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How To Document Property Damage Claims at Your Business or Medical Practice: Asset Protection

Slide1As we’ve seen across the United States over the last year, severe weather, disasters and even intentional acts of vandalism can cause financially devastsing  property damage. Below are tips on how to document and pursue claims with your insurance company to enforce your rights under your  property and casualty policy.

• Step One: Actually having adequate insurance

Check on your property damage dollar limits to make sure they are adequate for the actual value of the building (and its contents) and make sure you understand important policy details like the difference between replacement cost (the dollar amount needed to replace a damaged item with one of similar kind and quality, without depreciation) and actual cash value (which pays only the amount needed to replace the item at its current market value).

• Step Two: Document everything — this is now a legal issue

As is reasonably possible, document the damage to your structure including an inventory of any damaged items you can immediately spot, including medical equipment, fixtures, signage, and office equipment, as well as documenting any appointments that had to be cancelled and other loss of revenue opportunities related to the damage. Write it down at the time so your recollection is fresh and accurate, and support that writing with pictures, video, etc. If you have a smart phone you have the ability to do this at all times.

• Step Three: Protect the property

Most polices have language that requires you to take reasonable measures to prevent further damage after it has come to your attention. This may include addressing covering damage in roof, walls, doors, and windows with temporary shelter. Your insurance policy may exclude further damage to your property if you have not taken reasonable steps to secure the property. Your insurance company will generally reimburse you for all reasonable costs to protect your property, so document everything and keep receipts for all expenses. Avoid any possible permanent repairs and major expenses until your carrier’s claims adjuster has assessed the damage.

• Step Four: Report the claim

Call and report the damage to your insurance agent or representative to start the claim process. Get a claim number issued immediately so you are in the system and have something to refer to on all future calls and correspondence; without a claim number you do not exist. It is vital to document everything. Keep a written log of all phone calls and correspondence, including the names of the people you spoke to, their telephone extensions and e-mail addresses and make copies of all correspondence sent to or received from your insurance company. Many insurance carriers intentionally obfuscate contact numbers and provide an endless maze of dead-end fax and phone numbers, in an effort to delay timely processing of claims, or “paperwork you away.” So if an insurance company employee or adjuster gives you such numbers to use, try to get them in writing.

• Step Five: Demand an adjuster and complete any forms they require

Your insurance company may use a “proof of loss” form or will simply have you make a formal verbal statement on the phone that may be recorded. You are not a contractor; so don’t give opinions on the scope of the damage, costs, and etc. It will likely be used against you later, if you do. Report the damage you’ve been able to see, any remediation you’ve had to perform, and any help you need with further remediation. Inform them you’ve documented the claim with a list and photos. The adjuster should perform a thorough evaluation of the damage, so check their inspection report, when it happens, against your own list to make sure they haven’t intentionally or accidentally omitted any losses. If the adjuster is unable to complete a thorough inspection due to time constraints he may be forced to “scope the loss.” This is a brief inspection of the damage with a second visit necessary to complete the inspection.

If your carrier gives you the run around on any issues, does not timely respond, or most likely, fails to make you an adequate settlement offer, report the issue to a claims manager and support your case with documentation, estimates, and the photos you took. You have specific rights under the laws of the insurance codes of your state; know them. They are typically easy to find on every state’s department of insurance website and will spell out your rights and the carrier’s legal obligations in plain English.

This article originally appeared at www.physicianspractice.com where Ike Devji has written over 135 articles on buisness law, risk managment and asset protection for doctors. 

Arizona Asset Protection Attorneys Featured at 17th Annual Wealth Protection Conference, May 2014

Attorneys Charlie Davis and Ike Devji will be speaking at the 17th Annual Wealth Protection Conference on May 9 and 10 in Mesa Arizona.

From Left, Attorneys Charlie Davis and Ike Devji

From Left, Attorneys Charlie Davis and Ike Devji

Topics covered at the conference will include:

How To Protect Your Assets For Generations,   How to Safely and Legally Use Offshore Trusts and Banks,  Common Fatal Flaws and Misconceptions That Cost Successful People Everything,  Asset Protection Blueprint,   Estate Planning Tips,   Must Have Assets for 2014, Tools To Help You Put Your Business Into Hyper Growth Mode, Profiting During the Impending Dollar Collapse,   Where Energy is Headed & How to Profit, Taxpayers Rights and Abuse Prevention.

