Ike Devji, JD

An unexpected side effect of COVID19 is a significant rise in identity theft and related cybercrimes. Here are the most common traps to look out for and a response plan in case it happens to you or someone you know.

We’ve covered a variety of risks related to the coronavirus from many angles, ranging from the need for you to reexamine your 

 coverage to the importance of having effective 

 the effects on your income and the economy. One risk we previously anticipated, but certainly not to the extent to which it actually happened, has been a spike in identity theft.

 are shocking; it happens every two seconds, has affected 30% of the U.S. population and affected over 14 million last year alone. Criminals have taken advantage of the chaos the virus has caused to both increase their traditional identity theft activities and to expand into newer areas including using your identity to fraudulent obtain unemployment benefits, receive PPP Loans, and take over your bank accounts and open new accounts in your name.

They get you to reveal your personal identifying information to them by phone, online, by text message or through some other form of “phishing” that often imitates a vendor, bank, etc. where you actually have an account.

Using malware to infect your computer or smart phone so they can get your passwords and other personal info or use ransomware to lock you out of your computers and files. This may include the use of malicious links and attachments in emails and text messages, asking you to call a fake customer service number, or directing you to a fake log-in page where you are asked to enter or “confirm” your information.

Getting you to send money to or make purchases from organizations that are not legitimate in one or more ways.

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There are a variety of consumer, security, and financial industry articles on this issue out there, but one of the most concise summaries of the COVID19 specific threats I’ve seen and one I’ve saved to share with my clients is from PNC bank. 

 Beware of fraudulent websites offering PPE, vaccines, testing kits, or other scare supplies at too good to be true prices. In some cases, they will bill but never deliver; deliver counterfeit, expired, or non-conforming goods; or simply steal the credit card info you enter.

 This goes both ways, so both remote workers and their employers should be vigilant about checking details like return email addresses and should verify any unfamiliar, private, or new email addresses with the sender by phone before disclosing any sensitive info, responding to payment or wire requests, or even clicking any links or opening attachments.

 of a real medical or health organization while selling products that falsely claim to prevent, diagnose, or treat COVID-19, or as a government organization claiming to provide information about COVID-19—such as contact tracing, heat maps, or infographics.

For most Americans, it’s a now question of when, not if, identity theft will affect you, a family member, or a colleague. Fortunately, the FTC has a 

—they make the identity theft reporting process very simple and provide a step-by-step 

checklist and online progress tracking system

, including an online report form you can fill out in just minutes, prefilled forms you may need to use with financial institutions and links to credit agencies, and others you will need to access and make reports to and get your credit report from.

Balancing medical industry work with a healthy private life

Call the company(ies) or government agency where they fraud occurred and file a formal report

Place a fraud alert on your credit report or “freeze” and get your credit reports

Report identity theft to the FTC using the website and get a report number

Review your credit reports with all three credit agencies and correct any mistakes and dispute any fraudulent reports or accounts (links at FTC website)

Notify banks of any fake accounts opened in your name

, JD, has practiced law exclusively in the areas of asset protection, risk management and wealth preservation for the last 16 years. He helps protect a national client base with more than $5 billion in personal assets, including several thousand physicians. He is a contributing author to multiple books for physicians and a frequent medical conference speaker and CME presenter. Learn more at

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Identity theft risk spiking with covid19

With the election around the corner the country may be in for some significant legal and political changes that can affect physician’s assets.

We’ve examined various estate planning issues for physicians from many angles including the 

. If the thought of your own mortality during the COVID19 crisis and the need to protect your heirs with an estate plan hasn’t prompted you to get an up to date estate plan in place already, perhaps this will. 

There are pending expected changes to the current estate tax exemption limits that will create an estate tax exposure for many physicians,the ‘mass affluent’, and ‘HNW’ categories.

I recently reviewed these issues with estate planner 

, a partner at the law firm of Davis, Miles McGuire Gardner* in Phoenix, AZ, who handles estate planning for HNW doctors and business owners. Mike shared some specific numbers, what the estate planning world thinks is going to happen and his concerns on why this issue should be considered 

If your current net worth is at or above $3,500,000, or soon will be, you should seriously explore whether you need to do some additional estate tax planning before the end of the 2020 calendar year. Failure to do so could result in a significant estate tax exposure that would reduce what you leave to your heirs being taxed by as much as .40 cents on every dollar (current rate assumed as carrying forward) over the exemption amount.

