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The “C” Word in business: Vital Issues To Consider With C-Corporations

April 19, 2013 by Leave a Comment

TAXESThe article linked below contains some simple and important issues to consider regarding the taxation of C-corps. As an asset protection attorney I’ve never been a fan of them because they are weak , if not defective from a creditor perspective as the shares can actually be taken from you as an asset and handed to a creditor in the worst cases, unlike an LLC as one alternative. 

We’ve even seen estate planners use them as the General Partner of a Limited Partnership. A disaterous result when combined with the scenario above that would actually put a creditor in control of the entity you might be using for defensive purposes and to which they might not otherwise have had any access.

When ever I talk to the owner of a C-Corp. the question I ask is typically, “Why do you have a C-corp. ?” and I an continually surprised at the very small number of people who can actually articulate a reason other than that was what their CPA or attorney suggested and always does. I’ll say that’s not good enough and you and your counsel should be able to articulate a reason and that they should provide you with a comparison like the one at the end of the article linked below.

Look Before You Leap from an S to a C Corporation

http://www.accountingtoday.com/news/Look-Before-You-Leap-Corporation-66407-1.html?ET=webcpa:e6974:134343a:&st=email

There are absolutely times when the C-Crop. is the best choice as in cases where they are established to give the owner of a closely held and profitable business access to certain kinds of tax personal deferral planning. Unfortunately that’s often not why it happened. As always, this is not tax or legal advice specific to you. Get expert personalized help when examining these issues.

Filed Under: Asset Protection, business survival, CEO, closely held business, dentists, Doctors, Due Dilligence, family business, FINANCIAL ISSUES FOR DOCTORS, financial literacy, high net worth, IRS, Legal Strategies, start-ups, startup, tax deductions, taxation, taxes, wealth transfer Tagged With: , , , , , , , , , , , , , , , ,

Asset Protection Trust Jurisdictions for Physicians – Part 1, Domestic

April 16, 2013 by Leave a Comment

law and money for doctorsIn our discussion two weeks ago we introduced the Asset Protection Trust (or APT) as a tool and answered some of the most frequently asked questions regarding what it is and how it differs from the estate-planning trust many doctors already have in place. We continue our discussion of the APT this week and examine the often argued and misunderstood issue of jurisdiction, that is, the place and laws under which the trust is created that ideally control any legal action with or against it.

The Options

The most basic division between choices is simple; APTs can be on-shore or “domestic” or offshore, typically referred to as “international” or “foreign.” Look for these prefixes to indicate this elemental distinction. Both DAPTs and their offshore or international (IAPT) counterparts share some common elements:

• They are irrevocable

• They must strictly comply with all legal, formational and operational requirements imposed by a specific jurisdiction and state so in their drafting

• They have trustees appointed to mange the trust and its assets

• Some require that the assets seeking legal protection are actually located within the jurisdiction and that an approved local agent, trustee or authority is appointed

• They must be set up and funded in advance of any claim or specific liability you want them to be effective against

• Neither structure is secret or tax free, despite what’s promised

• Both are usually ineffective against a current spouse when used in a legal way

There are a number of states that have created laws that allow the formation of a domestic APT or DAPT in their jurisdictions. This number has grown over the last few years due to consumer demand and the states’ realizations that they can generate significant fees as part of being in the trust business.

Among the most popular of the DAPT jurisdictions are Nevada, Montana, Delaware, and Wyoming but there are many others that have similar statutes. Experienced planners have strong opinions about which jurisdictions are best and why and should be able to explain the benefits and how they can effectively apply to you and your assets well beyond just, “Because we are in state X”.  

These trusts are typically less expensive than their offshore counterparts but are as yet untested on any wide scale and rely on the hope that, for instance, a judge in California with jurisdiction over a California defendant will refrain from trying to grab that defendant’s assets in Nevada because Nevada says they are in a special trust. This also unfortunately flies in the face of “full faith and credit” which essentially states that a judgment in any state is good and enforceable against a defendant and their asset in every other state. Large numbers of DAPTS have been established over the last few years in various jurisdictions by planners of widely varying skill for clients with questionable timing.

