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Dentists, Puns, and Money is a podcast focused on two things: The financial topics relevant to dentists leaving clinical practice and the stories and lessons of dentists who have already done so.
1. The stories of dentists who have transitioned from full-time clinical dentistry.
2. The financial topics that are relevant for dentists making that transition.
If you’re a dentist thinking about your exit from clinical, and you’d like to learn from the experiences of other dentists who have made that transition, be sure to subscribe to your favorite podcast app.
Host Shawn Terrell also dives deep into the many financial components of exiting dentistry, including tax reduction strategies and how to live off your assets.
And, we try to keep it light by mixing in a bad joke… or two.
Please note: Dentists, Puns, and Money was previously known as The Practice Growth Podcast until March 2022.
[00:00:00] Welcome to dentists, puns and money. I'm your host, Sean Terrell. And my guest on today's show is me, which is another way of saying there is no guests this week. From time to time. When I have a topic I think is relevant and useful, I will record a solo or a monologue podcast. And that is the case.
This week is I discussed estate planning. My wife and I recently completed our estate planning documents and I've put together my top 10 takeaways from that process. That I hope are helpful for listeners that also need to get that buttoned up. Before I dive into this though, a disclaimer, I am not an attorney and none of this should be considered legal advice.
Please consult with your own attorney on this topic. And as a reminder, our affiliated firm dentist exit planning helps dentists on their journey toward financial independence. If you are interested in finding your eventual exit from active practice, we are here to help, whether you're three months or 30 years away [00:01:00] to schedule an initial consultation with us, visit dentist exit.com click schedule meeting at the top right corner of the main page, and then select discovery meeting.
And with that introduction, let's dive into my top 10 takeaways from the process to complete my estate planning dot.
So off the top and we'll call it the number one item, I guess. I think it's helpful to define the estate planning documents that will make up the process for most people. And I'm going to be really general about these, but the first one is just your last will and Testament. This document states who gets some of your properties.
And who your executor is or who sorts out everything for you when you're gone. And it often accounts for who would care for any minor children. If you have those, the second document medical power of attorney, if you are alive, but incapacitated or cognitively impaired, this document, designates someone to make medical decisions on your behalf.
And then the third document is the legal [00:02:00] power of attorney. Again, if you're alive, but incapacitated or cognitively impaired, uh, this document designates someone to make legal decisions on your behalf. Again, really high level in general, some situations might need more documents, but this is just related to my situation.
And so with that out of the way, let us continue.
Take away. Number two, it's hard to find the time. One saying that I've found to be true as I've gotten older, is that the busy-ness of. Has a way of crowding out the important things in life at times. Definitely true. In our situation, I am a list person. I'm always making to-do lists and this was something that I had on my to-do list for several years and finally with a one child already.
And another one on the way I was doing some goal setting work. At the end of 2021. And I just made a commitment that I was going to get this accomplished finally, in the first quarter of 2022. And even with that commitment, though, it was still difficult to get the project to the finish line. Both me [00:03:00] and my wife work.
Uh, we have demanding careers. We work opposite schedules and anyone that has young kids know that caring for them can eat up a lot of any free time that is available. And then when you actually do have free time, it's a lot easier to go do something fun rather than focus on executing important legal documents.
And so I can see why so many people that I work with when I first started working with them, just haven't got this done yet. Uh, and that sense though, uh, technology and some of the technology changes that we have benefited from as a society in recent years, certainly helped with this process. Uh, my wife and I were able to meet with the attorney.
We worked with several times over zoom or on the phone. And in the old days, I guess if you will, some or all of those meetings may have had to have occurred in person. And it would have been a lot more difficult and taken a lot more coordination. If that was the case. Uh, as it turned out for us, we only needed to, to meet with our attorney in person one time.
And that was just the very end of the process to get everything [00:04:00] signed and witnessed and notarized. So my best advice is just to make a commitment to getting this completed and then follow through.
Just one of those things in life, like buying a house or changing jobs that you just sort of have to deal with every 10 years or so.