 (a.k.a. “death tax”) for 2020 is $11,580,000 

 that a married couple can pass to anyone they want free of federal estate tax exposure. That’s a big number and frankly, a good problem to have, but that is set to decrease dramatically in 2026, decreasing to $5,000,000. Some current lawmakers and political candidates are calling to lower it even further, to $3,500.000 (estate tax) and $1,000,000 (for gift tax). If there is a new administration in place following the November election, the decrease may be enacted even sooner; legislation passed in 2021 could potentially be made 

In plain English, you currently have a limited opportunity to transfer up to $11,580,000 double for married couple) of assets to one or more trusts that may not be subject to 

 estate taxes when you die. If you don’t act, that number could be reduced to as little $1,000,000 (double for married couple). This could result in a savings of over $4,000,000 (double for a married couple) in estate taxes.

Given these numbers, strategic gifting and sales to specialized trusts before the end of 2020 should immediately be considered by higher net worth doctors to take advantage of current high exemption rates, provide asset protection for the assets and to maintain the greatest degree of control and economic benefit possible, potentially including any 

 those assets currently produce. Planning strategies (fact specific, get expert help) may include the potential sale of gifting of assets to irrevocable trusts established for your spouse or children, including tools like ‘Spousal Lifetime Access Trusts’ (SLATs) or by using ‘Grantor Retained Annuity Trusts’ (GRATs).

These trusts hold assets outside your estate so they are exempt from estate taxes but can still be directed by you and/or your spouse subject to the terms established in the trust. Under current law, you are ‘grandfathered’ in and as long as the funds are formally transferred to a trust of this type before the exclusion amount changes, there should not be estate tax due upon death of the individual.

Those physicians to whom this discussion applies have typically put very significant educational efforts, labor, discipline and risk (and perhaps a little luck) into building their net worth. In many cases physicians say that one significant motivation for doing so is to provide a predictable future for their families, and in some cases that wealth can be multi-generational, invest in your legal planning accordingly. Please strongly consider your current and target financial position and planning needs now, while you can still act. I’m not the only person providing this information and top estate planners I work with across the country are already booked over a month out. Add the election, holidays and COVID related delays…the clock is ticking.

With the election around the corner the country may be in for some significant legal and political changes that can affect physician’s assets. 

Current legal, political issues effect physicians assets

Tax savings plans targeting doctors require careful due diligence. We examine some of the basics every physician should be aware of.

Our return to work after Labor Day marks the start of the 3rd quarter, when tax plans targeting doctors traditionally turn up their sales pressure. While I’m certainly in favor of you using all legal methods available to minimize income taxes, the abuse of legitimate tax plans by various plan promoters and their clients is common. It’s also unfortunately common that some plans that sound reasonable and that are presented by seemingly credible salespeople, 

We are also in the middle of both an election season that may bring significant changes to current tax laws and multiple economic crises that increase the need to retain as much of your income as possible. Promoters of all skill levels are acutely aware of all these issues and some may use that knowledge and the contentious nature of current politics to play upon your fears or their claimed affinity with your particular political beliefs. In the best cases they are merely playing on your emotions, in the worst cases they are engaging in actual 

that may center around tax planning or investments including currency trading and cryptocurrency. 

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No matter who you rely on for tax advice, it is vital that you always remember that you, the taxpayer, are the legally responsible party for the information contained in your tax return and the legality of any deductions or tax strategy you use. While some licensed advisors may have professional liability for any advice they give you, the taxes, interest, penalties, and potential civil and criminal legal liability are your problem, and your expense. Not only will you have to recover from an advisor for their errors and omissions separately, in some cases they become an additional legal liability, as I’ve previous detailed in several discussions on 

Check With the IRS First and Know The Dirty Dozen

Due diligence is vital, and the first place I look to is always the IRS itself. The 

 website has plain-English explanations of a variety of tax plans and the compliance details each requires. It also provides a 

 and identifies the worst plans that receive the greatest scrutiny both on the annual “

” of tax scams and on the larger and more detailed “

” list that should be an immediate red flag and indication that you need a second opinion if you see a transaction you are involved in described.