I’m a strong believer that “bad facts make bad law” and given the number of bad fact-planning cases that have been executed in the last few years, I feel it is likely that you will see many of these structures pierced. Although these cases should be judged individually on their merits, human nature makes it more likely that they will begin to be viewed as a group by the courts and either generally upheld or viewed as ineffective. Until that drama plays out I advise not be in the legal equivalent of a clinical trial.

Consumers must be wary of who they chose to work with for both DAPT and offshore-based planning. There are significant ramifications for making transfers to these kinds of vehicles including tax, estate, and fraudulent conveyance issues that you must understand or have counsel that does. Many recent entrants to the asset-protection business are applying form documents without a full understanding of their use and how it will affect your future defense, control, and use of those assets. Get personalized help from an experienced attorney who can help make sure that you are following the letter of the law to get any and every possible benefit the trust may provide.

Our next discussion on this issue will turn to the use of offshore asset protection trusts by doctors and the myths surrounding IAPT planning and its effectiveness.

 This article was originally written for and published by www.PhysiciansPractice.Com, The Nation’s Leading Practice Mgmt. Resource, where Mr. Devji is also a regular contributor.

Filed Under: Asset Protection, asset protection trusts, chiropractors, DAPT, dentists, doctor sued, Doctors, Domestic Asset Protection Trusts, FINANCIAL ISSUES FOR DOCTORS, financial literacy, HEALTH CARE LAW, Ike Devji, Legal Strategies, Medical Practice Management, physicians, recession survival, trusts, Wealth Transfer Strategies Tagged With: , , , , , , , , ,

Tax Scams: I.R.S Dirty Dozen Targets Doctors and Business Owners

March 25, 2013 by Leave a Comment

 BUSINESS AND MEDICAL PRACTICE OWNER LAIBILITY

With fewer than 60 days until tax time the annual 11th-hour tax planning rush by doctors is in full swing. The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter. “Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” IRS Commissioner Doug Shulman said recently. “Scam artists will tempt people in-person, online, and by e-mail with misleading promises about lost refunds and free money.” In other words, be wary of these scams:

 

 

Identity Theft

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund. An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized. 

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. 

Return Preparer Fraud

Most return preparers provide honest service to their clients. Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts, or nominee entities, using debit cards, credit cards, or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities, or insurance plans for the same purpose. While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requrements that need to be fulfilled.

“Free Money” from the IRS & Tax Scams Involving Social Security

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country.

False/Inflated Income and Expenses

Including income that was never earned, either as wages or as self-employment income in order to maximize refundable credits, is another popular scam. Claiming income you did not earn or expenses you did not pay in order to secure credits such as the Earned Income Tax Credit is a crime. 

False Form 1099 Refund Claims

In this scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return.

Frivolous Arguments

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

Falsely Claiming Zero Wages

Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

Abuse of Charitable Organizations and Deductions

IRS examiners continue to uncover the intentional abuse of 501(c)(3) organizations, including arrangements that improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or the income from donated property.

Disguised Corporate Ownership

Third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business. These entities can be used to underreport income, claim fictitious deductions, avoid filing tax returns, participate in listed transactions, and facilitate money laundering and financial crimes.

Misuse of Trusts

While there are legitimate uses of trusts in tax and estate planning, some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. IRS personnel have seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement.

 
 
Filed Under: CEO, chiropractors, cpa, dentists, Doctors, Due Dilligence, FINANCIAL ISSUES FOR DOCTORS, financial literacy, IRS, liability, Medical Practice Management

Medical Practice Liability Insurance Tune Up: The First Line of Defense

March 19, 2013 by Leave a Comment
law and money for doctorsWe’ve previously detailed both the most common fatal flaws in physicians’ asset-protection planning and the reasons insurance alone is inadequate to protect doctors. Those issues aside, insurance against known and recurring exposures is always the essential first line of defense.
 
