What To Know About Asset Protection If You Are a Physician

 

Everyone believes they practice good medicine, and most physicians believe they should not have to worry about litigation if they practice good medicine. However, you must account for unpredictability.

Many doctors learn that as their careers advance, they may experience situations in which their financial security is compromised. Divorce, lawsuits, and other events have an impact on their ability to protect the assets they've fought so hard to obtain. We talk about asset protection for physicians virtually every day.

Nobody is immune, but people with a lot of money are especially vulnerable. Unfortunately, doctors and other medical professionals are particularly vulnerable. It's simply a fact that when someone reads "MD" at the end of your name, they assume you have significant finances - they think you're an easy target.

So, do you have an asset protection strategy in place? And, if yes, are there any crucial information or protection angles lacking from that plan? Both are excellent questions to revisit frequently.

Putting these safeguards in place today can save you money and future worries. The best news is that settig up a strategy to protect your valuables does not have to be difficult. Most of the time, physicians spend time and money on asset-protection solutions that may not be the best fit.

Instead, focusing on the fundamentals of asset protection might help you have a solid basis for asset protection without overspending or overthinking.

 

Reasons Why You Should Have An Asset Protection Plan

 

• Protect yourself before an issue arises.

 

You must be proactive and protect yourself before filing a case or receiving a judgment. Purchasing vehicle insurance after a car accident or life insurance after you pass away is similar to purchasing an insurance policy.

• Reduce the cost of your liability and malpractice insurance.

 

If your assets are secure, you may require less insurance coverage. Some coverage is always recommended, but the expense of asset protection strategy will most likely be recovered within a few years due to lower annual insurance costs.

 

• Mind at ease.

The ability to run your business, practice, or career without fear of lawsuits or threats of litigation can be invaluable, allowing you to focus on day-to-day tasks without interruption.

 

 

Best Asset Protection Strategies 

 

• Transfer your assets to a secure place.

 

The secret to asset preservation is to control everything while owning nothing. Transfer any non-exempt assets out of your name and into the names of protected entities like trusts, LLCs (limited liability corporations), limited partnerships, and so on.

‍

• Formation of a Professional Practice Business Entity

One of the first crucial considerations a physician or dentist should make is the type of business company to use for their professional practice. While forming a business entity for a professional approach will not limit a professional's liability from a malpractice claim related to their work, it will help protect the professional's assets from other creditors of the practice and specific malpractice claims against other physicians or medeical practice involved in the process. 

• Acquire Malpractice Insurance

You are likely be sued or have a legal judgment issued against you during your whole career. Therefore you should obtain malpractice insurance.

How much protection do you require? Inquire with other local specialists in the same field. Understanding what your colleagues pay is usually a good starting point.

• Retirement Accounts

Most states provide excellent asset protection for retirement plans like 401(k)s and IRAs. Sometimes, the amount protected is limited to what a court believes you need to sustain yourself, which is likely less than what you think you need to maintain yourself. 401(k)s are given far more protection in certain areas than in IRAs.

• Gifting Assets 

Physicians can use gifting tactics to shield assets from creditors and as an estate planning tool to decrease estate tax after death. Gifts can be made in the form of an outright gift of an asset to a third party or more sophisticated methods such as transferring assets to an irrevocable trust or forming a type of family limited partnership or a family limited liability company to protect certain assets and givig away non-voting interests in those entities to others.

 

It might be difficult to protect your assets as a physician. Putting in place the necessary systems may be simpler than you think. Begin with the correct sorts of insurance and work your way up to more complex techniques. When you create your protection strategy from the ground up, you are laying the groundwork for long-term financial success.