If you’re lucky, some of your assets may already be protected. It all depends on where you live since the laws are different from state to state.

Chances are that your homestead is your single biggest asset, and if you’re fortunate enough to live in Florida or Texas, or in a state with a similar homestead exemption law, your house will be safe no matter how much equity you may have.

If, on the other hand, you live in most other states, your exemption could be limited to as little as $5,000 or $10,000, which will put your home at risk if you have significantly more equity in your home, unless you take measures to protect it.

In addition to the basic homestead exemption, there is another possible way to protect your home, at least to a point. If you live in one of those states, for example Michigan, that allow married couples to own their home as Tenants in Entirety (TE), you will have a certain degree of protection. If a home is titled as TE, a creditor cannot force you to sell your part of the home. The home in its entirety belongs to you AND your spouse, and the law is there to ensure that you will be able to stay in your home, together.

Unfortunately, if your debt is a joint debt, owed by you AND your spouse together, a TE title will not protect you. Besides, the exact legal status and the availability of that type of protection differs from state to state. So you should definitely consult an attorney to find out exactly where you stand and to get any help you might need with protecting your home.

There are other types of assets that are already protected in many cases, especially certain life insurance policies or annuities, and also certain types of retirement accounts. This is why other assets, such as Accounts Receivable and home equity are often shifted into life insurance policies. [DID YOU FIND THIS SOMEWHERE? I'VE NEVER HEARD OF THIS.]

Once again, however, you will need the help of a qualified attorney to make sure that your life insurance policy and your retirement account is set up properly and is indeed protected. Since the exact legal situation varies from state from state, and since those laws themselves frequently change, you’ll want to make sure you have the exact information that applies to your specific situation.

You are welcome to request a free consultation with one of our well-trained advisors in your area, who can help you to know exactly which of your assets are safe and which are at risk.

Your home may well be your greatest asset, and one of the most important ones to protect from creditors. If you happen to live in states like Texas or Florida, which have unlimited homestead exemptions, the entire value of your home will be protected.

If you live in another state, though, where homestead exemptions are very limited, they will be of little help to you if you have more than $5,000 or $10,000 of equity in your home.

There are, however, a few options you have to protect your home equity.

The less desirable among those are Tenants by the Entirety (TE), Qualified Personal Residence Trust (QPRT), LLPs and FLPs. All of those options have major flaws that either can ultimately cost you your home or greatly increase your tax liability, sometimes both. You can find more information about each of those options in The Doctor’s Wealth Preservation Guide.

By far the best option is the Debt Shield, also known as Equity Stripping. Debt Shields and Equity Stripping may sound fancy or exotic, but the terms simply stand for taking out a large amount of debt on an important asset that otherwise does not have much if any debt.

The theory behind debt shields is simple: if an asset is riddled with debt, a creditor will not want it. If a creditor does want it, he/she will have to stand behind the first creditor holding the loan against the valuable asset. Therefore, debt shields offer excellent protection for your asset.

How does Equity Stripping work?

Before recent internal revenue code changes, clients could simply borrow as much money as a lender would give them via a re-finance of their home, and write off the entire interest payment as an itemized deduction on a personal tax return. Then they could take that borrowed money and invest it in specific ways to create supplemental retirement savings.

Unfortunately, the IRS has since limited the amount of refinance debt that can be deducted to $100,000. However, you can get around that limit by buying a new home, and then borrowing the entire purchase amount while stashing the equity from your old home in eligible forms of retirement savings.

In fact, with the equity harvesting program, the money from the loan is typically used to purchase a low expense cash-building life insurance policy where the death benefit is at the minimum rate allowed so the client can take “tax free” loans from the life policy, in retirement. More information on tax-free loans from a life policy can be found in the Life Insurance section of The Doctor’s Wealth Preservation Guide.

The home loan itself is typically set up as interest-only and tied to the lowest interest rate possible — Libor, for example. The reason the loan is interest-only is due to the fact that the whole point of the loan is to keep it on a valuable asset so the asset is not attractive to a creditor; and even if a creditor makes a claim against the asset, the creditor is second in line behind the lender.