As you’ve seen in this column before, it is unreasonable to think that we can adequately insure against any and every possible loss or liability to an unlimited amount, but we can catch some of the big and predictable ones. Below is basic list to consider, along with an expert, which can explain the details and gaps common to many policies.

1. Adequate liability and loss coverage. It’s important to not only insure your physical facility for liability but also for loss and in an amount that adequately covers the structure, its replacement, the improvements you’ve made, and the fixtures and equipment at actual replacement value. Work with a reputable company that has national claims service offices, which can be held accountable under bad faith jeopardy and that is experienced in insuring businesses like yours.

2. Employment practices liability insurance. We’ve covered the issue of employment and the significant exposure it creates for every medical practice with employees in several articles in the past. It remains the number one exposure most practices face and sexual harassment awards average over $500K.

3. Data breach insurance. Make sure you are protected against the loss, theft, or intentional misuse of patient financial and HIPAA-protected information. Be careful about the use of mobile devices, laptops, and tablets and make sure they are covered as well. Have demonstrable security policies in place and enforce them; in some cases liability is based on your proactive efforts, or a lack of them.

4. Directors and officers insurance, a.k.a. D&O. We’ve covered this in detail recently; many physicians, practice managers and executives face severe civil and even criminal liability for their decisions, acts and omissions. Make sure those that have such responsibility are adequately insured against this additional professional liability.

5. Workers’ compensation insurance. This provides coverage for an employee who has suffered an injury or illness resulting from job-related duties. Coverage includes medical and rehabilitation costs and lost wages for employees injured on the job. The law in most states requires some form of workers’ compensation insurance and this protects the employer by limiting an employees right to sue for further damages.

6. RAC audit insurance. Any business that bills Medicare, Medicaid, or a private health-care provider should be prepared to be audited and have payments denied or classified as over-payments at some point. Defending against such an audit and the ensuing manpower demands the massive record production can create is stressful and expensive. There is coverage available to handle the various costs and exposures involved.

This list is no complete but is a good start in examining the adequacy of your risk management plan. As this week’s column is devoted to the practice itself, I’ll save a discussion of the personal coverage so crucial to practice owners themselves for a future column.

Be aware, however, that life, disability, and long-term care insurance are increasingly vital parts of doctors’ planning that need to be implemented in a tactical way and are often an extension of the practice’s own risk management and continuation plan.

 This article was originally written for and published by www.PhysiciansPractice.Com, The Nation’s Leading Practice Mgmt. Resource, where Mr. Devji is also a regular contributor. He works with a national client base from his office in Phoenix, Arizona. His legal practice is devoted solely to asset protection and wealth preservation.
Filed Under: Asset Protection, business legal planning, business survival, dentists, Director and Officer Liability, doctor sued, Doctors, Employment law, FINANCIAL ISSUES FOR DOCTORS, financial literacy, liability, liability insurance, Medical Practice Management, physicians, risk management Tagged With: , , , , , , , , , , , , ,

HIPAA EXPOSURE GETS EVEN MORE ONEROUS – Medical Practice

February 22, 2013 by Leave a Comment

BUSINESS AND MEDICAL PRACTICE OWNER LAIBILITYAs we’ve discussed in several previous articles, insurance that covers corporate and executive liabilities in an essential first line of defense, including Data Breach or Cyber Liability Coverage for doctors. This coverage grew even more important on Jan 25, 2013 as DHS provided additional rules and liability for medical practices which go into effect on March 26, 2013.

The liability level for breach and exposure of HIPAA protected data gets even more serious this week. According to OH health care attorney Joe Feltes:

“Physicians need to dust off their old HIPAA policies and NPPs, review them with legal counsel, and update them to meet these new requirements aimed at safeguarding patient privacy in a brave new post health care reform world.”

