Your children or spouse might not be the best power of attorney — what you can do about it

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Medical professionals spend their lives making critical decisions for their patients, ensuring their well-being and health. However, when planning for their own future, particularly those who will make decisions on their behalf if they can’t, many overlook one of the most important parts of estate planning — choosing the right person to act as the power of attorney.

It’s easy to assume that your spouse or children will be the most suitable candidates for this role, but that isn’t always true. Family members may be emotionally compromised or lack the expertise needed to handle complex medical or financial decisions. So, how can you ensure that your health, finances and legacy are protected? Let’s explore the key elements of estate planning, including setting up the right power of attorney, maximizing savings for future medical expenses and preventing unnecessary financial burdens on your loved ones.

Why family isn’t always the best fit

When selecting a person to serve as their financial or medical power of attorney, many people default to a spouse or one of their children, assuming that someone close will make the best decisions. However, emotional proximity doesn’t always equal sound judgment in stressful or complex situations.

A person with a power of attorney will need to make significant financial and health care decisions on your behalf if you’re incapacitated. Ideally, you want someone with the time, mental clarity and understanding to make these decisions without being clouded by emotion or inexperience. A family member might be too emotionally invested in your condition or lack the knowledge required to navigate the complexities of medical procedures or financial management.

Instead, consider appointing a trusted friend, colleague or professional fiduciary. These individuals can remain objective, ensure your wishes are followed and have the experience to deal efficiently with legal or financial institutions.

Incorporating long-term care in your estate plan

Many medical practitioners fail to account for their own long-term health care needs. Whether through illness, aging or an unexpected accident, the need for long-term care can quickly deplete assets if it isn’t adequately planned for.

Long-term care insurance is one way to protect your estate and ensure health care costs are covered. This policy can safeguard your assets by covering the cost of in-home care, assisted living or nursing home care. Include long-term care in your estate plan to protect your medical and financial well-being without burdening your family with these responsibilities.

In addition, setting up an irrevocable trust can shield your assets from depleting by long-term care expenses. Trusts provide a legal framework for distributing your assets while protecting them from creditors or costly health care services. This ensures that your legacy is preserved for your loved ones and that you have access to care that matches your professional and personal expectations.

Maximizing HSA and other savings tools

Another strategy that medical practitioners can easily overlook is maximizing the use of Health Savings Accounts (HSAs) and other tax-advantaged tools. As health care professionals, you likely understand the importance of planning for future medical expenses. But HSAs can do more than cover current costs — they can serve as a powerful savings tool for future health care expenses in retirement.

HSAs offer triple tax benefits:

• Contributions are tax-deductible.
• Growth is tax-free.
• Withdrawals for qualified medical expenses are also tax-free.

These accounts can be a crucial part of your estate planning, allowing you to build a reserve of funds specifically for health care costs in retirement. Since unused funds roll over year after year, you can make a substantial amount to cover future health care expenses without tapping into other savings.

In addition to an HSA, consider contributing to retirement accounts like a 401(k) or IRA. These accounts can be used for general retirement expenses and medical costs not covered by insurance. Maximizing your HSA and retirement accounts ensures you have a safety net that provides for your health needs while protecting your estate.

Preventing your medical debt from becoming a burden

One issue many people forget to consider in estate planning is the effect of unpaid medical debt on their estate. If left unaddressed, your estate could be saddled with significant debt after your passing, affecting the inheritance you leave for your loved ones.

Even as health care providers, it’s easy to underestimate the costs of end-of-life care or significant medical expenses, which can quickly accumulate. To prevent medical debt from draining your estate, there are several strategies to consider:

Use of insurance: It is essential to ensure that your health insurance provides sufficient coverage, especially for end-of-life care. Beyond traditional health insurance, long-term care policies can provide additional protection.

Set aside funds: Establishing an emergency savings fund or designating specific assets to cover potential medical costs ensures that your estate won’t be responsible for unpaid medical bills.

Review estate planning documents: Regularly review and update your estate planning documents, including any trusts, wills and medical directives. This helps ensure that your health care decisions and financial wishes are clearly outlined and protected.

One common misconception is that medical debt disappears after death. In reality, creditors can make claims against your estate, reducing the amount available to your beneficiaries. Take proactive steps to prevent these debts from impacting the legacy you’ve worked so hard to build.

Planning beyond the obvious

Medical professionals arguably understand the importance of thorough planning when it comes to health, but it must be applied with the same rigor to their personal finances and estate planning. Choosing the right power of attorney, incorporating long-term care into the plan, maximizing savings tools like HSAs and preventing medical debt from affecting your loved ones are all critical steps to ensure a smooth and stress-free future.

The truth is, estate planning isn’t just about distributing assets; it’s about protecting yourself and your loved ones from unnecessary financial and emotional burdens. Plan wisely to take control of your legacy and ensure that your health, finances and family are in the hands of the right people — even if that means looking beyond your immediate family.

Howard Enders is COO of The Estate Registry.