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Physicians Have Special Planning Issues

By Eve Kaplan, Certified Financial Planner ™ Practitioner

Physicians are some of the busiest and “stressed out” professionals around. Some of this stress comes from not having enough time to deal with relatively complex financial planning issues – such as a greater need for asset protection, retirement planning and insurance. Special financial planning issues are especially pronounced for physicians who run their own practices and are not employees of a medical group.

Here are some of the key issues I work on with my physician and dentist clients to help them sleep better at night:

1. Asset Protection:  This is a very hot button with medical professionals since they can face significant liability risks (physicians in particular). When physicians discuss their finances, asset protection immediately comes up as a concern. Asset protection involves various strategies to protect a doctor from potential litigants and creditors. Solutions range from complex trust creation (e.g. domestic and offshore asset-protections trusts, and family limited partnerships) to simpler solutions (e.g. a large insurance umbrella liability policy). Since elaborate trusts often are involved, financial planners typically partner with “best in class” asset protection estate attorneys and CPAs to find a solution tailored to each individual physician.

2. Business Planning: Physicians are subject to rapid changes in their insurance and regulatory environment. In addition, physicians who run their own practices need to contemplate an exit strategy (or may want to buy/merge with other practices) – all while juggling patient care, benefit plans for their employees, business taxation issues, insurance planning and employment contract issues. A financial planner can coordinate work by experts to manage the most cost-effective and efficient business structures.

3. Insurance Planning: The most important asset physicians have is their own potential earnings power – the result of years of study and practice. Insurance needs typically include long-term disability (replacement income in the event of disability), malpractice and other liability coverage, life insurance and long-term care insurance. There are new products on the market which combine elements of long-term disability with retirement savings. Life insurance – not only the value of death benefit but the structure of the insurance itself – also can play a key role in protecting a physician’s family. Business insurance sometimes is deployed so surviving partners in a practice have the means to buy out a deceased partner’s share of a practice and pay his/her surviving spouse or other heirs.

4. Retirement Planning:  While younger physicians and dentists grow their assets, they typically are saddled with significant student loans which average 100-135K and sometimes exceed 200K. Efficient debt management is important in order to help build a sound retirement. Physicians also often have a significant percentage of their retirement assets tied to qualified plans. This requires careful tax planning to maximize wealth. Because physicians and dentists typically do NOT have pension plans, they need to bulk up on savings rates outside of qualified plans to create a comfortable retirement.

Physicians can improve their quality of life by taking these worries and concerns off their plates so they have more time to practice the medical care they were trained to provide.

Copyright © 2009 by Eve Kaplan

Eve Kaplan is a Fee-Only (no commissions) Certified Financial Planner. She works with a number of physicians in her practice. Kaplan Financial Advisors, LLC is a Registered Investment Advisor in NJ and NY. Her website is She can be reached  at 908-898-0549.