Avoiding these specific and predictable risks will help make your assets and the new year more predictable and secure.
Our last discussion of 2019 provided 12 self-exam questions for physicians to consider about their business and personal asset protection planning this year. Today, we look at some specific and predictable recurring risks to your wealth to manage as we start 2020.
Post-Holiday Credit Check-Up
In the age of identity theft, it’s important that you monitor and protect your credit like any other asset. All American consumers are legally entitled to free copies of their credit reports annually and can quickly and easily get reports from all three major credit reporting agencies by filing out a single form. In addition to any inaccurate reporting about your own credit and payment history, one big item to look for in your credit report after the holidays should include any new or duplicate accounts opened. Every major retailer encourages consumers to open new credit accounts at the cash register and this temptation peaks in the holidays when they offer discounts on your purchases for doing so. Unfortunately, this rush to open new accounts also means that fraudulent accounts may be more easily opened in your name, without your knowledge.
Similarly, carefully review your credit card and bank statements (you know you shouldn’t be using debit cards for most purchases for security reasons anyway) for the last few months for any incorrect charges. The obvious ones for purchases you never made are easy to spot, but some are less obvious, like inflated charges, excessive tips added by servers, or duplicate charges by merchants. Again, these may not always be “fraud” but just errors made in the holiday rush, but either way it is your money, your credit, and your responsibility to confirm your accounts and object to any issues or report identity theft in a timely manner.
It’s Engagement Season –Plan Your Marriage as Carefully as You Plan Your Wedding
It’s not just your imagination. Yes, your social media accounts have been and will be full of pictures and announcements of more engagements than usual for the next month or so, right through Valentine’s day. Bizarrely, divorce filings also filing at this time of year and peak just after the Superbowl. In some cases, that’s because one spouse has simply “resolved” to make a new start after suffering through another unhappy holiday or didn’t want to spoil the holidays for family and children. In other cases the timing is more tactical and at the advice of lawyers and other advisors.
As one example from the Tax Cuts and Job Act, “In divorces finalized after January 1, 2019, spousal support can no longer be deducted from taxes. And for those receiving alimony, spousal support is no longer considered taxable income. This significantly increases the burden on the individual paying alimony and ultimately means more money for the government”.
We’ve previously discussed the basic details of prenuptial agreements for doctors and why they are part of any real asset protection plan, especially for high earning professionals like physicians, even if you don’t have significant wealth yet. Remember that pre-nups are time sensitive and can’t be done at the last minute or under duress to be effective, so allot enough time (i.e. months) between your engagement and your wedding to execute one and have both parties consult with legal counsel. Also, pay attention to your pre-marital assets including both how you hold title and the timing of sales, purchases, and career events like medical practice partnership before your marriage.
Some specifics to discuss with advisors when planning for a wedding:
- The timing of any real estate purchases or sales (i.e. Would it be better if it was before marriage and your separate, pre-marital property?)
- Commingling of assets you earned before marriage
- The need to address marriage and divorce of in your partnership’s buy-sell agreement
- Using legal tools and structures to get pre-marital assets out of your own name and to make your interest in those assets legally distinct from marital property including savings, retirement plans and real estate
- Liability for your future spouse including both their professional liability and debt
Our next discussion later this month will provide additional specifics to address to make your future more secure and predictable. As always, remember that general articles like this are not legal advice and can’t replace individual consultations with your own advisors about your specific fact pattern.