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.
Protecting accumulated wealth should be a cornerstone of your financial plan. A solid financial plan will address who or what poses the threat of taking away what you have earned and puts measures in place to limit the severity of those threats. These threats are often unseen and not easily predictable and therefore may cause a derailment from the path to your goals if your plan is not properly structured. Do you understand what your plan has put in place for asset protection?
It is not easy to think about, but just imagine that today was your last day alive. Who will be there tomorrow to protect your family and the assets you leave behind? Who will replace the high amount of income that you provide? Will your current savings be enough to provide for the day-to-day basics, let alone the big expenses of the future such as college tuition? Proper planning aims to assess the capital needs of an individual and his or her family to ensure that given any unfortunate event, the family will be taken care of first. A less often considered, but nonetheless important, scenario is disability due to injury or sickness. Will you still be able to pay your mortgage, car loan or other payments? What if this disability is for an extended period of time? You must, again, ask what your financial plan has in place for the future of your family and goals.
Personal and Business Liabilities
For physicians and other highly visible professionals, the possibility of becoming the defendant in a lawsuit based on work performed or expertise given is not out of the question. How is your medical practice structured? Which of your personal assets will be exposed to liabilities? There are particular are strategies to help protect and separate your business assets from your personal assets (Domestic Asset Protection Trusts).
Estate Planning & Titling
Do your estate planning documents match your intentions? Your estate plan may be designed to leave assets to your children; however, if your accounts and assets are not titled properly, your children may not receive those assets as intended. For example, accounts titled as Joint Tenants with Rights of Survivorship, all assets will remain in the account under control of the surviving owner, regardless of the estate plan documents. It is critical that your account titling matches your estate plan documents to avoid unintended consequences.
Mistakes and Unforeseen Problems
Without proper planning, your accumulated wealth could be exposed to numerous risks. With proper planning, those risks can be mitigated. CIG Capital Advisors Wealth Management team can make sure your wealth plan accounts for unforeseen personal events (death, disability or lawsuit) as well as financial hazards that could jeopardize the assets you’ve built over a lifetime. It can take many years, often decades, of hard work to accumulate significant assets. Unfortunately, it can only take one event to erase your progress. Contact a CIG Capital Advisors professional to prepare for the unexpected.