The whole story is available here: http://www.mdnews.com/news/2013_02/hipaas-new-
563-page-mega-rule.aspx 

RELATED – See More Here:

Data Breach and Employment Liability Insurance for Doctors:

http://www.proassetprotection.com/2010/11/two-types-of-liability-insurance-your-practice-needs-and-likley-lacks/

Director’s and Officer’s Insurance for Doctor’s:

http://www.physicianspractice.com/blog/directors-and-officers-liability-insurance-issues-physicians

Filed Under: business legal planning, dentists, Director and Officer Liability, doctor sued, liability, liability insurance, medical practice mangement Tagged With: , , , , ,

Addressing Employee Liability Issues at Your Medical Practice or Business – 12 Month Practice Tune-up

January 18, 2013 by Leave a Comment

January 08, 2013 | Finance, Risk Management, Law & Malpractice, Staff

By Ike Devji, JD

Happy New Year and thanks for continuing into 2013 with us. In one of my last columns of 2012, I suggested that many of the complex issues we discussed together over the last few years in this forum can seem daunting when taken as a whole and that we would provide a series of guides to help you address major issues in a time- and cost-effective way. This article is the first in that series.

One of the greatest assets and largest liabilities any business faces is its employees. The average American business is five times more likely to face legal exposure by an employee than for another reason. And judgments for common complaints like sexual harassment routinely produce verdicts of $500,000. We continually see that many of the issues that arise and become adversarial or create significant legal and financial exposures for doctors result from a failure to plan and have adequate “risk management” measures in place. Risk management is the first line of defense as preventing harm or liability is almost always cheaper and easier than trying to correct it. This is also a great time to make some changes; employees expect that policies and procures are updated periodically, typically at the beginning of the year.

Issue One: Employment Manuals

A good employment policy manual, a.k.a. employee handbook, is one of the most basic and effective lines of defense and an indispensable management tool. The majority of medical practices out there have either no manual at all or worse, a form manual that is poorly drafted and fails for some reason. Many manuals in place are outdated in terms of compliance with current employment laws or have been borrowed from another doctor, sometimes in another state, and the laws around which they were drafted do not apply.

The common practice of borrowing another doctor’s manual of questionable value and simply cutting and pasting the name of your practice in to save a few dollars will almost always produce a bad result when it’s challenged. We’ve provided a specific resource and very specific tips from an expert in a previous article but a good manual will, as a minimum:
• Be drafted for your business and how it actually operates;

• Include a specific and legally enforceable conduct, confidentiality and discipline and termination policies; and

•Be specific to the current employment laws in your state.

Issue Two: EPLI Insurance

Employment Practices Liability Insurance (EPLI) is another “must have” tool. This very specific type of insurance is structured to help handle the cost of an employee lawsuit and may not only provide the costs of legal defense, which can easily be six figures on its own, but also provide some coverage in the event of a judgment. Like all insurance, its cost is based on underwriting and your past risks and exposures. The cost is very low and it will pay for itself the first time you have any need for an employment attorney in a controversy, based on my experience. In fact, in most cases a year of insurance can cost less than just a retainer required by a lawyer. Work with an insurance expert that can explain in detail the differences and gaps between different carriers and policies.

Issue Three: Workers Comp Coverage

This is another specialized area of insurance that requires professional guidance. Remember this policy is there to protect your employees from loss and injury incurred on the job, it’s also there to help avoid you and your practice for being help directly and personally liable for those losses and the financial and legal costs involved. I often see physicians trying to shop this on price alone. Don’t do that. This not only protects those who trust and work for you it also protects you by limiting their right to sue you for the harm in exchange for these benefits.

Issue Four: The Human Factor

As carefully as we plan, there is one exposure that’s very hard to prevent: the human factor. Always keep in mind that you are responsible for the workplace and the specific human interactions of the people in it, including employees, contractors, vendors, and even owners and partners. Intentional conduct or gross negligence are almost always going to cause you trouble and cost you money. Make this the year that you identify and fix specific behavior issues that create these liabilities or terminate those that cause exposure if they refuse to conform. Your business is at stake.