Take a look at the Conference website at www.wealthprotectionconf.com and sign up today to secure your spot. If you want to bring a colleague, spouse, child, or a friend the price of a second ticket is half price.

Charlie Davis is the founding partner of Davis Miles McGuire Gardner (DMMG) in Tempe Arizona and has decades of experience in dealing with business owners and other successful Americans on issues related to real estate, tax law and advanced business planning including Asset Protection.

See more on Charlie here: http://www.davismiles.com/attorney/charles-e-davis/

Ike Devji has over a decade of national legal practice devoted solely to Asset Protection and Wealth Preservation and helps protects billions of dollars in personal assets for client base that includes thousands of businesses owners and physicians among others. Ike joined Davis Miles McGuire Gardner earlier this year to help create formal practice groups in theses areas.

See more on Ike here: http://www.davismiles.com/attorney/ike-z-devji-j-d/

About the DMMG Asset Protection Practice group:

http://www.davismiles.com/practice-areas/asset-protection/

 

 

 

Lawsuits Against Doctors Are For More Than Just Medical Care Delivered

PHYSICIAN AND HEALTHCARE EXECUTIVE LIABILITYGetting back to the asset protection roots of our discussions, today we examine a variety of liabilities for doctors that are not strictly related to the “standard of care” at the center of most malpractice claims.

If you joined us last week, we discussed so-called “defensive medicine” and the idea that limiting diagnostics based on what third parties want to pay for can lead to tragic results for patients and their doctors. There’s a logical nexus between the most common cause of medical malpractice lawsuits and the issue of what is subjectively enough diagnostics and testing. Approximately 35 percent of all such claims are related to “failure to diagnose” including the closely related claim of “misdiagnosis,” according to a 2013 medical malpractice study.

RELATED:  So-called “Defensive Medicine” is often Good Medicine and “Best Practice” for Doctors http://www.proassetprotection.com/2014/03/defensive-medicine-is-often-good-medicine-and-best-practice-for-doctors/

As serious and obvious as this exposure is to doctors, the actual care delivered is only one of many reasons that patients sue doctors. Below we examine some recent examples that range from shocking to arguable, but in most cases, it is actually the doctor’s fault.

In one recent case that displays a shocking lapse of judgment, a California anesthesiologist put stickers on a patient’s face to make a mustache, gang tears, and etc., during surgery. Upon being shown the photo, the patient sued and her lawsuit seeks damages from the hospital, the anesthesiologist, and his entire medical group for violation of privacy, infliction of emotional distress, and other allegations. Her attorney said the plaintiff was forced to leave her job ordering and maintaining supplies for the hospital’s operating rooms because she was “ridiculed and humiliated while under anesthesia.” While this may seem funny, I know plenty of attorneys that would use an incident like this as de facto evidence of the surgical team’s ineptitude in the event of any adverse patient outcome (fortunately, not a claim here) and I’d bet plenty of courts would agree.

An even more egregious case is a $1.5 million suit in Cook County, Ill., that names Dr. V. Puppala, the Feinberg School of Medicine, and the Northwestern Memorial Hospital. A patient is claiming invasion of privacy and infliction of emotional distress according to court documents. The patient was allegedly admitted to the hospital in extremely intoxicated condition and was then allegedly photographed by the attending ER physician who photographed her crying, passed out, with an IV, etc., and then not only posted her pictures on social media but later refused to take them down when requested to do so by hospital security. The plaintiff patient is a Northwestern student that had the “potential to someday work for Fortune 500 companies, which may now not occur because of said photographs,” according to the complaint.

In perhaps a more defensible case, a New York physician was sued by a patient for testing her for HIV and telling her she had it without her express consent. The treating physician was concerned about her white blood cell count after her condition failed to improve despite continued treatment and he had blood drawn and had the test done, presumably to protect her health. Unfortunately, this is a case of “strict liability” as New York law requires specific informed consent, counseling after testing, patient education, and a litany of other conditions that control how this testing is administered, regardless of the doctor’s actual intent. Given the patient’s history of non-compliance, the idea that she would have gone through all the required steps is frankly ludicrous, but I imagine a “failure to diagnose” claim would have followed in the future had he not acted and had her condition continued undiagnosed. What’s the right answer? Hard to say in case like this, perhaps having her sign a strongly written (i.e. by a healthcare lawyer) waiver of the test would have helped.

