Estate Planning for Physicians by Gretchen Cliburn

Estate Planning for Physicians July 15, 2024 Gretchen Cliburn, CFP® Managing Director

Forvis Mazars • BKD • BKD/DHG = FORVIS (Forward Vision) • Forvis Mazars

Physician Financial Wellness Client Centered Team Based Approach Areas of Importance • Career Stage Advice • Multiple Areas of Credentials • Investment Management • Tax Planning • Unbiased Insurance Evaluation • Timely Access • Implementation assistance

Agenda Diagnosing the Problem Treatment Plan  What is an Estate?  What is Probate?  What is Estate Planning?  How to Avoid Probate  How to Minimize Estate, Inheritance,

and Income Taxes at Death

 How to Prepare an Estate Plan

Diagnosing the Problem The Basics

Career

Forward Vision

Lifestyle

Tax Efficiency

Protect Family

Diagnosing the Problem Career Stages

* * * IMPORTANT INFORMATON/DISCLAIMER * * *

 I am not an attorney  I am a Certified Financial Planner CFP®  Provide education on the need for estate planning, the types of documents, how to work with your trusted advisor team to create your estate plan  Team should include CFP®, Estate planning attorney, CPA, CFA® real estate and/or business attorney, etc.

What is an Estate?  What you leave behind when you die  All of your money  All of your stuff

What is Probate?  Legal process - Pays off creditors - Distributes assets as specified in validated will - Expensive and time consuming

Without an estate plan in Missouri If you die with:

here's what happens:

spouse but no descendants

spouse inherits everything

children but no spouse

spouse and descendants from you and that spouse spouse and descendants from you and someone other than that spouse

children inherit everything

spouse inherits first $20,000 of your intestate property, plus 1/2 of the balance descendants inherit everything else

spouse inherits 1/2 of your intestate property

descendants inherit everything else

parents and siblings but no spouse or descendants parents and siblings inherit your intestate property in equal shares parents but no spouse, descendants, or siblings siblings but no spouse, descendants, or parents

(Mo. Rev. Stat. § 474.010 (2024).)

parents inherit everything

siblings inherit everything

What is Estate Planning?  Incapacity and Death  Asset protection  Assets go where you want them to go  Desires are carried out even though you can no longer make decisions  Minimize estate taxes  Avoid costly and time-consuming probate  Save money and family strife

What is Estate Planning?  Who Needs to Do Estate Planning?

- Those with assets if you care where they go - Those with children under the age of 18 - Those over age 18  When do I need an estate plan?

- One in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age.1 - 100% chance of dying at some point

What is Estate Planning?  What Documents Make Up Your Estate Plan?

- Will - Living Will/Advanced Medical Directive/Medical Power of Attorney - Durable Power of Attorney - Revocable Living Trusts - Irrevocable Trusts - Love Letter/Letter of Intent - List of Important Documents

How to Avoid Probate  Beneficiary Designations  Pay on Death or Transfer on Death Designations  Revocable Living Trust  Irrevocable Trust  Joint Ownership - may impact step-up in basis - May impact asset protection  Small Estate Affidavit (under $40,000)

How to Minimize Estate, Inheritance, and Income Taxes at Death  Federal Estate Tax - Tax that is paid on any amount over the estate tax exemption • Today Exemption Amount is $13.61 million per Individual • Jan 2026: Exemption Amount – estimated to be cut in half - Married exemption is portable - Top Tax Rate is 40%  Gift Tax - If you give more than $18,000 in a year to an individual • Required to file a gift tax return • Must be subtracted from the estate tax exemption amount

How to Minimize Estate, Inheritance, and Income Taxes at Death  State Estate Tax (State dependent)  State Inheritance Tax (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania)  Income Taxes - Step-up in Basis - Tax-Deferred Accounts

How to Minimize Estate, Inheritance, and Income Taxes at Death  If taxable estate: - Spend your assets - Give to charity - Annual gift tax exclusion ($18,000 per person per year) - Give away appreciating assets • Directly to the heir • Irrevocable Trusts • Limited Partnerships (LP) or Limited Liability Companies (LLC) • Roth Conversions

How to Minimize Estate, Inheritance, and Income Taxes at Death

How to Minimize Estate, Inheritance, and Income Taxes at Death  Life Insurance - Proceeds are not subject to income taxes - Still subject to estate taxes - Irrevocable Life Insurance Trust (ILIT) • Outside of estate • Annual premiums are considered gifts to heirs • Required annual notification - Life insurance can be a good estate planning tool - Life insurance is rarely a good investment

How to Prepare an Estate Plan  Build your Net Worth / Personal Financial Statement  Make a Plan for Minors • Who will be their guardian?

• Who will be the conservator of the assets and/or trustee of the trust funds?  What will the terms of the trust be?  Who do you want in charge? (during incapacity and after death)  Where do you want the assets to go?

How to Prepare an Estate Plan  Plan with your advisor  Hire an Estate Planning Attorney - Create or update documents (ALL) - Business exit planning - Consider estate tax, income tax, and asset protection implications - Consider asset protection for heirs (creditors and divorce)  Fund your Trust

 Fund your Trust

 Fund your Trust

How to Prepare an Estate Plan  Plan Re-evaluation - Review and update after major life event - Significant tax code change - Periodically (every 5 years)  Document Storage - Easily accessible copy at home - Attorney may keep a copy of it - Provide a copy to those in charge - Originals in safety deposit box

What Happens After you Die  After funeral, receive Death Certificates  Probate process – state specific  Will is authenticated, Personal representative is appointed  Locate assets  Determine Date of Death Asset Values  Identify and Notify Creditors  Prepare and file income tax return for individual and for estate  Distribute the estate

Questions?

Prescribing Financial Wellness for Physicians Do today • Create or update your personal financial statement • Evaluate if you will have a taxable estate now or after Dec 31, 2025 • Review your estate plan documents with your trusted advisor to ensure your wishes are achieved • Ensure your trust is funded!

• If updates are needed, schedule meeting with estate planning attorney

Thank You

Contact Forvis Mazars Gretchen Cliburn, CFP ® Managing Director, Wealth Advisory 417.522.0407 gretchen.cliburn@us.forvismazars.com

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