My third takeaway, there may not be a perfect scenario for picking guardians for any minor children. So this is one of the things that will need to be decided and established throughout the process. Uh, it's just, who's going to raise your kids if you and your co-parent both pass away. And in all honesty, this was something that held my wife and I up in terms of getting these documents completed for a long time, we just could not reach any agreement on the topic.
And so, like anything that's hard or that you can't come to an agreement on you just kind of avoid it for awhile. And without being too specific on how we eventually came to a compromise on this. Sort of eventually agreed that if anyone, besides us had to raise [00:05:00] our kids, it was a less than ideal situation for all parties involved.
So just by recognizing that and lowering the bar a little bit, if you will, we eventually came to a compromise. And remember if you never make a choice and document this, then the court system eventually gets to decide without your input. And that was something that we definitely wanted to address.
My fourth takeaway, uh, just consider keeping it simple with the implementation of any trusts, especially if you're young. So at a really high level, I went into this process thinking that if something happens to me, but my wife and kids survived me, that I would want my assets and my life insurance to flow into.
That could then only be accessed by my wife and eventually by my children. And my thinking ahead of time, I guess, was that a trust would shield and protect those assets from a lawsuit or from a potential second husband and a blended family down the road. And while all of [00:06:00] that may be true. I learned throughout this process that doing it that way.
Would make it much more complicated and expensive for my wife and kids to access that money along the way. And so I also learned that if my wife ever decided to get remarried, that a prenuptial agreement, I should basically be able to accomplish the same thing. So I just decided to err, on the side of simplicity, at least in this stage of my life,
And that leads me to takeaway number five, the decisions being made or that you make, they don't have to be forever. You can change these decisions really. I think anytime you want, for the sake of time and expense, the decisions you make. Should be what you would want to happen in the next five or 10 years at least, but you can always update the documents sooner than that.
Or later than that, I'm hopeful that the documents that we have recently executed will hold us for 20 years, at least until our family grows, uh, with marriages and grandkids. Uh, but we will see.
Number [00:07:00] six, use a professional when doing this, uh, you could go onto the internet and do something quick and dirty to sort of check the box. But the question becomes, if you do do that, would those documents stand up in court? Down the road, if they were contested or challenged in some way.
And my understanding is that likely they would not hold up. So use a real person, use a qualified attorney. And along with that, it's probably best to find an attorney who has some level of focus on estate planning within the. Uh, individual practice. That doesn't mean that they have to have an exclusive focus on estate planning, although that's great.
If you can find someone that does at a fair price point, but you want an attorney, that's at least doing this type of work on a regular basis. So they're up to date on all the state specific laws and the rules of thumb, that type of stuff,
I'm generalizing, but, uh, if the attorney tries to be all things to all people in their practice, uh, and that scenario, the more boiler plate, the documents will [00:08:00] tend to be that you're going to receive. And that does not always lead to great out.
Take away a number seven, even if you are using a qualified attorney with a state planning expertise, it's always good to double-check their work and our case while I am not an attorney. And I do not know state laws, I have read a lot of contracts in my life through my work. And I happened to catch a couple of pretty significant errors in our documents, the drafts of them that if I had not double checked them, Fairly certain they would have been executed incorrectly.
And while, uh, that was an honest mistake by our attorney. It's just a reminder that a second set of eyes never hurts. And if you don't understand something any good attorney will be okay with you raising a question. Number eight, be sure to update your beneficiary designations in conjunction with completing your estate planning documents. This is a really big one and some further context is probably helpful here. So in general, property or assets [00:09:00] will pass to an area.
And one of three ways they will pass through probate or the court system broadly speaking, which can be simplified by the execution of solid estate planning documents like we've been talking about, but property can also pass by. And it can pass by beneficiary designation. Uh, an example of passing by title is a vehicle or a home.
So if you're married and you buy a car or you buy a house, chances are that both you and your spouse will be listed on the title. Something happens to either of you in that car or that house automatically passes to the other person. So here's a good example of a common error that happens with beneficiary designations. Let's say you are a dentist and you're fresh out of school and you plan to buy a practice in the next couple of years. And you know that you're going to need to borrow money to do that.