No compliance plan can protect doctors where shocking conduct, lack of common sense, or a failure to follow state law controls the claim. As always, effective asset protection for doctors involves doing the right thing in terms of policies, best practices, insurance and legal structures, and compliance for all medical personnel in the chain of care including staff and enforcing the same for your physician partners, who hold the future of your practice in their hands as well every time they see a patient.

Income Tax Deductions Doctors and Business Owners Often Overlook

CPA TJ CASEY

CPA TJ CASEY

As tax day bears down on us with increasing momentum, I turned to a CPA for some tips on commonly overlooked deductions. As always, legal and tax advice given in this forum can only be general information and can never be considered individual tax advice, so discuss these issues with your own CPA now, while meaningful discourse and even some legal tax avoidance planning is still possible.

CPA TJ Casey is experienced in working with doctors through his firm TJ Casey CPA in Mesa, Ariz. and shared the following tips. Hopefully you have your own great CPA that you can turn to and who is helping your practice stay on schedule with its own business-planning calendar.

Here are Casey’s tips:

• Take advantage of reduced income tax from participating in employee-sponsored retirement plan, generally 401(k) plans.

• Keep track of your personal medical expense deductions for possible deductions on state tax returns. Many people don’t bother to keep track of medical expenses due to federal ceilings being so high that medical is generally disallowed. For instance, in our state, Arizona, all deductions for this expense may be allowable

• Take advantage of any available state income tax credits — allocating your tax dollars to working poor, private schools, and public schools; in some states to the tune of about $2,800 each year.

• Mileage deductions for self-employed doctors and practice owners. Most people don’t keep a log, and end up not being able to justify a deduction that could be a $0.55 per mile deduction depending on your state of residence.

• Not reporting when you should. Failure to report foreign bank account and security ownership (including through trust and other legal entities) can cost a doctor up to 50 percent of the account value if discovered by the IRS.

Note from Ike: Although we have discussed the use of a variety of offshores tools by doctors in this column and I personally use them with thousands of clients nationwide, all such tools are tax neutral, and are fully reported to the IRS. The penalties for abusing these tools, as many doctors are prone to do, (often at the suggestion of unskilled or unscrupulous tax plan salesmen and financial advisors), are exceptionally onerous and carry fines of hundreds of thousands of dollars and multi-year jail sentences. Full tax disclosure means never having to say, “I’m sorry.”

• Missing Alternative Minimum Tax (AMT) credit carry forwards and missing other tax attribute carry forwards like loses from previous years you may not have been able to fully use then.

• Misreporting issues like failing to properly report debt relief income from real estate transactions like short sales or other write-offs where you escaped the full liability of financing debt.

• Paying unnecessary penalties for failure to properly and timely pay estimated tax payments (do your really want to leave a tip?)

As Casey explained to me, none of this individually may be that exciting from a numbers perspective, but not letting a number of these things get away from you has a substantial cumulative effect.

Given the time of year and the damage severe winter storms have done to many parts of the country I discovered a few other timely and important deductions to consider:

• Deductions for damages and losses due to disaster (and theft and other losses). Again this is fact-specific but we’ve seen large numbers of practices affected over the last few years by tornadoes, hurricanes, and now severe winter storms. Those in official federal disaster areas get some level of automatic qualification, but get professional advice and don’t try to deduct things that actually weren’t a loss (i.e. normal wear and tear) and for which you may have been fully reimbursed by insurance, as one prohibited example.

• Deductions for caring for a parent or other dependent individual. The IRS may allow you take a specific deduction of up to $3,000 known as the “Dependent Care Credit”  for the care of a parent or other individual that meets certain minimum qualifying criteria and who is incapable of caring for themselves.

• Deductions of a variety of common and recurring business expenses including:

• Financial advisory and financial management fees including bank fees of various types;

• The cost of last year’s tax returns;

• Property taxes you may have paid on any time share property (doctors love these); and

• Qualifying personal and business legal expenses.

Again, please explore these issues only with professional tax help in the context of your own business and personal tax returns.