This article originally appeared at www.PhysiciansPractice.com and is used here with permission. Asset Protection only attorney Ike Devji has 10 years of practice devoted exclusively to Asset Protection and Wealth Preservation planning. He works with a national client base including 1000’s of physicians and business owners often through their local attorney, CPA or financial advisor. Together, he and his associates protect billions in personal assets for these clients. Ike also regularly writes, teaches and speaks on these issues to physicians and other professionals nationally.

Filed Under: business legal planning, chiropractors, dentists, doctor sued, Doctors, Employment law, FINANCIAL ISSUES FOR DOCTORS, HEALTH CARE LAW, Leadership & Management, liability, medical practice mangement Tagged With: , , , , , , , ,

Fatal Flaws in Doctors’ Asset Protection Planning

January 7, 2013 by Leave a Comment

During my practice with a client base of thousands of doctors I have seen the best and the worst of asset protection planning available to the American public as well as the most common flaws evident in both self-directed planning and plans executed by “professionals” who do not practice primarily in this area.

Below is the first part of a short summary of “fatal flaws” to keep in mind when addressing this crucial issue. Please bear in mind that information in forums like this is not specific to you, is written in the broadest terms and is never a substitute for consulting with an experienced professional:

1. FAILING TO ACT (Timing) — Asset Protection is best analogized to “net worth insurance” and like insurance you have the best, most effective and legally supportable options available to you when you implement the planning before a crisis exists. Transfer of assets into plans after you have specific exposures is costly, ineffective, and some cases illegal (fraudulent conveyance). The best time to act is always now and every day that passes makes your planning stronger.

2. THINKING YOU’RE NOT RICH ENOUGH — A sin I see committed on a weekly basis, often by professionals like lawyers, CPAs, and financial advisors. Advisors often tell clients that they are not rich enough to do any planning and that that they should have a net worth north of $5 million or even $10 million to consider it. Nothing could be further from the truth, especially if you are in the “fall” of your earning career. All you have is important to you and there are precautions that can be taken at any net worth level. When should you start? There are many simple ways to analyze this but here is an easy one, answer these questions:

• If you lost what you have today, or some significant portion of it, are you at an age, earning level, and financial condition that will allow you to maintain your family’s goals and expenses?

• Do you have assets that would be difficult or impossible to replace given your age, health, and economic conditions?

• Are you financially and legally prepared for a lawsuit that is either uncovered by liability insurance or which often produces verdicts above the limit you are carrying?

If you’re not comfortable with your answers, it’s time to take responsibility and action for your financial future.

3. RELYING ON YOUR TRADITIONAL ESTATE PLANNING — “I’ve got this covered, I think. I have my home, cars, and investments all titled in my trust.” This is something we hear often. The layperson usually feels that a transfer of these assets to a vehicle like an estate planning trust, like a Revocable Living Trust, is effective asset protection; it’s not. The first word in the trust is “revocable” and in most cases a judge will simply order you to revoke the trust and tender the assets for a judgment. That is death planning. What has been done about your life planning and the exposures you face every day practicing your profession, driving a car, having children (some driving your car), or having employees…?

4. TOO MANY EGGS IN ONE BASKET— Others implement a good tool like an LLC as a barrier between themselves and their investments, but fail to adequately segregate and subdivide assets so that they are protected from the owner and each other. A common example is the case of the property owner who has single LLC that is legally and financially responsible for a wide variety of properties that have different levels of liability, equity, and use. If you call and say you have $5,000 to 10,000 down on four new short sale properties in a single LLC, it’s probably OK, because your total exposure is theoretically limited to $20,000 to $40,000, the value of the LLC’s assets. On the other hand, if you call and say that you have seven pieces of real estate with a total equity position of six or seven figures, some paid for, some all debt, including a triplex, a lot, and a commercial strip mall, I’m going to start sweating on your behalf. Why? Because any exposure at a new, zero equity property could wipe out your entire portfolio of paid for or partially paid for properties. Assets must be divided based on use and equity as well as into the right kind of legal vehicle, among many other factors.