And you know, that any lending institution is going to require that you have life insurance on yourself as collateral for that. So at this point in this hypothetical, you don't have a spouse, you don't have kids, but you [00:10:00] decided to be proactive about getting the life insurance. Now, since you're young, you're healthy term, insurance is really cheap when you buy that life insurance, you're going to have to name at least one beneficiary.
And for most people that aren't married and don't have kids. They usually name their parents as the beneficiary. Now let's say again, hypothetical situation, 15 years, go by. You're now married. You have some kids along the way. You did use that life insurance as collateral to buy the dental practice.
You've since paid off that debt, but you never updated the beneficiary designations. With the insurance company that wrote your life insurance policy. If something happens to you, the beneficiary designations of that policy will determine who receives the proceeds in the event of your death. So if they never get changed from your parents to your spouse and something happens, the life insurance company is the legally obligated to pay your parents that benefit regardless of what your estate documents say.
So it's critical when completing. Your estate planning documents that you do [00:11:00] a, a full audit of all your accounts, all your insurance policies, all the titles that you have, uh, with your property, and just make sure that everything reflects the wishes that you've outlined in your estate planning documents, just to make sure that everything is congruent and in lock step with what's been outlined there because at the end of the day, those designations will rule the day
in terms of who receives the proceeds in the event of your demise seems really simple, but this is something that's really often overlooked and it's really complicated and expensive to fix it after the fact.
All right. Number nine, create a roadmap for your beneficiaries or the guardians of your children. And this is one that I came up with on my own. It's not a legal document, it's more informal, but as I went through this process and I tried to put together a comprehensive list of all the bank accounts and investment accounts and all the insurance policies, many [00:12:00] different types of insurance policies, all the utilities.
I realize that the details and the context for all this information was all in my head. And that if something happened to me, it would be a huge task for someone else to try to figure it all out without me there. Uh, just go through your credit card statements and bank statements for one month and you will start to notice all the automatic payments that are coming out.
And that's a pretty good indication of the places that you're doing business with. Where you're putting money in general terms. And so for people like my parents and those that are their age, they might have this big filing cabinet or drawer or safe deposit box that contains all these details, or at least, uh, enough breadcrumbs or physical clues as to all the pieces that would need to get sorted out for them, but not as simple for people of my age and people that are younger because of.
Everything's been digitized in the last decade or so, which means that maybe all the information about these accounts, about these policies, about the [00:13:00] credit cards, the majority of it could all be on your laptop or your phone. And in my case, it would be difficult to access that information without my face ID or my fingerprint.
So for me, Creating a master list of accounts or a roadmap just seemed like a really good idea. And in our house, most of the financial stuff is handled by me with, uh, our division of labor. And as I told my wife, when we were wrapping all this stuff up, if something happens to me, it's, it's going to leave a huge pile of sh it in your lap to figure out regardless, but with everything I've done through this process, as much as I can, or as much as I could, I'm making that.
It's small and as uncomplicated as possible.
All right. We have reached the end of the line, take away number 10 from me in my experience of completing my estate planning documents and sort of getting organized around that process. my last bit of wisdom, if you will. If [00:14:00] you own a practice or any other type of business, don't forget to include that business in this process.
In some fashion, if you own a practice with other partners, then you should already have, and if you don't, you will need eventually a well-crafted buy, sell agreement. That accounts for the seven different ways that a partner can separate from that practice. And just as an aside, buying insurance on your partners is not enough.
You need the legal document, the buy sell agreement, and if you want a sole practice, it still might be a good idea to have some sort of continuity plan in place to, at a minimum you can create a successor manager. In my case, I'm not a dentist. I don't own a dental practice, but I do own a couple LLCs in which I'm the sole member.
And it would be challenging for someone else to keep the business running or even dissolve it without me, since my wife is my primary beneficiary and executor. Anyway, one thing that I did do was designate her as the successor of the business I'm involved [00:15:00] with or the businesses that I'm involved with.
Again, it's not a perfect solution, but at least. And that scenario, as she tries to sort everything out with, without me, she would be starting on second base and doing so instead of starting in the batter's box. So, there you have it, my top 10 takeaways from my own estate planning experience. I hope you have found some value in, in hearing this.
And, we will talk to you again, hopefully very soon.
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