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I previously covered some of the details that can make a technically legitimate strategy like 

 into an abusive one and how well-meaning physicians can bring each other into harm’s way when sharing an “opportunity”. My friend and colleague, Jay Adkisson , added additional color to this strategy in a his recent 

 that details the negative attention they recently received from the U.S. Senate; it predicts rough seas ahead.

Similarly, captive insurance companies, and the 831(b) micro-captives that physicians in particular often end up in, continue to face scrutiny and the I.R.S. has actually sent 

 to micro-captive owners advising them to get a second opinion and come clean about any compliance issues and voluntarily pay what they owe. Essentially, “Don’t make us come get you”.

Finally, consider these questions about any tax promoter:

Are they a licensed professional like a CPA, CFP, attorney etc. that may have attorney client privilege on your communications and both a fiduciary duty to provide accurate advice and professional liability for failing to do so?

 for possible tax fraud like one or more of the following?

They require an NDA agreement and that you keep their “proprietary” advice confidential, 

They use questionable sales techniques emphasize emotional issues like politics and name dropping of the “rich and famous people” that use these “secret strategies” rather than identifying specific tax code, law and etc.

They are unwilling or unable to provide written materials about their strategy or to answer questions

Do they have specific training and experience beyond just sales and do they have a proven history with the strategy?

Tax savings plans targeting doctors require careful due diligence. We examine some of the basics every physician should be aware of. 

Tax savings plans targeting physicians require caution

Physicians doing business with family members as co-owners, investors, or lenders face a variety of legal and financial risks. This checklist outlines some of the most common issues every doctor should address to protect their assets and their relationships.

Our last discussion outlined some of the reasons that physicians routinely end up as defacto 

 and how a lack of formality in how that business is legally organized, managed, and owned often creates liability and intra-family conflict. This business relationship takes many forms including business loans to family members, hiring a family member to a run a business you own, being a passive investor in their business or co-owning a business or other asset (like real estate) with both capital and operational contributions.

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Regardless of the specifics, you have more to lose than just the money you invested up front. Consider the following business planning checklist the bare minimum and then apply your own fact pattern for any industry specific risks.

 While there are certainly many advisors that take the position that you shouldn’t do business with family members and should 

, many physicians do so out of both family obligation and in search of a return on their investment. If you are making a business loan to a family member, it’s important to carefully document the loan in a way that, as a minimum:

Memorializes the borrower’s acknowledgment of the amount of the loan and the repayment term or obligation

Addresses the minimum applicable interest rates and other terms of the loan required for the loan to be legitimate and 

Provides a security interest for the loan that can include a collateral interest in the business’ assets, income and receivables as well a personal guarantee from the borrower

Beware of Credit Obligations and Co-signing.

 In some cases you are lending your existing capital, in others you may be assuming debt obligations directly for capital or to finance the purchase of an asset or going business, either as a owner or partner or simply as a guarantor. Consider the risk carefully and be sure you understand if you are guaranteeing only a portion of the loan or if you can be collectible for the entire amount and if you are financially and 

Have a conversation about money, then write it down.

 It’s important that both parties explicitly understand their roles and the expectations about compensation and profits. If you have a family member running a business that you own as your employee, agree to a rate of pay and make that relationship formal and legally compliant with all tax, wage and labor laws. Conflicts often arise when an operator thinks their salary is a “draw” or that their labor includes an equity position because these issues were never clarified.

 As an owner or investor you need legal documentation of your interest in the form of LLC membership interest or partnership or s-corp. shares, etc. for tax, legal and estate planning purposes. Without this paperwork the business does not belong to you despite any understanding or agreement you think is in place and will go the estates and creditors of the business’ official owners. This is especially true if your family is unaware of the details. Co-owned entities also need operating agreements that outline the owners’ agreements on operation, governance and profit sharing among other details. Your brother-in-law merely recording the LLC for the motel that you financed isn’t enough.

 Not every relationship is forever and if your family business is a partnership it needs 

 just like any other that covers the basics like the ‘Five Ds’; the death, disability, departure, divorce or disqualification.

. Many family businesses end or suffer when an operating partner or key employee that manages the business for their physician partner dies or is disabled. Consider how and if the business would continue and 

 like key man and disability overhead insurance.

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The details of successful family business operation fill books and magazines. This covers only the most basic issues and can’t replace professional guidance about your facts that can help protect both your investment and family harmony.

A bare minimum checklist for your business.

Author | Ike Devji, JD

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