5. SQUARE PEG, ROUND HOLE — USING THE WRONG TOOL — Certain vehicles have great use for specific business functions supported by statute, tax law, and case history. You and your planner must have a good handle on these issues and know what pros and cons each entity presents, what the effect on your liquidity will be, and what it will take to maintain and support that stated business purpose as a start (Starting to see the detail required?). One good example is the common misuse of Family Limited Partnerships (FLP) to own the client’s personal residence. What is the legitimate business purpose of using a vehicle that is most often created for “family investment management and wealth transfer” to own the house you personally live in? If you’re not paying commercially reasonable rent, you don’t have one. The plaintiffs (or worse, the IRS) will successfully argue that you are using the FLP as personal piggy bank that is not legally distinct and immune from your personal assets and liabilities.

6. DRAGGING LIABILITY INTO YOUR PLAN — Similarly, we often see dangerous articles of personal property like your personal vehicles moved into this structure or others like an LLC or S-Corp. that is your primary business, or equally dangerous, into an entity like an FLP that is holding safe and attractive assets like cash, stocks, bonds, and other liquid assets. Think about it, if you lease or own your vehicle through your business, you have linked the most dangerous thing you likely do on a daily basis, drive a car, and linked it to either the source of your wealth, your business, or in the case of your FLP, the place you keep your wealth.

7. RELYING ON GIFTING TO RELATIVES (SEE ALSO FAILING TO ACT) — Transferring all of your assets to your spouse and/or children, especially after something has happened, will not protect your assets from a lawsuit and simply opens up another Pandora’s Box. There are thousands of lawsuits filed daily due to employment grievances, “slip and fall,” and auto accidents. Consider this scenario: Let’s suppose that you transfer all of your assets to your 18-year-old son who causes an auto accident. Several other cars are involved in the accident and several injuries are incurred. Chances are high that the other parties will come looking for the driver with the deepest pockets. If your son “owns” your house and business, a sympathetic jury will undoubtedly take the possession away from your son in order to teach him a lesson for his reckless driving. The same holds true for spouses, parents, and even friends. Also, gifting is limited to about $13,500 annually, per spouse, per donee. Gifts over that amount must be documented with a gift tax return. Failing to do so will result in you having to answer the question: “Are you lying now re: the date and validity of this transfer or did you cheat the IRS?” This is a bad place to be in a time of need.

8. USING UNPROVEN, POORLY STRUCTURED TOOLS OR SCAMS LIKE “FRIENDLY LIENS” — Another common scam I see is promoters of LLC mills setting up LLCs that you or a friendly party own and then having that entity record a “lien” against some valuable asset, typically real estate. While validly recorded and executed liens do have great deterrent power against creditors, they have to be backed by a real exchange of value. So if your brother-in-law owns a Nevada LLC that holds a lien on your home for most of its value, there should have been some exchange or “consideration” roughly equal to the amount of the lien. “Your sister has a $300,000 lien against the $400,000 home you live in? Uh, OK…then where’s the record of the $300,000 she gave you, as a bank would have in a real home equity loan? She didn’t give you anything in return? Great, we’ll take the house.”

This article just scratches the surface of what you need to consider when evaluating your exposures, asset protection planning, and the countless options available. Act today, seek experienced counsel, and keep looking for more light and information that will help you and your family keep and enjoy the fruits of your labors. Remember, it’s not just what you make; it’s also what you keep!
 

Asset Protection only attorney Ike Devji has ten years of practice devoted exclusively to Asset Protection and Wealth Preservation planning. He works with a national client base including 1000’s of physicians and business owners often through their local attorney, CPA or financial advisor. Together, he and his associates protect billions in personal assets for these clients. Ike also regularly writes, teaches and speaks on these issues to physicians and other professionals nationally. See his work in WORTH, Advisor Today, Physician’s Practice and at www.ProAssetProtection.Com 

As always, the information presented here is general and educational and can never replace the advice of experienced counsel specific to your assets or situation. This article originally appeared at www.PhysiciansPractice.Com where Ike Devji is a regular contributor, and is reprinted here with permission. This was originally published in Jan, 2011 and is the kind of material Ike has taught for a decade as an expert speaker and educator for medical groups.

