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Recurring versus reactive risks.
We continue our 2021 asset protection for physicians checklist, addressing both predictable, recurring risks and those that are timelier and more reactive to current events.
Despite earning relatively high incomes, physicians’ long-term wealth is not always predictable due to the wide variety of risks they face. Some of those risks are professional, some are personal and some are related to non-practice business risks, like investing in real estate or other active businesses. Our last installment was reactive to current, ongoing threats including election-related violence and business disruption, related employment law and medical partnership legal issues, and the need to be proactive about addressing the risks of social media. This week we examine five specific defensive steps to take.
The single most common asset protection mistake is still the most basic; doing nothing to protect yourself before something happens. In many cases this happens because an individual has been so busy working and accumulating wealth that haven’t ever taken the time to add up their exposed assets and consider the time and effort that was required to acquire them and what the effect of losing them would be. Review the simple self-exam I’ve previously provided as a starting point and add additional exposed assets based on your own fact pattern.
It’s important to consider all the issues that can threaten your wealth, not just medical malpractice. I’ve previously outlined some of the most predictable risks that many doctors face in list form, please take a look at it, especially if you think that professional liability is your only serious risk, and consider anything else in your life that should be addressed now.
Unfortunately, most people don’t have a good handle on what legal planning they have and if that planning actually does everything they need it to until it is tested in crisis, when it’s usually too late to do anything about it. While you are most likely relying on the professional skill of your advisors for the effective drafting of specific documents, one easy way to understand the scope of what your planning actually covers is to walk through my simple self-exam of some very common issues. Your planning should cover those basics as a bare minimum and will show you where to need to ask questions or have some additional work done.
Dollar for dollar, some of the most cost effective, predictable asset protection planning you can do as a doctor is buying all the right kinds of insurance at the right coverage limits. I take pains here to be clear that you need a comprehensive insurance ‘program’, not just an insurance ‘policy’ and as a minimum your personal insurance coverage should include:
Avoid shopping on price alone and ideally, work with an experienced, independent insurance agent thar can explain what the various polices do and do not cover and the specific coverage limits each provides. Beware of simple “yes or no” answers when you ask if you have coverage on practice liability issuesincluding employment law liability coverage, data breach and cyber liability, directors and officer’s liability insurance and RAC audit insurance, among others.
In many cases physicians discover that they are un-insured or under-insured on these issues and only have a “rider” on their medical malpractice policy of $50 or $100K, when it should be seven figures. Finally, think (and insure) outside the walls of your practice. Many physicians are owners, investors, or promoters in businesses outside their medical practices and may have professional liability from those sources ranging from service on a hospital or other business or private foundation board of directors to being the de facto CEO of a real estate investment company that owns an office building or some rental homes or a member of an LLC that owns a surgery center where she has a title like CMO, president, etc. All these issues require the same attention to detail.
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.