I Wish I Had Paid More Attention to My Personal Affairs

This article is about the behind-the-scenes stories of healthcare practice. When you first read the title, you immediately think about what goes on behind the scenes of medical practices themselves. What it doesn’t say is what goes on behind the scenes of the person outside of the medical practice, whether that person is a physician, a physician extender, an administrator, or a practice employee. Isn’t this just as important as the medical practice itself?

I have been working exclusively with physicians as a certified public accountant for over 30 years. As you can imagine, I’ve pretty much seen it all. I’ve seen how hard physicians and others work in medical practices, but at the same time, I’ve seen how poorly many of them handle their personal financial affairs. Don’t the two go hand in hand? Why do some people work so hard and then blow it on a personal level? It makes no sense.

It all started for me when I was just 24 years old. I had a client who was a general surgeon in his 70s. He was an active investor, mainly in the oil and gas industry. The industry took a major downturn, and he was left with numerous debts, far more than his assets. As he was approaching the age when his life insurance would expire due to his age, he went into his garage and committed suicide. He wanted to make sure his spouse would be financially secure after his life insurance paid off his debts.

At that point I made a major career decision: I would never allow myself to concentrate only on the business side of a physician’s medical practice, but would also make sure to address the personal side as well.

Much has happened since that time, as you might expect. For example, one time I received a call from an attorney who needed a valuation of a medical practice immediately. It turned out that a physician had seen patients during the day, then had gone to his office at the end of the hall and fallen over dead from a heart attack, right in his office. He was only 37 years old. The only asset he left his non-working wife and three children was the medical practice itself. He had no insurance and no other sources of future income. There is also the story about the surgeon who contracted cancer and was left with no feeling in his hands after the chemotherapy treatments. As a result, he could no longer perform surgery. Was he prepared financially to go into the future without his surgical salary? No. The truth is that many physicians are required to work. In other words, the current status of their personal financial affairs does not allow them to leave medicine and to live a financially comfortable life afterward. You would be shocked and saddened at the number of physicians who do not plan for the future.

I could write a whole chapter about personal “war stories” like the ones I have noted above, but what I’d rather do is give you an important takeaway. I have provided a checklist that you can use to make sure that your personal affairs are in order and that they stay in order. My son, who is in the financial services arena specializing in the healthcare industry, developed this one for me. I want you to use it and to make sure that you don’t become a war story yourself someday.

Financial Planning Checklist

Retirement

• Yes/No Have you secured guaranteed retirement income?

• Yes/No Have you laddered your retirement plans to maximize your retirement income?

• Yes/No Have you identified your specific retirement expenses and income needs?

• Yes/No Have you calculated your expected income from Social Security?

• Yes/No Have you decided when you’d like to retire and what retirement looks like?

• Yes/No If you have retirement accounts from previous employers, have you rolled them into one account to avoid fees?

• Yes/No Have you had your retirement plan independently reviewed within the last 90 days?

Asset Protection

• Yes/No Are you a member of a profession that is often sued?

• Yes/No Have you protected your income from loss? If so, does that income cover all of your monthly expenses? How long does it last?

• Yes/No Are you aware that creditors aren’t limited to banks? They can be an ex-spouse, ex–business partner, current client or patient, or even someone unknown who believes they were harmed by you.

• Yes/No Have you protected your income and assets from lawsuits and potential creditors?

• Yes/No If you have an asset protection plan, was it reviewed within the last 12 months?

Estate Planning

Have you completed your:

• Yes/No Last Will and Testament? If yes, when was it last updated?

• Yes/No Revocable management trust?

• Yes/No Guardianship for minor children?

• Yes/No Guardianship for yourself in the event you become disabled?

• Yes/No Health care directive (living will)?

• Yes/No Powers of attorney, in case you can’t make decisions?

• Yes/No Identified specific gifts?

• Yes/No Protected your estate from probate contests?

Insurance

• Yes/No Do you have enough life insurance to cover your family needs? How do you know?

• Yes/No Have you included potentially tax-free insurance in your investment diversifications? If not, why?

• Yes/No Have you established a private pension to supplement your retirement income?

• Yes/No Do you have an umbrella policy?

• Yes/No If you own a business, is your coverage adequate protection against sexual harassment, data breach, product liability, and workers’ compensation claims?

• Yes/No Do you have long-term care insurance? If not, do you think you need it?

Business Owners

• Yes/No Have you completed a buy–sell agreement? If so, how is it funded?

• Yes/No Have you covered the business against loss of key employees?

• Yes/No Have you completed a succession plan? If so, have you funded it?

• Yes/No Have you established an executive compensation plan that allows you to freely choose which employees participate? If so, did you structure it so you can also contribute to the plan?

Investment Accounts

• Yes/No Have you had someone review the fees charged in your investment accounts?

• Yes/No Have you had your investment allocations independently reviewed within the last 90 days?

• Yes/No Do you understand which investments meet your short-, mid-, and long-term objectives?

• Yes/No Have you completed a risk assessment to ensure your allocations are aligned with your risk tolerance?

Family Assistance

• Yes/No If you are a special-needs family, have you established a special-needs trust? If so, how is it funded?

• Yes/No Have you established an educational savings plan for children that doesn’t disqualify them from grants and scholarships?

• Yes/No Are you supporting a parent or adult child, or do you anticipate doing so? Have you discussed your parent(s)’ ability to support themselves?