Physicians are acutely aware of liability risks and the exposure of personal assets to the claims of creditors. Given the publicity of large malpractice verdicts and the incessant amount of malpractice-related attorney advertising, this concern is understandable. However, malpractice liability is hardly the only financial risk that physicians face.
Although physicians may be inclined to view an asset-protection strategy in the context of a medical malpractice claim, physicians can pay or lose money as the result of the many non-malpractice liability claims, including:
- uninsured or underinsured casualty losses;
- ill-advised investments;
- personal guarantees of business obligations;
- alimony and property payments that could have been minimized with a pre-nuptial agreement;
- uninsured sexual harassment claims;
- estate taxes caused by inadequate estate planning;
- victimization by fraud;
- liability for breach of fiduciary duty (e.g., ERISA claims, director or officer liability); and
- indemnification obligations.
A comprehensive asset-protection strategy for a physician could include any of the following depending on the financial complexity of each physician. Some of these include but are not limited to:
- Adequate Insurance Coverage
- Proper Titling/Transfer of Ownership of Assets Within a Family
- Exempt Asset Creation
- Creation of FLP and FLLC
- Asset-protection Trusts
- Propper Retirement Plan Assets (ERISA vs non)
- Avoidance of Indemnification Obligations
Despite the widespread adoption of state law tort reform, physicians continue to be greatly concerned with asset-protection issues. In addressing this concern, two factors should be kept in mind. First, the malpractice plaintiff is far from the only potential threat to the financial well-being of a physician. Secondly, an asset-protection strategy should be integrated into an overall financial and estate planning program to help ensure appropriate strategies are selected.
To evaluate your titling and asset protection risks, contact the CIG Wealth Management team to schedule a complimentary consultation.