The Must-Do Legal and Financial-Planning Items for Doctors

Here are some issues to consider that may help you prioritize and pick your battles.

As the end of the year rapidly approaches the volume of panicked calls to your advisors reaches a roar. Issues that have gone unaddressed by you since tax time now seem like an emergency and as I warned you about in previous columns, your advisors are busy with those who called first and taking time off with their own families as well. Not everything is an actual emergency and not all things that are actually time sensitive can be addressed in a competent way given the time we have left this year. Below are some issues to consider that may help you prioritize and pick your battles. The act of taking the first step and getting some positive momentum is vital. Don’t fall for the common lament of doctors, “I don’t have time to do everything so I’m going to do nothing”.

Gifting of Assets

There are two basic kinds of gifting; one is the gifting of smaller amounts of assets ($14,000 or less) that are below the annual gifting limits. The other is focused on giving larger gifts with the intent of wealth transfer and estate tax avoidance, especially for those couples with a net worth of more than $10 million or individuals with a net worth of more than $5 million. While I support this practice, look at and understand the numbers and their actual effect on you before you make it a year-end emergency. If your current net worth is $2 million or less as a couple or $1million as an individual, you have no real current  exposure in this area even under the worst case scenario for estate tax increases.

Get Your HR in Order

I cannot stress strongly enough how common employee lawsuit risk  is for doctors. I was recently asked to speak to members of a dental tennis association on asset protection exposures and when I got to the employment law section at least 25 percent of the dentists in the room had a horror story of their own. We’ve covered this issue in greater detail in the past but the core advice is simple; get a professionally drafted employment manual and EPLI insurance as the first lines of defense before another year passes. Year end is a perfect (and logical) time to upgrade and implement policies and procedures that make your office safer, happier, and more productive.

Max Fund Your Tax Plans

Work with a CPA and good financial advisor (I’m amazed that as many as 30 percent of you I talk to manage your own investments and tax planning with widely varying success). Tax rates are likely going up, including those on your passive investments. You need to start thinking about all the ways you and your family are going to keep more of what you make and act today. Don’t forget to include your CPA as many abusive tax plans focus on doctor marketing at this time of year.

Reorganizing Your Investments

I’ve seen a variety of financial advisors orchestrating a “fire drill” to churn some year-end activity and get people in the office. Yes, the pending changes in tax law and etc. certainly require discussion, but unless the discussion involves max funding your retirement plans or a specific time-sensitive opportunity it’s probably not an emergency. Note that time-sensitive opportunities may include the purchase of large amounts of life insurance, as sophisticate estate plans often include gifting of large amounts of cash towards premiums that you may be better off doing this year. Ask specific questions like, “Is there a difference between doing this now and in January?” Finally be aware that many scams targeting doctors are pushed through at the end of the year using fear and timing to pressure you. Don’t throw your caution and due diligence out the window.

Maximizing Deductions

Again, a great CPA is now more vital than ever to your success. Think about invoices you can pay or fixed, recurring expenses you can pre-pay now to get some additional legitimate deductions. If you are replacing or upgrading your computers, tablets, phones, or other electronic equipment make sure you understand how to safely dispose of them, they carry HIPAA-protected info and are a source of substantial risk if not handled properly.

This is general advice not specific to you but we do hope that it gets you thinking and helps you prioritize and vet the moves you should be making. Thanks for sharing another year with us and Happy Thanksgiving.