June 22nd 2015
Many of our clients are physicians. Doctors are vulnerable to malpractice lawsuits, often brought by avaricious plaintiffs’ attorneys. With approximately 17,000 medical lawsuits filed each year, most doctors will get sued at least once in their career, with plastic surgeons clocking in at number five, and neurosurgeons topping the list as the number one most sued doctor in the U.S. Malpractice suits are rampant and many times unexpected. In fact in a study done on medical professionals being sued, only 1% said they had expected it. This is why it is highly advisable for doctors to get an asset protection plan in place before the seemingly inevitable happens.
We have helped many doctors protect their assets effectively and avoid the mistakes that so many doctors are prone to make when it comes to asset protection planning. Here are five of the biggest mistakes that we continually come across:
5. Retaining too much control
Having control over one’s assets is a gut instinct. However, there is a certain inverse correlation between control and protection when it comes to asset protection. To effectively protect assets, trusts, and other tools which theoretically involve relinquishing some power over one’s assets, must be used. Unfortunately, the inability to ‘let go’ of control leads to a shabby strategy and vulnerability to creditor claims.
4. Underestimating the Benefits of Umbrella Insurance
Umbrella insurance is the first layer of protection a doctor should have. Although it won’t protect against malpractice, it can provide protection for other claims. Surprisingly, many do not take advantage of this basic and cost-effective protection. A common mistake is that clients purchase enough insurance to cover the value of their assets. The value of the assets has nothing to do with the amount of the claim. Insurance covers the risk exposure, not the assets.
3. Unqualified Professionals
Asset protection planning is a strategic game that picks and chooses different tools to build a solid and effective plan based on a client’s needs. It is important to use an asset protection attorney that is experienced, meticulous and has a strong track record. Anyone can read about how LLCs work. Many lawyers are well adept at setting up LLCs. But unless you have done it a few hundred times, how would they know when an LLC is appropriate?
2. Outdated Asset Protection Plans
It is very important to routinely update an asset protection plan to take advantage of changing laws, changes in client’s risk profile, as well as to monitor how assets are titled.
1. Waiting until it is too late
The biggest mistake doctors make is waiting until they are sued to get an asset protection plan. Unfortunately, trying to protect assets after a claim has been filed will most likely be termed a ‘fraudulent transfer’, making the planning ineffective.
Having and maintaining a good asset protection plan is essential in the medical profession. With the escalating number of malpractice suits filed every year, even the most careful physician is open to attack.