#243 Essential Steps to Secure Your Family's Future

Hey everyone. Hope you're having an amazing week. This is a season of giving that we're in right now. As I'm recording this, Holidays giving, Joy, abundance. And of course, we're thinking about family members. And when you think about your family, I don't know, for those of you who are in a committed relationship, perhaps you have children, whether whatever it might be, now your family unit has grown, you start to think about ways to protect that family, making sure everything is okay for them. I've talked about this in previous episodes, but I've even learned so much more. So I'm going to share with you the essential things that you need to do to protect your family's future. So stay tuned. Welcome to the Passive Income MD Podcast, where we talk about creating your ideal life through multiple streams of income. If you enjoy hearing about this stuff, make sure to hit subscribe. Now, let's get on with the show. So I heard some recent unfortunate news that somebody that I knew was a little bit older had passed away recently. And turns out through some of his family members that I knew well, that he never even set up a will. And to me, that was quite shocking because this is a person who has eight or nine figures of net worth, tremendously successful, and never set up the plans for when he would pass on. And it seems so obvious to many of us, but many of us are number one. Obviously, we think that we're going to live longer than we do and we hope, knock on wood, will continue to live longer through all of the longevity things and new technology elements that are coming out right now to help us live healthier, better new technologies and treatments for us in certain situations. Hopefully we'll live a very long time. However, we should always plan for things to happen unexpectedly for us in the medical field. I think we know this all too well that things can change in a moment. So the best thing to do is be prepared for it. And especially if you are one of the primary people to take care of your family's situation, the environment that they're in, the finances. You want to make sure everything is set up as best as possible. But again, no one teaches you this stuff. So I want to go over some things that I may have talked about in some previous podcasts, but I want to put it all together here for you and then talk about how to make this lasting. Figure this out so that moving forward becomes the most effective thing possible. So let me go ahead and just create a list here. I'm going to run through these things pretty quickly and Maybe you can check these things off in your mind as you have these or you don't. Maybe it's something you want to look into. Number one, you want to have a solid estate plan. What that means is that a plan for what happens to all of your assets if you or your spouse pass away. Usually that's done in the form of a trust, which is similar to a will, which is another thing that people can do as well. Usually a trust is a little bit of a heavier document that describes more in detail and the instructions that you're leaving behind for your family when you pass away. It allows you to assign a trustee, someone who will take care of your beneficiaries, take care of the plan that you have, make sure that the assets, your cash, your properties, whatever it is, get split up according to your exact instructions after your passing. Why that's important is that if you don't have one like this acquaintance of mine that I recently found out about it, then it becomes a free for all these things go to court, they go to probate court. There becomes, obviously, there's room for contention if there's multiple family members involved. And you've probably heard of these situations, hopefully none of you have experienced this, but who gets what? How much should one person get? These are all opinions. And everyone obviously is looking out mostly for their own interest. And so that can create a lot of conflict. But if you are intentional about it from the beginning, that you have a living trust that really states in a document all of these things where you can decide how much goes to who, what goes to whom, and then also when they go to whom. So, for example, if you have a young child, if something happens to you, and for some of you, you might be sitting there on a really pricey or heavy estate, meaning that you've got a good amount of net worth, you may not want them to get it all at once, where they hit their 18th birthday and they're now saddled with a good amount of income, you may want that to come in specific times for them so that it creates a cadence for when they're ready for it. For example, when they buy their first home or when they get married, or these kind of things. And I think for a lot of people, that's how we've set it up, so that if something happened to us, they wouldn't get everything all at once, but in stages. And because it's all set up for you beforehand, you avoid that court, the probate court, which can get nasty and pricey and very, very public that your family can avoid and have it settled completely differently. And that's a really important thing to have. So that's living trust. So if you don't have that, usually it costs a few thousand dollars to set up with a good lawyer and it's, trust me, it is worth your time. You set it up once and then you'll be able to do some maintenance over time on it as your circumstances change. Oftentimes in that trust, a power of attorney is also set up, meaning that, and this is a medical power of attorney, we've all experienced that before in the hospital. If somebody's making medical decisions on things, you want to make sure that that's