This article originally appeared at www.PhysiciansPractice.com , the nation’s leading practice management resource, where Asset Protection Attorney Ike Devji has written over 125 articles.  See them here: http://www.physicianspractice.com/authors/ike-devji-jd

CPA TJ Casey has experience ranging from estate planning services coordinator in a local law firm to “Big 4″ and local public accounting. He provides his tax clients an added benefit with his extensive background and experience in estate planning both from a tax and trust administration perspective. TJ graduated from Arizona State University with his Bachelors Degree in Accounting in 2001 and Masters Degree in Taxation in 2002. He is a member of the American Institute of Certified Public Accountants, the Arizona Society of Certified Public Accountants, and is a current member of the Board of Directors for the East Valley Adult Resources Foundation. In his spare time, TJ enjoys fishing, camping, attending his children’s sporting events, and playing guitar in a Phoenix based rock band. Learn more about him at: http://tjcaseycpa.com/

“Defensive Medicine” is often Good Medicine and “Best Practice” for Doctors

PHYSICIAN AND HEALTHCARE EXECUTIVE LIABILITYAsset protection for doctors is the main focus of this column (note: this article originally appeared at www.PhysiciansPractice .com, The Nation’s Leading Practice Mgmt. Resource) and we’ve examined it from many angles over the last 100+ articles I’ve shared here. Today, we examine the issue of defensive medicine, much decried by politicians and insurance companies and the role a thorough diagnosis, free of fear of such claims by a third-party payer, plays in good medicine and your own risk management plan.

The inappropriately deemed “common wisdom” regarding medical malpractice lawsuits and the overuse of diagnostics due to so-called defensive medicine is something like this:

1. There is a national medical malpractice lawsuit crisis;

2. Doctors run too many unnecessary tests to avoid being sued;

3. These tests have little medical value and are not necessary or reasonable to providing good care; and

4. It is because of this so-called abuse that healthcare and insurance costs are high, fewer medical procedures including testing can be covered, and your compensation must continually be reduced.

This is an admitted oversimplification of the arguments from both sides, but it seems to me that the loudest opponents of this standard of care regularly fall into two primary categories: marginally informed politicians looking for a hot button issue to trumpet and insurance companies and their lobbyists and publicists. It’s my opinion that neither of these groups have effective diagnosis, treatment. or doctors at heart.

I have worked with a national client base of several thousand doctors for 11 years and have seen every imaginable form of liability you can imagine. If you’re a regular reader of this column you know I take the threat to your wealth posed by litigation very seriously and have repeatedly addressed the threat of medical malpractice lawsuits in particular, so let’s assume that I agree you are at risk; in fact most of you will statistically face such a claim twice in your career.

Now, let’s look at the fact pattern behind a vast number of medical malpractice claims, a majority of which (some 35%) center on either “failure to diagnose” or “misdiagnosis” claims by plaintiff patients or worse, their surviving family members. We don’t need to look far for examples. I get news updates on medical malpractice claims, settlements, and lawsuits several times a week and cases like the recent failure to diagnose a bone infection in Texas  that lead to a suit against an orthopedic surgeon, the death of a six-year-old child in Dallas after his internal injuries were misdiagnosed as constipation and treated with enemas, and the misdiagnosis of lymphoma in Louisiana as an infection that was treated with antibiotics and which led to the patient later needing surgery and radiation are common. In the latter case, the lawsuit included claims for damages including, “medical expense, physical pain and suffering, mental anguish, economic loss, diminution of earning capacity, disability, fear of death, scarring, disfigurement and loss of enjoyment of life”. What else do these three cases have in common? They are all from the headlines of the last one week.

I’m not a doctor and my knowledge of the cases is limited to the reports I’ve shared, so humor me and assume that the facts in these are accurate as reported. I am, however, an attorney and I know many other excellent attorneys, including the ones that sue doctors (and everyone else) for a living, here’s a little of what they’ve shared with me:

• Yes, is there is a pool of crooked attorneys out there churning frivolous cases and looking to scare and extort settlements out of any poor doctor they can get their sights on;

• This group is relatively small and spends most of their time on lower level cases that are typically settled or relatively easier to win, like conventional personal injury, dog bites, car accidents, slip and falls, etc;

• The best (meaning most successful and highest recovering) medical malpractice attorneys play to win and hedge their bets by carefully screening cases. They invest significant amounts of time and actual dollars in fronting costs for many claims and don’t usually take cases they don’t think they can win or which are at least strongly arguable as to causation in their client’s favor; and

• A key element of their claims is often related to the testing that could or should have been done to prevent further distress, or worse, to the patient. This standard of care is easily arguable both ways and poses a significant risk to your career and solvency.