Is Equity Harvesting financially viable?

The IRS thought it was so financially viable that it acted to limit the interest deduction on home equity loans and refinancing of homes. As a general statement, if the cash value life insurance policies perform as they have for the last 20+ years, and if interest rates remain anywhere near what they have for the last 20 years, then Equity Harvesting will work very well for you financially. You can find an entire chapter on Equity Harvesting in The Doctor’s Wealth Preservation Guide.

As a bonus, you will find that you may be able to get rid of any other life insurance policy for which you are paying now. Why? Because with the equity harvesting concept, you are buying a life policy with a sizable death benefit.

While there is no perfect solution, Equity Harvesting allows you to create a situation where no creditor would want to make a claim against the house. In addition, it is also very likely to work out as a nice wealth building strategy for you, assuming, of course, that your advisor uses the correct type of life policy — one that is specifically designed for equity harvesting.

There are various ways to protect your medical practice’s A/R. By far the best option, however, is the Accounts Receivable (A/R) Leveraging Plan, which helps protect your A/R from creditors and can also turn them into a retirement benefit.

The A/R Leveraging Plan involves using a medical office’s A/R balance as the primary collateral for a bank loan. Depending on your lender, the loan will be equal to the revolving A/R balance generally ranging anywhere from 30 to 120 days. The A/R balance, by the way, is the “real” value of the A/R ─ not the inflated amount your medical practice may have on the books for what is billed.

Since the bank will have a primary lien against the receivables’ balance, this “asset protects” the balance from the claims of other creditors.

Once the bank loan is made, the loan proceeds can be invested for the purpose of providing the physician with death benefit protection and, potentially, a source of supplemental retirement income.

How well the A/R Leveraging Plan work for you depends on the following factors:

1) Interest Rates – The A/R Leveraging Plan requires a loan for upwards of 20 years. The lower the interest rates and the longer loan rate is fixed, the better the plan will work.

2 Investment Returns – If the investments do not perform well (7% or better), the likelihood of the A/R Leveraging Plan working better than post- tax investing is reduced (unless interest rates on the loan stay abnormally low).

However, if the interest rates are moderate throughout the life of the Plan and if the return in the investment is similar to what the S&P 500 has done over the last 30 years, then the A/R Leveraging Plan, when set up correctly, can be a nice and economically effective way to protect your medical office’s A/R.

The Steps for Doing A/R Leveraging Correctly:

1) The bank lends money directly to you, the physician. The borrowed money is equal to the amount of current “real” A/R on the books of the medical practice.

2) You purchase a single premium immediate annuity (SPIA) with the borrowed money.

3) The SPIA pays income for 3-5 years, and that money is used to fund a life insurance policy that is supposed to act as a long-term investment for the physician.

4) The SIPA and life insurance policy are pledged as secondary collateral on the loan.

5) The medical practice’s A/R is pledged as the primary collateral for the loan.

That is as complicated as it gets when doing A/R leveraging the correct way. Because the A/R is pledged as the primary collateral for the loan, it is asset protected as long as the loan stays in place.

Is the A/R Leveraging Plan right for you?

If you are worried about losing your A/R in a lawsuit to creditors, then the A/R Leveraging Plan is a nice option to consider as long as you understand how it works.

If done correctly, the A/R Leveraging Plan should work out neutral or positively from a financial perspective. Unless interest rates go through the roof (10%+), the A/R Leveraging Plan should work well for you as an asset protection tool and at least neutral with the possibility of positive financial returns for the client in retirement.

Since you may also be able to lower your malpractice insurance coverage and save money on premiums, those savings will further help improve the financial viability of the A/R Leveraging Plan.

In the end it’s up to you: if asset protecting your A/R will help you sleep at night and make your life less stressful, the A/R Leveraging Plan will be an option you should seriously consider and discuss with one of our expert asset protection advisors in your area.

You will find that CICs are a nice way to implement an offshore asset protection plan that is different from the traditional offshore LLC or offshore trust.

CICs are generally used more for income tax reduction but because the CIC is set up offshore to save on set-up expenses, it turns into a terrific asset protection tool as well. [THIS SENTENCE DOESN"T WORK -- RUN ON?]