Filed Under: Asset Protection, Asset Protection Fraud and Failures, dentists, doctor sued, Doctors, Ike Devji, medical practice mangement, physicians Tagged With: , , , , , ,

This Doctor’s Love Affair Became Malpractice

December 13, 2012 by Leave a Comment

A doctor gets a six figure award against him unanimously upheld by an appeals court. We can protect you against lots of things, but your own actions are sometimes our greatest challenge. See the whole story as reported on medline here: This Doctor’s Love Affair Became Malpractice http://www.medscape.com/viewarticle/775952?src=nl_topic

Filed Under: dentists, doctor sued, Doctors, malpractice, medical practice mangement Tagged With: , , , , , ,

Seven Ways To Survive a Business Cashflow Crunch – CEO/Entrepreneur/Startup

August 10, 2012 by Leave a Comment

Mark Johnson, B2B CFO

Over the last few years the concept of Asset Protection has greatly expanded to include not just the traditional threats like litigation exposure, but effective risk management on all fronts, including cash flow and other solvency related issues magnified by the economy. We’ve covered many of these issues here including those related to real estate, (see the index in the “articles” section of this website to read more).

The article below has seven simple and actionable tips to help preserve your business cash flow, today is always the right day to start. – Ike Devji

By Mark Johnson

In our current economy, the lack of cash flow has become all too common with small business owners. In normal times – when cash is plentiful and liquidity is good – there is less concern with the weekly cash requirements for payroll, vendors and creditors.

However as the downturn in the economy impacts more and more businesses, the need to manage cash flow has risen and now there is a necessity to find creative solutions in order to keep businesses operating as expected.

Here are some tips I have learned through my dealings with clients and other small business owners to maximize cash flow in difficult times.

1. Do not pay your suppliers until the due dates and, if necessary, go past the due date with the vendor’s concurrence.

2. Accelerate all accounts receivable collections through timely customer follow-ups on past due receivables. Consider something like a discount for cash payments made prior to the due date.

3. Renegotiate lease terms on both rent and equipment when you are in the last two-to-three years of a contract. Lessors would rather keep you in a longer contract at a lower rate than lose you as a client altogether.

4. Utilize outside consultants who work on a contingency basis to lower costs for expenses such as telecom, property and casualty insurance, etc. These arrangements allow for lower expenses and the savings is usually split with the consultant.

5. Reduce inventory levels and manage workflow production with a minimum of on-hand product for manufacturing.

6. Research your deposits paid over a year ago to utility companies in order to determine if the deposits are still required – there is a chance they may not be.

7. Defer principal and interest on outstanding loans with banks and other creditors.
Additional assistance and guidance in the area of cash flow management can be provided by your finance and accounting professional.

About our Guest Author:
Mark R. Johnson, MBA, brings more than 33 years of diverse financial and operational experiences from closely held small and medium size entities to large public companies serving as a CFO, CPA, and a Project Consultant. His background includes Senior Manager with a Big 4 public accounting firm, senior management positions with several Fortune 500 retailers, as the chief financial officer for a family owned $250 million retailer and two startup ventures here in Arizona as the chief accounting officer. Recently he served as the Project Lead Consultant on Sarbanes-Oxley internal controls documentation and testing for several casinos in Las Vegas and a $2 billion equipment leasing company in Scottsdale. He has also instructed accounting and auditing courses for post graduate students at schools such as Arizona State University and Western International University locally.