My advice to doctors given these fact patterns is simple: Practice “defensive medicine” that puts the full range of modern diagnostics at your patient’s disposal. Its good medicine, good risk management, and the life you save may also be your own.

 

LIfe Insurance for Doctors and Business Owners – Key Due Dilligence Questions for Buyers

LIFE INSURANCE STRATEGIESThe last two weeks of the year is high selling season for life insurance polices as doctors rush to fund various retirement plans and as advisers take advantage of year-end wealth-transfer opportunities and favorable deals sometimes available from insurance companies. Knowing the right questions to ask about an insurance policy is a key issue for physicians, especially considering the significant investment often involved and the exit costs involved in buying a lemon.

Covering all the options and nuances available in the life insurance marketplace in anything less than book form is nearly impossible. The following are core concepts to be aware of that are the most basic and generally applicable.

What is my annual premium and can it change?

This is the amount the insurance will cost you every year. In some case this number is fixed and in other cases it can change based on variety of factors such as the performance of the stock market and other indices. Make sure you understand your obligations and what you will lose or be left with if you don’t make what the policy expected and what was actually illustrated.

Show me the policy illustration.

I see lots of bold promises and spit-ball estimations of future performance made by advisers. The policy illustration is all that matters, so any conversation about what could happen if the policy exceeds the expectation that the illustration creates is moot; don’t engage in it and instead ask about the “minimum guarantees” if one exists at all. That’s the minimum you’ll earn in the policy if the worst happens. Remember, the column on the far right in most illustrations is the “perfect world” scenario, so look at and have the others explained as well.

Does this policy have a cash value?

The cash value is the amount of premium that builds up inside the policy and that may be available to the policy owner in the future. Some policies, like term insurance, have no cash value, while others have it immediately and some build it up over time. Be clear if yours does and exactly when it will be available if you need it and under what terms.

Is my policy protected from creditors?

We’ve covered the tactical use of high-cash-value insurance with this feature before. Know what the laws in your state of residence are and if your policy and both the cash value and “death benefit” (dollar amount paid upon your death) is protected by law or not. Asset protection of liquid assets is always a key focus of my concern. If the law is not in your favor, some simple trust planning can often protect your policy from both estate taxes and more active threats.

How long will my policies last?

Again, this goes back to the illustration and specifies how long the coverage will be in place at a specific cost and what the death benefit will be through the term of the illustration. In some cases, keeping the policy alive may have significant increased costs while in others you may be able to reduce the death benefit to keep the premiums level or to stretch the policy for a longer period of years. Find out how flexible your policy will be in the future and weigh that as part of your risk-and-liquidity analysis.

What’s my exit strategy?

Find out what happens if you can’t or don’t want to continue to make premium payments. With term insurance you usually lose what you paid; that’s OK, think of it the way you might car insurance. Other policies that were structured to have a future cash value or that have a current cash value early on however may have significant “surrender penalties.” Know what happens if you walk away and what options the policy may provide, including the specific surrender penalties that may be imposed in the policy. The carrier could, for instance, keep all the cash value you built up if you don’t keep it for a minimum number of years.

 

This list just scratches the surface and is deceptively simple. Our goal here was to introduce some of the key concepts and questions you must be familiar with, so you can do your own due diligence on when buying life insurance, whether a simple term policy or a complex premium-financed strategy with a triple-reverse galactic split dollar that includes a trip to the Bahamas to read the policy.

My thanks to Jeff Christenson, president of Christenson Wealth Management in Phoenix, Ariz., for his significant contribution to my education on these issues.

Arizona Asset Protection Lawyer Ike Devji in Financial Consultant Magazine

IKE DEVJI FEATURED IN FINANCIAL CONSULTANT MAGAZINE

Attorney Ike Devji was recently featured as an author in the premier issue of Financial Consultant Magazine.

Ike’s article, “The Growing Role Of Financial Advisors – Asset Protection” takes a look at the financial devastation that many successful professionals experienced over the last few years and the role that top advisors must play in helping their successful physician, business owner and executive clients keep their wealth.

The link below provides the article in it’s full original form, and provides details on what went right, what went wrong and how some people have even managed to prosper during this challenging time.