So yes, there actually is a way to save on taxes by going offshore, just not the way some irresponsible people may try to make you believe. And yes, it’s perfectly legal. To read more about how a CIC can be used as an income tax reduction tool, please turn to the income tax reduction section of The Doctor’s Wealth Preservation Guide.

A CIC is just what it sounds like. It literally is your very own insurance company that can sell insurance to a number of different people or entities, although most of the time your CIC will sell insurance to your own small business. The insurances it will sell to your own business are legitimate insurances you can get on the open market, but which would be prohibitively expensive, and not likely to be utilized.

Therein lies the benefit to you: You get to transfer lots of money in premiums to cover an event against which you are already self-insuring — such as Medicare fraud, or sexual harrassment lawsuit — which you are likely never going to have to pay out. Instead it grows tax-deferred under your own management, if you prefer, and comes out taxed at the long term capital gains rate.

So how else does a CIC work as a wealth preservation tool? Well, it is typically created offshore to save on expenses. And because CICs are offshore, they provide the same kind of asset protection as any other offshore company.

Physician Example:

Dr. Smith has a medical patent company in which he owns 100% of the stock. He has generated $2,000,000 of take-home income after expenses from his company, and he does not need the money to live on. He is 58 years old with three children, a spouse, and a net worth including the value of his company of $15,000,000.

Dr. Smith could set up a CIC that could be owned entirely by his children. His company would then purchase $1,000,000 worth of insurance from the CIC for various types of insurance coverage, and Dr. Smith’s company would pay the premium each year.

Several good things are accomplished with this scenario:

1) Dr. Smith transferred $1,000,000 into an offshore CIC which is owned by his children. This transfer was done without income, gift or estate taxes; and with a good claims’ history, the children will be able to keep that money.

2) Dr. Smith did not have to take the money home and pay income taxes on it.

3) Dr. Smith did not have to figure out how to asset protect the $600,000 he would have taken home after tax (in the 40% tax bracket) since the money has not only been transferred to the children’s CIC but is in an offshore CIC.

The money in the CIC is there in the event of any insurance claims, but realistically that money will be used by the children as part of their inheritance.

CICs may not be for everyone, but if you are looking to implement an offshore asset protection plan, you should definitely consider them. Just keep in mind that the CIC must also have, as its primary business purpose, the sale of insurance.

Make sure you have an expert advisor who can counsel you on the proper way to set up a CIC so it will comply with all applicable laws. Just request a free consultation with one of our expert advisors in your area, who can answer all your questions, and order The Doctor’s Wealth Preservation Guide to read much more about CICs.

Have you heard that going offshore might save on U.S. federal income tax? It’s WRONG! Any advisor who tells you that you can move assets offshore and avoid taxes is an advisor you want to stay far away from.

Offshore planning is also very much on the pricey side. While you might be able to implement an entire asset protection plan domestically for $2,500-$10,000, a similar offshore asset protection plan could cost in excess of $25,000.

So why would anyone consider going offshore?

The simple answer is that offshore planning may be the best way to protect your assets. If you have a lot of assets, that is, millions of dollars worth of assets, going offshore may well be worth the extra expense, trouble, and risk.

Why? Good offshore planning takes your assets out of your control and puts them in a place that the U.S. government cannot reach. The U.S. only has jurisdiction over people or property located within the U.S. borders. When you move your assets to an entity that is offshore, you remove your property from U.S. control.

Offshore investments are also much better protected from creditors. Creditors have to bring a separate lawsuit in the jurisdiction where the assets are located. To bring such a civil lawsuit after getting a judgment from a long U.S. civil lawsuit will cause a creditor much grief and expense.

There are several options for offshore investments. Here, we’ll focus on LLCs and Trusts.

Probably the simplest and best offshore planning tool is a Nevis LLC. It will protect your assets much like certain U.S. LLCs would, where the only remedy a court can give a creditor is a charging order.

But when your LLC is in Nevis, a foreign jurisdiction, the creditor has to file suit in Nevis. Asset protection plus litigation deterrence make the use of a Nevis LLC a powerful option.

