Wills and estate planning for doctors: A guide to protecting your legacy

For many doctors, protecting the legacy they’ve built through their medical career involves much more than simply writing a will.

Higher incomes, family trusts, superannuation and insurance can all add layers of complexity to wealth management and estate planning for doctors. If you own a medical practice, there’s also the question of what happens to your business if you die or are no longer able to work.

So what does effective estate planning for doctors look like, and where should you start?

Start with an inventory: What you own, and how you own it

“One of the biggest mistakes doctors make around estate planning is not looking at the bigger picture,” says Evelyn Burke-Shyne TEP, Special Counsel in Avant Law’s estate planning team.

“Beyond your will, it is important to also consider family trusts, companies, partnerships and superannuation, and how they fit into the broader estate plan.”

A practical first step is making an inventory of what you own. This might include:

• Personal assets: property, bank accounts, shares, investments and valuable personal items.
• Retirement and insurance: superannuation, life insurance and other relevant policies.
• Business interests: medical practice, company shares, partnership interests and trust interests.

A will only controls assets you own personally — not those held through a company, trust or superannuation fund — so it’s important to get clear on how each of your assets is held.

Your will: The foundation of your estate plan

Your will is one of the most important parts of your estate plan — setting out how your estate will be distributed after your death and naming the executor responsible for carrying it out.

If you die without a valid will, your estate will generally be distributed according to the intestacy laws in your state or territory — which may not reflect your wishes.

“If a will isn’t up to date, the first step is to check if the people who have been appointed are still appropriate,” Burke-Shyne says.

“Look at factors including the dynamics of the relationship and whether the appointees have capacity. If there are any concerns, it may be useful to consider a review of the will.”

As part of your will, you can also establish a testamentary trust, which takes effect after your death. A testamentary trust can provide greater control over how assets are managed and distributed to beneficiaries.

Assets outside your will: Trusts, companies, super and insurance

For many doctors, some of their largest assets sit outside the will and need separate arrangements in place.

• Family (discretionary) trusts: Many doctors use family trusts as part of their wealth management — to hold investments or practice interests, manage tax strategically and protect assets from risk. Assets held in a family trust don't form part of your estate. Your trust deed usually sets out who controls the trust after your death.
• Companies: A company — including a practice entity — owns its own assets, so your will can only deal with your shares. Check that the company constitution and any shareholders’ agreements work alongside your will.
• Superannuation: Super doesn’t automatically form part of your estate. A valid binding death benefit nomination directs the fund trustee to pay the people you've named. Without one, the trustee generally has discretion over who receives it. Many binding nominations lapse after three years unless renewed or made non-lapsing.
• Life insurance: Policies with a nominated beneficiary are generally paid directly to that person, so check these nominations separately. Life cover held inside super follows your super nomination.

Succession planning for medical practice owners

There’s another layer to estate planning for doctors who own a medical practice: succession planning.

“If you own or co-own a medical practice, it is important to have a business succession agreement in place and regularly updated,” Burke-Shyne says.

“These agreements can be tailored to provide clarity in instances when one of the partners might be unable to work for a period of time. It can also outline how each share or interest is valued when a partner leaves the business.”

Planning for incapacity, not just death

As well as planning for what happens after your death, it’s worth considering who could make decisions on your behalf if you lose capacity through illness or injury.

Depending on your circumstances, this might include:

• An enduring power of attorney so someone you trust can manage your financial and legal affairs if you're unable to.
• A medical treatment decision-maker to ensure your health decisions reflect your wishes if you can't communicate them.
• A corporate power of attorney as part of your succession planning if you own a practice, so someone can manage urgent business matters such as payroll and supplier contracts.

When should doctors review their estate plan?

Estate planning and wealth management aren’t one-off exercises. You may need to review your estate plan as your personal, professional or financial circumstances change, for example, after:

• marriage, separation or divorce;
• the birth or adoption of a child;
• the death of a beneficiary or executor;
• buying into or selling a medical practice;
• establishing or changing a trust or company;
• significant changes to your assets or liabilities
• changes to your superannuation or insurance; or
• retirement.

Because estate plans can be complex, it’s a good idea to seek independent legal and wealth management advice tailored to your circumstances.

Taking the time to get your estate plan right can help protect what you’ve built — and provide greater certainty for you and those who depend on you.

Key takeaways

• Estate planning for doctors involves more than just a will — practice interests, super, trusts and insurance usually sit outside of your will and need separate attention.
• If you own a medical practice, make sure you have clear succession planning in place.
• Review your estate plan as your personal, professional or financial circumstances change.
• Seek independent legal and wealth management advice to ensure your estate plan is robust and aligned with your intentions.

FAQs

What's the difference between a will and an estate plan?

A will is one document within a broader estate plan. Estate planning for doctors should also include superannuation nominations, insurance beneficiaries, powers of attorney and — if you own a medical practice — succession planning, all of which sit outside the will itself.

Is superannuation covered by my will?

No. Super doesn’t automatically form part of your estate, so you need to nominate one or more beneficiaries through your super fund. Without a valid binding nomination, the fund’s trustee generally decides who receives it.

What happens to my medical practice if I die without a succession plan?

Without clear succession planning, ownership interests may not transfer automatically, which can lead to governance disputes, delays or a forced sale.

Do I need a lawyer to write my will?

You can write a basic will without one, but given the complexity of practice ownership, trusts and superannuation many doctors deal with, it’s often a good idea to get independent legal advice to help ensure your will aligns with your broader estate plan.

Legal Disclaimer: This article is for general informational purposes only and does not constitute any legal advice or services. Readers should seek independent qualified legal advice relating to their specific circumstances or concerns and should not apply, act on, or rely on any of this advice otherwise.'