SEE THE ARTICLE FROM FINANCIAL CONSULTANT HERE:

https://www.dropbox.com/s/k0ioupamb5rfv47/FINANCIAL%20CONSULTANT%20MAG%202013%20-%20IKE.pdf

 

Medical Marijuana: Legal Issues for Physicians

MMJ 2Nearly two dozen states now allow the legal use of medical marijuana. Given the growing mainstream acceptance of the drug as a potential natural alternative for a variety of pharmaceuticals, physicians are more apt to get questions about it than ever before.

Today we take a first look at a variety of legal issues and common questions around the use of medical marijuana (MMJ) by recommending physicians.

Medical media personalities as mainstream as CNN’s Dr. Sanjay Gupta have jumped into the MMJ debate with both feet, bringing the worst-kept secret in medicine much wider exposure. From a business and patient-number standpoint the numbers are staggering for something so relatively “new” in the world of medicine. By some estimates tens of millions of Americans currently use marijuana and a surprising number classify that usage as medically related, regardless of whether it’s legal in their state or if they actually have a physician’s recommendation. Some sources estimate that medical marijuana currently generates well over $1 billion a year in revenue and that the industry could grow to six to eight times that in the next four to five years.

Here are some frequently asked questions:

Q: How many states have legalized medical marijuana usage?

A: There are currently 20 states that allow medical marijuana usage for limited medical conditions (which also vary by state). Those states currently include: Alaska, Arizona, California, Colorado, Connecticut, Washington, D.C., Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Montana, New Hampshire, Nevada, New Mexico, Oregon, Rhode Island, Vermont, and Washington. And that number is expected to grow. Remember, even if it’s legal in your state for medical purposes, it’s still solidly illegal under Federal law.

Q: How many doctors are currently recommending marijuana for medical purposes?

A: It’s hard to say. Many states have strict privacy laws that cover both registered, legal patients and recommending physicians. These laws were enacted, at least in part, to protect both parties from any real or perceived stigma around medical marijuana usage. Additionally, as doctors recommend for specific conditions, (the top two are PTSD and spinal injuries) there’s a thinly veiled work around.

In budding markets like Los Angeles and Denver, early adopters of medical marijuana legislation, there are countless medical practices devoted specifically to medical marijuana, which openly advertise themselves as such, in some cases even using catchy names and “Pot Doc” references. John Nicolazzo, COO of www.MarijuanaDoctors.com (a state-specific referral service for patients looking for MMJ-friendly doctors), says it’s less than 1 percent, as quoted in another recent article on the MMJ industry.

Q: How much marijuana is a patient allowed to have for medical purposes?

A: This, like many other questions about medical marijuana, is exceptionally state law specific. One of the clearest summaries of state law I found was compiled by ProCon.org, a non-profit social issue think tank. The website offers a state-by-state chart and even provides detail on statutes and legislative history in layman’s terms. In most cases the range from state to state is as low as one ounce and as “high” as 24 ounces, (hello Washington!).

Q: Where do patients get medical marijuana?

A: Again, this is a very state-law-specific question, but may states allow some combination of the following: home-growing of a specific number or usable weight of plants, the ability to buy from “caregivers,” a name given to licensed home growers who can sell directly to approved registered patients and finally, licensed retail dispensaries, a surprising number of which are owned by physicians. These operations range from stereotypical head-shop hubs decorated with posters to high-end, spa-like operations in upscale parts of the country, such as La Jolla, Calif. In most cases they have one thing in common: They are compliant, single-line pharmacies that essentially offer one product in many sizes and forms, including lozenges, liquids, edibles, and traditional “loose-leaf” varieties.

In future weeks we will continue our examination of the many business and legal issues of this growing medical industry, including liability and credentialing for recommending physicians and the issues to address when owning or operating a dispensary or marijuana-friendly practice.

This article originally at www.PhysiciansPractice.com, the nations leading practice management resource where Ike Devji is a regular contributor.

Asset Protection Trusts For Doctors – An Introduction

law and money for doctorsAsset-protection strategies for physicians take many forms and range from sound policies and procedures that seek to minimize risk and liability to crisis-management plans, the right kinds insurance, and, finally, specific legal tools.

All of these strategies can be valid and effective parts of a true asset protection and risk management system and the key to the success of most plans is having many effective layers instead of seeking a single solution cure.