Offshore trusts are similar in some respects to traditional trusts in the U.S. They have all the same flexibility of design as domestic trusts when it comes to adding provisions.

But of course, they also offer powerful additional advantages:

U.S. Courts have no jurisdiction in a foreign country and, therefore, have no control over the assets in a foreign offshore trust.

U.S. Courts typically do not use Contempt of Court (where the court would send you to jail until you brought back your assets from the offshore trust) when assets are properly transferred to offshore trusts. However, there have been exceptions.

In addition, most of the offshore asset protection havens have drafted their local laws to be as friendly as possible to U.S. citizens looking to shield assets from lawsuits. The laws make it extremely difficult for a creditor to gain access to the money in an offshore trust.

The advantages above are offset by some serious potential problems, however. It may be hard to find a foreign trustee you can trust and who will remain solvent. What typically happens if there is a lawsuit where a creditor tries to get at assets in the offshore trust is that the client (i.e., you, the physician) who is a co-trustee loses his/her powers and the foreign trustee (who is not subject to the jurisdiction of U.S. Courts) takes over total control of the assets in the trust.

Once you lose control, however, you can never be sure whether or not the foreign trustee is going to “do the right thing”, the right thing being to protect the assets in the trust, not embezzle the money. Just as it is difficult for creditors to go offshore to try to get your assets in an offshore trust, it will be just as difficult for you to sue your foreign trustee if that trustee embezzles your money.

It’s easy to see how offshore trusts may have great potential benefits, but the risks and expenses are great as well. If you are even considering this option, you should definitely seek the professional advice of an expert lawyer who has plenty of experience with offshore trusts to be sure you set yours up correctly so you will be able to reap the benefits while minimizing the risk.

When it comes to asset protection, you will find that corporations are not as helpful to you as a physician as they might be to some other businesses. This is because certain professionals, doctors included, are personally liable for all professional actions whether they are performed within a corporate structure or not. Corporations are still helpful, however, in limiting your personal liability for certain corporate responsibilities, such as employment issues, fiduciary responsibilities, etc.

Another way to use corporate entities to protect your assets is to use them for your assets themselves. For this purpose, you should consider Limited Liability Companies (LLCs), Family Limited Liability Companies (FLLCs) or Family Limited Partnerships (FLPs). In fact, LLCs (which I will use to represent all three types) are “the” tools of choice when it comes to asset protection.

LLCs were designed to bring together a single business organization with the best features of the pass through income tax treatment of a partnership and the limited liability of owners in a corporation.

If used for the medical practice itself, from a corporate liability standpoint, LLCs are similar to S- or C-Corps in that physicians still have personal liability when they see and screw up on patients, thereby causing a medical malpractice claim. LLCs also provide the standard corporate protection to shareholders and directors for negligence actions against the LLC itself.

For use in protecting assets, however, there is a major difference between LLCs and S- or C-Corps; and the key to that is something called a “charging order.” A charging order is the ONLY remedy a court of law can give a creditor who is trying to get (obtain) the assets of a debtor when the assets are in an LLC (or limited partnership).

A charging order DOES NOT allow creditors to sell assets of the LLC or to force distributions of income. The best way to illustrate what a charging order does is to use an example. Please note that the law affecting LLCs can vary from state to state, so please check your state statute to make sure there haven’t been any changes.

Example:

Patient Lucky sues and obtains a judgment against Dr. Smith for $3,000,000. Dr. Smith has $1,000,000 worth of medical malpractice coverage and has all the rest of his major personal assets owned by an LLC of which he owns 100%.

Lucky asks the court for satisfaction and asks the court to have Dr. Smith turn over the assets in his LLC to him. The court tells Lucky that the only remedy the court can give to him is a “charging order.”

What does the charging order get Lucky in the above example? Only the right to pay the taxes on income generated in the LLC.

What a creditor cannot get with a charging order

1) A charging order does not transfer the interest in the LLC to the creditor or force the debtor to sell his/her interest and turn over the sale proceeds to the creditor.

2) A creditor cannot force the LLC to sell assets.

