The “Lowdown” on Wills and Testamentary Trusts
AGING WELL IN EMERGENCY MEDICINE INTEREST GROUP
Gary M. Gaddis, MD PhD MAAEM FIFEM, Aging Well in Emergency Medicine Interest Group Co-Chair
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ne of the goals of the Aging Well in Emergency Medicine Interest Group (AWIEMIG) is to serve as a form of institutional memory for others in our specialty. One aspect of institutional memory is for those of us a bit long in the tooth to tell less senior members of the profession some life tips to help them avoid some of the mistakes that we have seen others make, or that we have made ourselves. Toward that end, this issue’s installment from our AWIEMIG concerns wills and testamentary trusts. Herein, we are not considering the trusts that those who sought to decrease the influence that the robber barons of industry enjoyed at the dawn of the 20th century. However, what will be covered are key types of trust agreements that can be created by emergency physicians early in their careers, near mid-career, or in late career to protect their financial interests, especially when the physician themselves cannot act in their own self-interest. Do you think you don’t need a trust agreement? Well, if you have a spouse and especially if you have children, think again! For the purpose of this article, a trust is a legal tool which permits someone who owns something of value (which generally includes cash, investments such as mutual funds, stocks and bonds, property, and/or other things of financial value), to designate someone else or some other legal entity to be the director of how that asset is to be managed and distributed if the owner of those assets becomes incapable of performing that directive
function themselves. The person or entity that assumes this function is known as a trustee. Trustees are most often individuals or corporations. When the trustee is a corporation, the role of trustee is generally assumed by a trust officer or other employee of that organization. If you are a high net worth individual, which in the parlance of many banks and investment companies means you have at least $500,000 or $1,000,000 of assets under management, then trustee services are often provided gratis by the institution with which you have investments. However, for those of you earlier in your careers who are not yet a high net worth individual or couple, you will probably have to pay a nominal fee to gain access to a trustee’s services. That small investment is definitely not something about which to be penny wise and pound foolish. Just as any emergency physician should have an attorney conversant in contract matters to review a proposed employment agreement before signing it, so emergency physicians should expect to pay a fee for a trustee’s potential services, should they become needed. As to the type of trust that a trustee can administer, know that there are many different types of trusts, and this review will not discuss all
thirty types that exist. Rather, the focus here is upon the type of trust that is most important for many emergency physicians, a testamentary trust. Testament refers to one’s last will and testament. Which establishes that, before delving further into trusts, one must first consider whether one needs to work with an attorney to create a will. No one, especially those early in their careers, likes to think about the prospects of their untimely death. However, death is a fact of life, and unfortunately, some who one would expect to be an early career physician becomes a former physician due to accidents or fatal illnesses. Personally, I know of a resident whom I helped train who died in a tragic bicycle crash before age 30, causing a probable neck injury that led to his drowning in water less than a foot deep, leaving a widow and two children. I also know of several colleagues who have died of medical illnesses before reaching age 50. Being a physician does not insure against an early death. When physicians meet a premature demise, if they have not created a will, all of their assets will be managed by probate court. This outcome may not be such a disagreeable prospect for many single early career physicians, because they are likely (due to medical school debts) to have a negative net worth (one’s net worth is the sum of all of a person’s financial assets minus the sum of their financial liabilities). However, if such a physician dies with a negative net worth, their educational loan may or may not include a provision allowing the loaning institution to collect the remainder of the unpaid debt from
"Do you think you don’t need a trust agreement? Well, if you have a spouse and especially if you have children, think again! "
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COMMON SENSE JULY/AUGUST 2023
27