Money Minutes for Doctors #13 - Asset Protection

It is a fear that all physicians have at one time or another…how do I protect myself in the event of litigation? In this month’s edition of Money Minutes for Doctors, Katherine Vessenes, JD, CFP®, RFC, Founder and President of MD Financial Advisors, talks to us about the realities of legal actions against doctors as well as strategies of keeping oneself protected as much as practicable. Enjoy!!

1456108851410.jpeg

About Ms. Vessenes:

Ms. Vessenes works with over 300 physicians and dentists from Hawaii to Cape Cod. Her firm uses a team of experts to provide comprehensive financial planning to help doctors build their wealth and protect their wealth while reducing taxes now and in the future. Katherine is a longtime advocate for ethics in the financial services industry; and has written three books on the subject of investment strategies. She has received many honors and awards including: numerous tributes from Medical Economics as a top advisor for doctors, multiple 5-Star Advisor Awards, honored as a Top Woman in Finance, in addition to being selected to be on the CFP® Board of Ethics. Katherine can be reached at: Katherine@mdfinancialadvisors.com or 952-388-6317. Her website: www.mdfinancialadvisors.com.

Quick Summary:

  • Lawsuits are less common than you may think

  • You can do a lot as a physician to prevent a lawsuit

  • Almost universally the amount of a malpractice lawsuit is completely covered by the malpractice policy and rarely exceeds that amount

  • Residents and fellows are covered by their training program and do not need additional insurance

  • You can be sued for issues outside of malpractice and need to protect yourself in alternate ways, i.e. umbrella policy, which is recommended particularly as you progress in your career and your net value increases

    • Umbrella policies are fairly inexpensive and are in addition to your standard insurances

  • Most times medical malpractice is covered by your employer, be sure to look for this benefit in your contract as group policies are often less expensive than individual coverage

    • Generally not recommended to have additional malpractice beyond which your group covers, but may be of benefit in high risk specialties or if you own your practice.

    • May want your attorney to review your contract to be sure enough medical malpractice insurance is offered

  • Often dollar amount of the lawsuit is determined by the extent of your malpractice policy as determined in discovery (a formal part of the lawsuit)

  • Depending on the state in which you live, home ownership equity can be a source of protected asset in a law suit but be sure the asset is well insured!

    • Having a home equity line of credit on your home will show up as a lein and therefor offers protection in a lawsuit and is a better situation then owning your home outright

  • 401k/403b accounts are protected at federal level from law suits

  • IRA accounts are at slightly more risk than 401k/403b

  • The amount of protection to your Brokerage accounts varies by state

  • Having a spouses’ name on the account if it is a joint asset does not offer you significant asset protection. To place the asset soley in the spouses’ name offers protection but depends on the security in the relationship and generally is not helpful

  • The protection of placing an asset in an LLC/Corp depends on the asset, i.e. offers little protection for 401k/brokerage accounts/real estate

  • If a trust is constructed well it can offer protection

    • Accountants and attorneys are the most helpful to protect these assets and place them in LLC/trust etc.

  • Vehicles are vulnerable if you own them outright, if there is a loan or lein then less vulnerable

  • Savings accounts are vulnerable but some portion of the account value is protected by the state

  • Wills/trusts can be a great way to protect assets for future generations but needs to be done properly, consult an attorney!

  • Asset protection is best accomplished now, when you are sued it is too late!