3) A creditor cannot force an LLC to distribute income

So the only thing the creditor gets through a charging order is the right to pay income taxes on income generated in the LLC but NOT distributed. If you find this confusing, you’re not alone. Here’s how this works:

When Lucky obtains his charging order, Dr. Smith as the managing member of the LLC decides not to take any of the $45,000 out as income and instead leaves the income in the LLC.

Normally, when a corporation does not distribute all the income out of the corporation, there will be corporate taxes levied on that income. If the LLC is treated as an S-Corp or partnership (which is the case 95% of the time), the income is passed through to the shareholder (or member) and taxed at his/her individual tax bracket (as if he/she took the money out of the LLC).

Now that Lucky has a charging order against Dr. Smith’s LLC, Lucky, not Dr. Smith, will receive the income from the LLC. However, in our example, Dr. Smith as the managing member did not distribute the income from the LLC.

So now Lucky gets a K-1 for the taxes on what would have been distributed from the LLC to Dr. Smith. If Dr. Smith were a 100% owner of the LLC interest, Lucky would get a K-1 for all $45,000 that he NEVER received. I call this phantom income (which is income you do not receive but have to pay taxes on anyway).

The power of an LLC is derived from the fact that a creditor can only obtain a charging order against the LLC (vs. forced distribution of assets or income or, in the alternative, the sale of a debtor’s interest in the LLC) where, if the LLC creates income and does not distribute it, the creditor will get a K-1 for income they never did and never will receive.

There are a few potential problems with LLCs. Not all 50 states yet allow for single member LLCs, although all 50 states now recognize LLCs as legal business entities. As the years pass, though, eventually all 50 states will likely have single member LLCs.

And although single member LLCs have been used for some time now, you still may want to have another person as at least a 5% owner of an LLC. This will prevent a creditor from arguing that an LLC without more than one owner should not be able to hide behind a Charging Order as the sole remedy.

The particular types of assets you should hold in LLCs include especially the following:

1) Real Estate (mainly rental or vacation properties)

2) Brokerage Accounts (you will still have full authority to buy and sell stocks etc., but the assets in the account will be protected)

3) Boats, Planes, Snowmobiles, Waverunners (these should be placed in their own separate LLC to protect them, but more importantly, to protect the rest of your estate from the liability issues that might come up with these recreational vehicles).

4) Any other personal assets of value.

Physician Example:

If the previous material confused you a bit, I want to give you a real world example of how to protect your assets.

Example:

Assume Dr. Smith is 45 years old, married with two children, lives in Michigan, and has the following assets:

Value

Personal residence $1,000,000 (with $400,000 mortgage)
Vacation Home $ 450,000 (with a $200,000 mortgage)
Brokerage Account $ 500,000
401(k)/Profit Sharing $ 400,000
Airplane $ 125,000

The following is the recommended asset protection plan using LLCs.

Title

Personal residence Tenants by the Entireties

(Not typically in an LLC due to the fact that the client will eventually sell the house and will want to take advantage of the $500,000 joint capital gains tax credit.)

Vacation Home LLC #1

If the clients choose to rent the vacation home, I would suggest transferring the vacation home to its own individual LLC to protect it from a suit by a tenant for negligence.

Brokerage Account LLC #1

Again, if the vacation home were ever rented, the brokerage account would get its own LLC.

401(k)/Profit Sharing Qualified retirement money is federally protected

Airplane LLC #2

Because the airplane itself is a source of liability, I would suggest that it be owned in its own LLC so, if there is a crash (and it is always pilot error), the passenger who sues the physician’s estate will have to settle instead for whatever is in the LLC (nothing after the crash) and the insurance payments from the company insuring the plane.

If you failed to protect your assets before you were facing a lawsuit, you will have a big problem. At that point, just about any attempt at transferring or otherwise trying to protect your assets will likely be construed as fraud.

What does this mean in practical terms? Here’s an example:

Imagine you have been called by a person who says that he has a claim against you for one reason or another (no suit has been filed). You remember the person; and even though you think he has no basis to make a claim against you, you decide to play it safe and make “gifts” of your assets to your spouse and children.

