A 2020 asset protection checklist for physicians

December 16, 2019

12 simple questions about your planning that will help protect your assets, your business and your family.

Many doctors use their time off at the end of the year to address legal and financial planning issues for the year ahead.  Here are 12 simple questions about your planning that will help protect your assets, your business and your family.

I hope you are safely enjoying your office holiday parties and working on funding various tax and retirement plans with the help of experienced advisors before the end of the year. Much of that planning is being presented as time sensitive, and some of it actually is. That said, the number one asset protection mistake made by physicians remains a constant, doing nothing. Always consider both asset protection and estate planning to be time sensitive. Many risks can only be mitigated before they actually occur, when it is legal, predictable and most cost effective to do so. This plain-English list of some common legal planning exposures will help you identify issues to resolve for a safe 2020 and a predictable future.

These are partial lists of some of the areas where we most commonly see surprises and exposures. They are not complete or specific to your fact pattern and should be considered a starting point to review with your own advisors.

Business Asset Protection Issues

1. Does your medical practice have an appropriate and legally compliant corporate formation? Is it missing any other required documents like state specific employment manuals and written policy manuals on legal compliance issues like drug-based treatment and computer disposal?
2. Are you properly insured with all the right kinds of specialty liability insurance? You need a plan that adequately covers common exposures like HIPAA/data breaches, employment law issues, payor audits and other issues that your medical malpractice coverage policy either limits or excludes.
3.  Do you have both personal and business income protection? If either you, an employee or a partner that produces income required to meet your fixed overhead were to be disabled, how long could your medical practice pay its recurring expenses (i.e. rent, salaries, insurance, etc.) without you either working or contributing your personal savings to keep the practice open?
4. For those in medical practice partnerships,  do you have an up to date to buy-sell agreement that is funded with all required life, disability, and other insurance? Does it cover the “five Ds”: death, disability, disqualification, departure, or divorce of any partner?

Personal Estate and Asset Protection Planning Issues

Many physicians with estate plans in place are often walked through a “process” of answering questions without a good understanding of the details. We look at some of details to consider here, along with some asset protection basics. 

1. Do you have a personal liability umbrella insurance policy of at least $1MM?
2. Do you know all your risk factors, beyond your medical malpractice risk, and do you know your target value and what assets you have exposed? 
3. Have your personal assets and passive investment streams been legally organized to be distinct from you and protected from your professional or personal liability?
4. Do you have an estate plan? Is it up to date, signed, funded and are your heirs aware of it? Are your instructions and the people you left in charge as guardians and trustees still appropriate?
5. Does your estate plan properly protect your estate and heirs from both your current liability and their known and unknown creditors, future spouses and etc.?
6. Is your spouse part of your relationship with essential legal, tax, and investment advisors and are those advisors adequate to provide the help they will need?
7. Are your adult children financially literate enough to handle the assets you may leave them, or will they need help and controls? If they are minors, are the guardians and advisors that your estate plan names adequately skilled and dependable?
8. Do you need life insurance? Is the amount of wealth and income your family would have if you were gone tomorrow adequate to provide everything you are working to provide for them now?

Ike Devji, 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 www.ProAssetProtection.com.