1 million.Now that the size of a taxable estate has been set to $10.25 million for married couples, there’s reason to cheer because the exemption is permanent now (so you can do your estate planning) and most physicians won’t be taxed at the federal level since the average physician family’s estate is well under $10 million, in my experience.With federal estate taxes more or less resolved for the bulk of physician families, you should turn your attention to state estate taxes if you live in one of the fourteen states that impose their own estate taxes. For example, Oregon taxes estates above $1 million, so that’s an issue for almost all mid-career physician families here in my state.

One of the more interesting provisions of the American Taxpayer Relief Act is a new rule that allows you to do a Roth conversion from your Traditional 401k account to the Roth portion of your 401k without having to leave your job or rollover your money to an IRA.

For most physicians, this in-401k Roth conversion will be useless. But for a tiny fraction of them it offers a chance to save big on future taxes. If you are expecting a big dip in your income (for example, if you take an extended sabbatical without pay or if you are disabled and not earning taxable income for the majority of a tax year), you might consider converting your Traditional 401k to a Roth so that your account will grow tax-free indefinitely. For other physicians earning six figures, the tax hit will likely make such a conversion less than palatable.

In February, Congress will sharpen its pen to write the next chapter, so stay tuned for more coverage in upcoming posts, and thanks for reading.

*Image Courtesy of



The Secret to Protecting Your Family's Financial Security Online

Can you keep a secret? I hope not"¦ this secret is so powerful that I want you to share it with the world.

The secret is that strong, unique passwords are the first line of defense when protecting your family's financial security online, and making super-strong, super-easy-to-remember passwords is easier than you think. Here's my secret password recipe:

  1. Think of something you love! Is it your kids? Your religion? Your sport? Or your hobby? Make sure it's something you're wild about.
  2. When you enter a new password, think about your favorite things. Think of a book, a movie, or a song that goes with whatever your favorite thing is. For example, if you're crazy about your two-year old, and you're entering a password for their new college savings plan, maybe it's a nursery rhyme like "Jack & Jill".
  3. Sing it or say it out loud to yourself. "Jack and Jill went up the hill to fetch a pail of water."
  4. Use the first letter of the words in the phrase to create your password, like this"¦ "jajwuthtfapow".
  5. Beef up the security. If you need special characters and numbers and capitalization, change it up a little, like this, "J&Jwuth2fapow." If you need a longer or stronger password, include more of the song or phrase, like "J&Jwuth2fapow.Jfd&bhc&Jcta." (That's, "Jack fell down and broke his crown and Jill came tumbling after."
  6. Give yourself a clue. To help yourself remember your password, write down a hint. For example, you could write "Oregon College Savings Plan: Timor's favorite nursery rhyme including punctuation"

A Few More Password Pointers

  • Longer is better. A password with 10 characters is 300x stronger than one with 8 characters.
  • If you must re-use passwords because you can't remember them, make sure to use a unique password for your email and bank accounts.
  • If you can only remember one password, get yourself a password manager like LastPass ( or RoboForm (
  • If you use your phone or laptop to unlock important accounts, password protect your devices too.

I have other tips to keep your family's finances secure, so if you've got a question, feel free to contact me.