If the claimant is successful and obtains a judgment against you which he cannot collect, the transfers will likely be held to be a fraudulent transfer by the court unless significant non-asset protection motives can be proven for the transfer.

A Classic example:

Dr. Smith goes into the operating room where he is supposed to amputate a diabetic patient’s right leg. Dr. Smith did not notice that the surgery techs prepped the wrong leg; and, in fact, Dr. Smith amputated the wrong leg. Dr. Smith figures this out in post op.; and instead of sticking around to console the patient and his/her family, Dr. Smith digs out his Doctor’s Wealth Preservation Guide to review and then calls his local attorney to immediately start drafting an asset protection plan.

Dr. Smith and his attorney immediately transfer Dr. Smith’s brokerage account and vacation home (value $2,000,000 collectively) to separate limited liability companies in hopes that this move will protect Dr. Smith from the lawsuit he is sure will arise from his amputating the wrong leg of his patient.

Sure enough, Dr. Smith is sued six months later by the patient for $10,000,000 (which seemed to be a just price to the personal injury attorney now that the client has NO legs after the second amputation). Dr. Smith has a 1-million/3-million-dollar medical malpractice insurance policy.

During the deposition, Dr. Smith testifies truthfully that he transferred all his major assets to limited liability companies one week after the surgery but before the lawsuit for malpractice was filed. The attorney for the patient asks for and receives a temporary restraining order to freeze the assets in Dr. Smith’s limited liability companies until a resolution of the case is complete.

The case goes to trial and the jury comes back with a $7,000,000 verdict in favor of the patient/plaintiff.

What is the outcome of Dr. Smith’s asset protection plan? Dr. Smith has violated the fraudulent transfer rules, and the court reverses Dr. Smith’s transfers and directs him to liquidate his brokerage account and sell his vacation property and hand over every penny to the patient.

The lesson from this story is simple: Create an asset protection plan while you still have the chance. Don’t wait. And definitely never make fraudulent transfers. If Dr. Smith had had his vacation rental and brokerage accounts asset protected prior to amputating the wrong leg, those assets would have been protected and the court would not have been able to tell Dr. Smith to liquidate the assets and give the money to the patient.

In other cases, fraud may be more difficult – but not impossible – to prove, including in the case of selling an asset 1) for less than its fair market value or 2) when a claim for damages against the seller is known.

Basically, fraudulent transfer laws will prevent you from removing assets from your estate after you know of potential claims against you. Even if a creditor cannot prove actual fraud, you still need to worry about constructive fraud when making transfers of assets after a claim for damages has occurred.

There is only one surefire way to prevent transfers of assets from being overturned by a court: make the transfers before any liability occurs. Protect your assets now, before there is a claim. And to ensure that the protection sticks and is legal, be sure to work with an asset protection expert.

For more information, ….

You may think that if having some malpractice insurance is good, more will be better. But that’s not the case. In fact, if you have millions in malpractice insurance, you are practically inviting a lawsuit. Here’s why:

Before malpractice attorneys take a case, they will investigate whether there is the potential for sufficient payout. Filing a lawsuit takes time and can be very costly. So unless there is a reasonable possibility of a big payout to justify the time and expense required in filing suit and pursuing it all the way to a successful ending with a high pay-out, attorneys will consider a suit “unviable” and not accept the case.

A very high malpractice insurance coverage signals to malpractice attorneys that yes, there is money to be made. So they are much more likely to sue.

If, on the other hand, you have only minimal coverage, attorneys will not find it viable to pursue a lawsuit. It would simply not be worth it. Even if they should win, they may not even make their expenses back.

Of course, this strategy only works in combination with proper asset protection. If you have not protected your assets, the attorney will simply go after your personal assets.

But if you have your assets so well protected that they can’t touch them, and you also don’t have excessive malpractice insurance coverage, you will not be a desirable target for a lawsuit

Here are two examples for how this would work:

1) A cardiologist screws up in the cath lab, thereby causing a substantial injury to a patient. The cardiologist’s bedside manner is not very good either, so when the patient runs into a personal injury attorney, the attorney talks the patient into signing up with him/her to look into a potential medical malpractice claim.

