Asset protection for doctors means thinking holistically about all your exposures, not just your medical practice. Here are some timely issues to consider during the spring break season.
The majority of these exposures unfortunately involve children from grade school through college age who, (along with their friends who you are also responsible for) have free time, are on vacation, often are unsupervised and who are using mom and dad’s cars, homes, and boats.
We consistently get calls on these exposures when it is too late to act from both a legal standpoint and from an insurance standpoint. If you are a regular reader of this column you have without a doubt read my previous warnings about a minimum $1 million personal liability umbrella insurance policy being an indispensible first line of defense and what happens when you don’t have one in place.
The two most common excuses for those who don’t have an umbrella are cost and being too busy. If you can’t afford the increased insurance costs, you almost certainly will be bankrupted by a serious accident; most people pay only $300-400 annually per million of "umbrella" coverage. If your excuse is that you’re too busy to protect your family this way, you certainly don’t have time to be in court.
•Establish and enforce firm rules for the use your property, cars, homes, etc. You’re the adult. If you are the kind of parent who says, "I've told them not to but they just won't listen…" no amount of "lawyering" is going to be able to help you, you are the best defense.
•Get your insurance in order and get an umbrella policy in place. A single phone call to your agent will get you a price and coverage. Also, make sure your insurance companies know who the authorized drivers are, I have recently received letters from insurance companies saying if you have any long term (as little as 30 days) or regular drivers we don't know about we won't be responsible for covering you in the event of an accident.
•Don't overlook latent risks like access to firearms, prescription drugs in your home, and your liquor cabinet.
•Remember the lowest common denominator rule. Plan for the worst behaved, least informed individuals. Don’t expect everyone else's kids to be as well trained and disciplined as (you think) yours are.
•Finally, consider monitoring what's going on and where your kids are. The use of web cameras, GPS-tracking and other monitoring is now common and universally affordable, one client called me to say that he took my advice and caught the neighbor's kids doing beer bongs in his back yard and using his pool and hot tub during the day. When he confronted them and asked why they didn't do it at their own house they said their mom would kill them and "is always watching."
In the spring, we see lots of new car leases and purchases. It is very important that you do not lease or purchase your (and/or your spouses) personal use vehicles in the name of your medical practice.
Instead, take a car allowance and keep it in your own name. This is a very common mistake that we regularly see doctors make, often at the suggestion of a certified public accountant (CPA). If this has been suggested by your CPA as a tax savings mechanism to allow "writing-off" the vehicle, they are correct, but they overlook some large liabilities such as the ones listed below.
•Driving a car is often the single most dangerous thing people do every day, we have 11 Million car accidents a year in the U.S. that produce 40,000 plus fatalities.
•You are taking the unrelated personal liability of owning and driving a car and making a business liability that it previously had nothing to do with.
•The plaintiff’s attorneys now have a highly collectible corporate defendant on the hook for their claims, this means your practice’s cash, assets, and receivables are now at risk.
•You have linked the liability, skill and luck of every driver of your car to your greatest cash producing asset and financial future.
Being a physician comes with a great deal of liability. Do not find yourself unprepared for the liabilities that can occur outside of your practice walls.