“We’ve had doctors who have committed egregious malpractice, and we find out through discovery they’re uninsured. We know that if they have a good asset protection plan, you’re not going to touch it. You’re just spinning your wheels.”Bill Ruggiero, Plaintiffs’ Lawyer
Board Certified Civil Trial Attorney
Asset protection for doctors is a critical component of financial planning. The law does not provide protection for personal assets against a physician’s professional liability. That’s the opposite of most other types of enterprises. In most businesses, entrepreneurs can theoretically limit the exposure of their personal assets against business risk by using a traditional business entity (e.g. an LLC, LP, or corporation). If the business incurs a liability or is sued, the business entity provides a theoretical firewall between that liability and the entrepreneur’s personal assets. The same is not true for doctors, dentists, chiropractors, or even attorneys.
Asset Protection for Doctors is Critical
Asset protection for doctors is important because it effectively provides the missing firewall between personal assets and professional liability. Again, traditional business entities can’t provide that level of asset protection for physicians or medical practices. They work fine for non-professional liabilities like equipment leases or employee contracts, but only a good asset protection strategy can protect a doctor’s wealth from professional liability for malpractice.
Other Benefits of Asset Protection for Doctors
Some other benefits of asset protection for doctors include increased privacy and the ability to reduce (or in some cases eliminate) malpractice coverage.
In terms of privacy, you’d likely be amazed at how much publicly available information exists regarding your assets. Asset protection planning helps streamline your public profile, and it goes a long way toward keeping your assets “under wraps” through the use of specific legal tools that make them undiscoverable if a plaintiff’s attorney ever does an asset search on you.
Does Asset Protection Planning Negate A Physician’s Need for Malpractice Insurance?
I’m a fan of professional liability insurance. Malpractice can be a very good thing, even if it is expensive. In some cases, however, the cost just simply outweighs the benefit. That’s especially true if you have a good asset protection plan in place to shield your personal wealth. Whether or not you should carry malpractice coverage is a personal decision, but I recommend that Florida physicians always carry at least a minimal amount of coverage.
Why?
Because of the three strikes law embodied in the Florida constitution, as an example. You can read it here. While asset protection planning for doctors is good at protecting wealth from lawsuits, it can’t protect your medical license. By having a minimal amount of insurance coverage, you buy a defense in the event that you are sued. At the same time, you create incentives for potential plaintiffs to settle claims quickly and on fair terms. Otherwise, they risk getting nothing if they proceed with a lawsuit. That’s the power of asset protection for doctors. Plaintiffs’ attorneys won’t want to pursue you just to see you “get a strike.” They are in the game for money. So the best defense you can mount is an asset protection plan specifically formed for doctors combined with some amount of insurance to ensure that the cost of any necessary legal defense is paid by the insurance company.
Logistics of Asset Protection for Physicians
The nuts and bolts of asset protection for doctors typically consist of a domestic limited liability company that is wholly owned by a portable offshore trust. Your personal wealth (i.e. cash, stocks, bonds, precious metals, investment real estate, etc.) goes inside the plan, which you completely control (and yes, you can trade and invest freely within the plan). If a lawsuit or other claim is asserted against you after an asset protection plan is created and funded, you have the option to move the entire plan (and your liquid assets) offshore and beyond the reach of plaintiffs’ attorneys in the United States. That’s the ultimate form of protection.
If asset protection planning sounds good to you, give me a call today so we can discuss the logistics of creating a strategy for you now: (850) 803-1166.