The attorney files the needed paperwork to start the discovery process and finds that the cardiologist has $1,000,000/$3,000,000 in malpractice coverage as well as several million dollars in personal assets.

After some time, the patient, due to the negligence of the cardiologist, has several surgeries to correct the problem; and now the patient is totally disabled for life and has $1,000,000 worth of medical bills.

After discovery revealed the assets of the physician, the personal injury attorney files suit and asks for $5,000,000.

2) Here is the same scenario with the same damages of scenario number one, but this time, when the personal injury attorney does his discovery, s/he finds out that, while the physician has $3,000,000 of personal assets, those assets are fully asset protected and are not going to be assets available in a malpractice suit.

Because the medical bills are $1,000,000 and the malpractice coverage limits for the cardiologist are $1,000,000 per claim, the personal injury attorney decided not to spend the $85,000 + in expenses it would take to get the case to trial and tells the patient that, while it is clear malpractice took place, the case is not financially viable; and, therefore, the attorney could not take the case.

The only difference in the two scenarios above is that the physician’s $3,000,000 personal assets were totally asset protected from lawsuits.

How much insurance is enough, though? Everybody’s situation is different. Each state has different legal requirements. It will take an expert in asset protection to ensure that you have enough but not too much insurance, and, even more importantly, that your assets are properly protected so that a frivolous lawsuit cannot take them away from you.

For more examples, please go…………….

When considering what kinds of assets you may need to protect, you will probably think of your home, your savings and investments, and maybe your medical practice. It is indeed important to protect those, but that’s just the beginning.

I have found that when clients put down ALL of their assets on a piece of paper, they are quite surprised at how much needs to be protected. Here is a more comprehensive (though by no means complete) list of things you may need to protect:

Family Home or Condominium
Rental Property
Non-Rental Property
IRAs
Stocks or Mutual Funds
Life Insurance
Bank Accounts or CDs
Planes, Boats, Automobiles, Motorcycles
Other business entity (especially S or C-Corp stock)
Any collectible items that have value
Future Inheritance for Family
Accounts Receivable (at the medical practice)

The last item may surprise you, especially since medical practices themselves are worth very little to a personal injury attorney trying to satisfy a judgment for medical malpractice. Most of the value in a medical practice is in the good will, which really is you, the physician, and the relationship you have built over the years with your patients and the community. In other words, the ONLY major asset of a medical practice that is not protected is the office’s accounts receivable (A/R).

What this means for you is that you must protect the accounts receivable of your medical practice. For specific information about how to do that, please turn to page 91 of _______________, where you can read about A/R leveraging.

You may think that the answer to the question above is obvious. After all, it’s not a matter of whether you need protection but a matter of how much and what kind. In fact, it has become almost unthinkable to practice medicine without paying sky-high malpractice insurance premiums.

As you know only too well, the odds are against you. Depending on which publication you read, the statistics range from one out of every four physicians being sued each year to six out of ten physicians being sued at least once during their careers. Clearly, those kinds of statistics show that physicians get sued a lot.

And if you are a surgeon, an anesthesiologist or a radiologist, the odds are even worse. In fact, the likelihood of you being sued sometime in your career is almost 100%. Why would I say that? Because surgery is inherently risky and outcomes are rarely perfect, which always leaves the door open to potential lawsuits. Just do the math: as a surgeon, you do hundreds of surgeries a year, during a career that lasts several decades: you’ll have to be incredibly lucky to escape the law of averages.

While more than 70% of malpractice suits are actually without merit, and doctors who go to trial win 80% of the time, such suits are still bad news. They cost you time and money as you have to defend yourself, and your reputation is on the line too.

Attorneys know how to use the legal system to their benefit and that of their clients. Most personal injury attorneys know that if a case can get past summary disposition, there is a good chance the insurance company representing the physician will settle the case at some point. The settlement might not be for a huge amount, but the fact that a settlement is often available gives such attorneys an incentive to seek out and file medical malpractice cases against physicians.

And that’s just the tip of the iceberg. You’ll find a lot more information in The Doctor’s Wealth Preservation Guide. You can also watch this voiced over powerpoint on why you need asset protection.