Did you know….more than 100 million lawsuits are filed each year? And one in three people will be sued in the next 12 months? Wow.
No one’s immune, but people with a large amount of assets are especially vulnerable. Unfortunately, doctors and medical professionals are among those who are more susceptible. It’s just reality that when someone sees“MD” at the end of your name, they believe that you have deep pockets — they believe that you're an easy target.
So, do you have an asset protection plan? And if so, are you missing any key information or protection angles from that plan? Both good questions to review regularly.
As part of our Growth-Driven Practice Series, we offer resources and guidance for specialty physicians to help them grow their practice. The topic of asset protection came up as a valuable one in recent months….after all, in order to grow a medical practice, it’s important that you first make sure it’s protected!
Ariel R. Enisman, Esq., an attorney at The Presser Law Firm, has a valuable experience in helping physicians protect their practices through an asset protection plan. She recently joined us for a webinar and we’ve summarized the content here for your benefit. Request the webinar recording for the full details.
What does asset protection mean for physicians?
Asset protection is the legal process of titling both your personal and business assets to put them beyond the reach of any future potential threats and creditors.
Your assets include things like:
- Shares in a corporation
- Stocks and bonds
- Real estate
- Intellectual property
And asset protection safeguards those against things like:
- Unknown catastrophes
Do doctors really need asset protection?
The short answer is absolutely. Even if you don’t feel like you have enough “assets” really worth protecting. In fact, if you think about it, the less you have, the more important it is to protect it. You could be wiped out by just one lawsuit!
Asset protection is a complex field covering many technical areas, including the laws of bankruptcy, tax, criminal, international and trusts. However, it breaks down into 3 key fundamentals:
1. Protect yourself before you have a problem. It's really important that you're proactive and you protect yourself before you have a lawsuit or before you have a judgment. Just like an insurance policy, buying auto insurance after a car accident or life insurance after you pass away doesn’t do much good.
2. Start with a basic plan and add firewalls as needed. What’s your largest financial asset? Start with base strategies, like making sure your car is titled to you — not both spouses, not your business, etc.
3. Don’t look for a magic bullet or one right plan. Most people have a lot more than they think, and everybody has different assets. Take stock of all your valuable domain names, telephone numbers, intellectual property, potential inheritances, and other non-liquid assets — and customize your plan to your needs.
4 Asset ProtectionStrategies to Implement Immediately
It starts with a plan and an understanding of the basic fundamentals. Here are the four basic strategies we recommend that will put instant and powerful safeguards in place to protect your “exposed wealth.”
1. Transfer your assets to a protective entity. The key to asset protection is to own nothing while controlling everything. Transfer any non-exempt assets out of your name to protective entities such as trusts, LLC’s (limited liability companies), limited partnerships, etc.
2. Convert non-exempt assets into exempt assets. State laws protect some personal assets from lawsuits and creditors. Those assets typically include your primary residence, personal items such as furniture and clothing, pensions and retirement funds, and life insurance. Start by finding out the exemptions for your state and convert non-exempt assets (i.e. cash) into exempt assets (i.e. life insurance).
3. Protect with liens. What is a $100,000 car worth if you owe $95,000? What is a $1million house worth if you owe $950,000? You can become a far less attractive candidate for a lawsuit by simply taking out lines of credit, recording mortgages against your property, and making all of your assets valueless.
4. Transfer all ownership rights. The more you own, the more you’re exposed. If you’re sued, you can lose it. So you really want to focus on who controls and benefits from the assets. Again, own nothing and control everything.
Want More Best Practices to Protect Your Assets and Grow Your Practice?
From estate planning to business succession planning to liability insurance, and more — the webinar covered a lot of ground. For a much deeper dive and to get the actionable steps you can take today to begin setting up an asset protection plan of your own, watch the full webinar anytime, on-demand: SafeguardingYour Money: Expert Legal Advice to Help Physicians Protect Their Assets.