defined beforehand. If some, we've all dealt with that, especially in our medical training, who is the medical power of attorney? And then in the event that you're unable to make your own decisions, which could absolutely happen, and hopefully not for you to arrange medical care, do all these things that it's already set up for you ahead of time. So that's number two, you definitely want to have that set up. Number three, this was easy. Life insurance. I think this is hopefully a no brainer for everyone out there. I think all of you at some point have been approached by life insurance brokers who have come to you, your residency, cafeteria, where people have come and try to sell you some of this stuff. But I think it's important to set up your future in case something happens to you. Especially if you're the primary breadwinner, you're probably bringing in a good amount of income and your family will depend on that moving forward. But if that source of income changes, you want to make sure that your family is all set up. Now how much you want to set up in terms of life insure is really up to you. It depends on your assets, your home, what you want to have covered. Usually most physicians will do it several million dollars just to make sure they have all of that covered, to make sure their homes and their debt, medical school debt, whatever it is, is paid off in the case of some sort of specific loss, damage or injury. Especially if you get the term insurance where you say 20 or 30 years, it's set at a certain term. Usually it's quite, I would say, affordable in regards to, you know, in comparison to other types of insurance. And it just gives you that peace of mind that if anything were to happen to you or your partner or your spouse or especially if you're the main breadwinner, that things will get taken care of and at least puts My mind at rest when it comes to protecting my family. Hey everyone. 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Okay, the next box to check is disability insurance. For all of us, especially as physicians, as high net worth individuals, the most precious, I'd say income generating asset that we have is not our investments, it's us, it's our hands, your mind, whatever. If you're, again, you're somebody who does a lot of procedures, again, it definitely is your hands. And your ability to generate income is dependent on your physical body and your mind to be able to do these things. And if something happens that injure that or damage that, you may, you know, if you get sick or you get injured, you may experience a good amount of loss of income which will put you in a really tough situation when it comes to covering your expenses and, and just your normal standard of living. So consider having disability insurance for a period where a sudden loss of income would make a big impact on you. Now I know a lot of people who over time they're able to be self insured, which means that they've created enough income, enough income streams through their investments or their businesses so that if something were to happen to them, they're not worried that their family won't continue to get income because you set it up beforehand. Now that is a great place to be. I think that's the hope for everyone to get to that self insured space and once you're there, you can drop the disability insurance over time. So I would say protect yourself, your income producing ability by getting disability insurance. Definitely shop around with an independent insurance provider to find out the best situation for you and when you don't need it anymore, you can drop it. Now the next few things I've had to learn the hard way from talking or trying to share things with my partner, my wife, where we've had to do some documentation to doing Some taxes, talking about investments, talking about these things. And I've had a hard time bringing my wife into figuring out where these things are located. And so I realized I needed to change things. So number one, I decided to organize my documents. When it comes to all of your important documents like your trusts, your deeds, if you own a home or properties, certain tax letters, your tax documents, I've really started to digitize almost all of these. And I think it's easier just because you can find them easier and you can throw them in a digital vault. Even on paper, you can want to have them in a defined area where it's easy for people to find. Again, you want to be able to locate these things when needed. You don't mind it right off hand, but if somebody needs to document your deeds and all of your trust and all that stuff, you want to know where to put it. And so whether that's putting it in certain numbers, notebooks, digitize. It may take a little bit of time and it feels extremely tedious to do this, especially for someone like me who doesn't like dealing with paperwork. But I know that if I spend an hour or two on one day, it's possible that I get all of this at least put in the right spot, then to digitize it, you can just buy a scanner. You can now use many apps on your phone to digitize this. And I promise you at the end of the day, it will be painful to do this for a while, but once you've completed this, it's like cleaning house. You'll feel so happy that you did and your partner and future generations will be happy you did as well, because everything will be easily found and you won't go scrambling for it. I don't know if anybody around tax time just starts scrambling for everything and I've done that myself too. And you realize the importance of having things organized in time so that when you need it, you can find it. The other part is now with everything online and access passwords, many of