As a partner with B2B CFO for the past three years he has served small family owned business owners in diverse industries including, construction, healthcare, education, hospitality, variable print media, food manufacturing and auto glass repair with bank financing, budgeting strategic planning, due diligence and IT software integration. Mark has successfully completed the Certified Exit Planning Certification course and is consulting with business owners that need assistance and a plan to exit from their business now or in the future. Learn more about him here:

http://www.markjohnsoncfo.com/articles/

Filed Under: 2012 Economy, business legal planning, business survival, CEO, closely held business, dentists, Doctors, family business, Finance, FINANCIAL ISSUES FOR DOCTORS, financial literacy, recession survival Tagged With: , , , , , , , , , ,

Start-Ups: When Does Liability for Your Business or Medical Practice Begin? – Asset Protection

July 9, 2012 by Leave a Comment

The many discussions we have shared here have largely centered on asset protection and other legal and financial issues faced by physicians and business owners. The bulk of those discussions assumed that you own or run a business or medical practice. Due to the growing availability of financial and legal education resources available to business owners, doctors and practice managers and the increasingly demanding and onerous nature of the medical business I’m seeing something encouraging as an attorney: Doctors are starting to get serous about the business side of their practices.

I’m increasingly working with not only the seasoned practice owner or physician with a substantial and hard-earned net worth we’ve always worked with, but also young doctors ready to start their own practices and ready to learn and implement strategies that will help them build their practice and family wealth in a predictable way. This discussion could easily fill a book, but we will begin here and help you identify key issues and questions to help get you started on you way or consider issues that need to be refined in your existing practice.

Step One: Understand When and Where Your Legal Liability Begins

In most cases it starts before you even open the doors. Make sure you have a good handle on your personal overhead and existing debt obligations when creating your business plan and projecting start-up capital costs. Remember that you have bills to pay yourself and you must be able to meet both your business and personal overhead commitments for an extended period of time while your insurance contracting and billing cycles get ramped up. Many experts advise planning for 90 days to 120 days for revenue to actually begin cycling back to your practice at start up.

Understand clearly the nature of the debt you are incurring and what you are signing, whether for real estate or for a start-up credit line in some form. If buying real estate with partners make sure that the debt obligation is limited to your proportional ownership, and that you are not “jointly and severally liable” for the entire amount of the debt in one big pool. As an example, if you are going to own only 25 percent of the legal entity that owns the building, make sure you are only personally guaranteeing 25 percent of the debt. Likewise, if collateral is required for such financing, make sure the collateral you contribute is similarly structured as well; don’t provide an asset or full claim to an asset that has a value greater than your fractional ownership of the debt.

Relying on any promises or agreements not explicitly in the written agreement between the borrower and the bank is fatal. Even if you have a written agreement with your partners or in your partnership’s operating agreement that says you share debt and liability as owners, the bank will almost never be party to that agreement or bound by it in any way. They will collect on the obligation to the letter of the law and the contract in the event of a default. Consult with independent counsel that represents you only, do not rely on the representations of the attorney that works for your “group” if joining a new practice or starting a new one with partners. That attorney has a client and it is the corporation itself (or worse, their buddy who hired them) in most cases, not you.

Use your attorney’s counsel to determine the exact dollar amount of your personal guaranty liability. If you are married, consider this number carefully and make sure you understand the nature of the effect of this debt on your spouse and whether it affects your community property. Never “bet the farm” without checking with your husband or wife. Wherever possible we also advise language that specifies the debt is the sole responsibility of the physician or practice owner spouse.

Finally, figure out what assets you have that are currently exposed. This number can almost always be reduced and there are basic asset protection measuresthat can be part of nearly everyone’s legal planning regardless of net worth.

As always, the information presented here is general and educational and can never replace the advice of experienced counsel specific to your assets or situation. Another version of this article originally appeared at www.PhysiciansPractice.Com where Ike Devji is a regular contributor, and is reprinted here with permission.

 

Filed Under: Asset Protection, business legal planning, business survival, chiropractors, closely held business, commercial real estate, dentists, Doctors, family business, financing, Ike Devji, liability, medical practice mangement, physicians, start-ups, startup, venture capital Tagged With: , , , , , , , , , ,
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