us aren't able to locate passwords. I had a situation where I need to tell my wife something I was away and she need to look into something. She's like, I don't know your password. I'm like, I don't know my password or I think it's this or it might not be. And I don't know what system you have for managing your passwords. I remember with my father, he would have some really old school ways of doing it, having on a sheet of paper and I told him that's probably not the best way to do it. And so he had to change as well. And especially these days with passwords we don't want to repeat, there's constant threats of, you know, passwords being leaked and things like that. And so I have a password protector. I, you know, use something called LastPass, which is itself kind of gotten some hacking there too, but they've put some measures to protect that or last, you know, one password or whatever it is for you to use. I, you know, particularly use a password vault to help me keep track of all these things. So if you're doing it the old way, where you have a piece of paper on your, near your desk with all your passwords on it, you should probably consider upgrading or if you use the same, exact same password for all of them. That's something you may want to consider as well, too. These days, there's more and more threat of password leaks. You're seeing so much phishing on your phone and texts and on social media that it looks real, but it is fake. And so watch out for that. And make sure that you and your parents, especially if you have elderly parents, are really safe when it comes to all of these things. Next, you want to really organize all your investments. You want to make sure that your spouse or partner, especially if you're the one that is responsible for managing all of your investments, and you have different investments in different syndications, different properties. You've got crypto, you've got it in different sites. You might have it on Robinhood, Fidelity, Vanguard. I don't know if you're like me, but you have multiple different platforms. How is somebody supposed to know where all those are if something happens to you? And so you want to make sure you have like a master list or something in terms of organization, where you have all these things listed out somewhere where somebody could actually go behind, find them all if necessary, and be able to figure all of these things out. Especially if, you know, there's, you know, whether you want to keep it, whether you want your CPA to know. I mean, that's probably one of the best sources, if something ever happens to you, is the CPA will know pretty much where all of these investments are, and they'll be, you know, make sure your loved ones know to contact your cpa. But if you have an Excel spreadsheet or whatever it is that's, you know, protected, that would be a great, more manual way to do it. And lastly, if you want to take all these things and make these really relevant for you is you have to review these things not just with yourself, but with your partner, your spouse, whatever it might be, whoever's important in your life to be able to review these things on a regular basis. I made the mistake before of doing this once, setting it all up and then thinking everything's going to be okay. And then of course, let them go over time or things get disorganized. Your partner, spouse doesn't know where to find stuff. And again, a lot of this is not effective. They don't understand where to figure all of this out. Even if it's just once a year, and I always think about it at the end of the year or the beginning of the year, it's a great trigger in your mind to have a sit down, to have a financial checkout meeting with your loved ones and say, this is where we're at. This is what we did this year. This is what we're focusing on this year. This is where everything is. We have a trust, we have this check, check, check. It's kind of like when you decide to fly. They say a pilot goes through a checklist and it's a simple checklist. They didn't even think about it, where they check certain, you know, whether it's the rotors, the lights, the navigation, all of that stuff is ready to go. It's kind of doing this on a yearly basis to make sure everything is checked. And the more you do this, obviously, the easier it gets. There may be certain things you've left, certain assets out of your trust or, you know, you had a new child or things like that where you need updating. And so every year, at least once a year would be a great time to do that. And I promise you, if you do all these things, you'll be able to rest easy knowing that your family's protected. Your job is now to make great investment decisions, to make good income, create awesome memories and experiences for your family, do all this stuff. But in terms of the actual protection or the backstop, you don't have to worry about that. So are any of these not on your list? Are any of these things that you need to consider? Are there any of these, you know, boxes that you want to check off in 2025? If so, I would say get at it. Don't waste time. You don't know what life has to offer, but once you do it, you'll feel so good about yourself and where you're at. In any case, hope you got a lot of value from this. Thank you to all of our new listeners out there and we've gotten a ton. We appreciate you. We're here to support you. Let us know. Take care. Have an amazing week. Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us at. And if you haven't already, make sure to hit subscribe. Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. Learn more at our website, passiveincomemd.com thanks again for allowing me to be a part of your journey. See you next time.