 

In previous discussions we’ve addressed the use of specific tools like limited partnerships and captive insurance companies by doctors, to name just two specific examples of tools that can be effective when used and drafted the right way. This week examine the Asset Protection Trust (APT) and address some of the most basic questions and misconceptions we’ve helped thousands of physicians investigate on a consistent basis.

When can I do it?

As with any asset-protection strategy, the key element is timing. This is preventative or defensive medicine but terribly ineffective against a pending or existing exposure. Implementing this against something that has already happened is called “fraud”.

What is it?

The Asset Protection Trust or APT is typically an irrevocable trust that becomes the owner of the assets being put into it, typically referred to as “gifting” or “funding.”

Why is it irrevocable?

In order for the property to truly be outside the reach of a judgment creditor by law it must go into a vehicle that is granted permanent, irrevocable title. If you, the “grantor” can easily pull it back at will, it is generally not protected from others either. It must truly be the property of the trust.

Is it the same as my estate-planning trust?

Typically no, but some estate planning vehicles do provide asset protection. The estate planning trust most doctors have or have seen is generally referred to as a Revocable Living Trust, a.k.a. “family trust” or RLT. This structure is often correctly funded with your home, investment account, and other assets. This is so those assets follow a specific chain of custody at your death and avoid the probate process. Unfortunately because this vehicle is revocable by you at will it offers ZERO creditor protection during your lifetime. A simple way to keep this straight is this: Estate planning is death planning and concentrates of giving your property away as you desire at your death. Asset protection on the other hand is life planning and preserves the assets you have, use, and would like to pass on so that they actually get to the estate plan.

I paid a great deal for my trust, does that mean it does more?

Usually not. Fees can vary widely based on the local legal market and the skill and experience of the drafter and what their expertise demands. Unfortunately, paying more does not it automatically make it better or give it extra features.

Can any lawyer do it?

Like any area of the law asset protection is an increasingly complex and specialized practice and as such it should be ventured into with an attorney with some very specific experience, just as you’d select a divorce, tax, bankruptcy, or other focused practitioner. While it shares similarities with other areas of law including corporate law and estate planning, there are a variety of considerations that must be accounted for with every move including timing, the liquidity needs of the doctor, the most defensible choice of legal entity, the jurisdiction that controls and legitimate business purpose. As asset protection has grown increasingly popular with consumers the number of attorneys and non-attorney promoters that have entered the field has grown exponentially. Furthermore, the leading sellers of form legal documents have recently increased their marketing of documents structured for the this purpose. In some cases, those documents are adequate; in others they are hopelessly inappropriate or drafted with fatal errors. Either way, even assuming the form is perfect, the application must be learned and apply to your very specific asset structure and fact pattern. Buying the best laser in the world will not make me a surgeon.

This simple introduction just scratches the surface of the features and issues physicians should understand when considering an APT. We will continue the conversation over the next few weeks and cover issues like jurisdiction, selecting counsel and the appropriate use of the tool as part of a system. As always, this information is general in nature and never fact specific legal advice. This article originally appeared at www.PhysiciansPractice.com, where Attorney Ike Devji is a regular contributor.

 SEE THESE LINKS FOR MORE DETAILS:

Doctors Lack Key Financial Planning Info

law and money for doctorsRecently, I read a 48-page report issued by AMA Insurance on financial preparedness among  physicians, based on 2,500 respondents. Consensus: Many doctors feel  they are under-planned and undereducated about personal finance issues. The good news? We’ve already covered and continue to address many of these issues for you here and at www.PhysiciansPractice.com, where this article originally appeared.

I didn’t find the results of the well-documented report particularly surprising based on my personal experience with a wide variety of doctors across the country. However, the report did help narrow down some of the areas to visit in greater detail going forward. The one constructive criticism I’d offer is that the report did not disclose any interest in or questions about asset-protection planning. As this column is primarily about physicians’ asset-protection and wealth-preservation planning you may assume some bias toward the topic by the author but two key facts remain: First, most polls show this is an area of significant concern and real exposure to doctors. Second, financial planning is moot if the assets get taken away from you. The key findings of the report identified several key concerns:

Half of physicians surveyed feel they are behind where they should be in their retirement planning while only six percent feel they are ahead of their savings plan;

Many doctors lack confidence in their education and decisions on key planning issues like estate planning, life insurance, disability planning, and retirement planning;

Many female doctors feel they are behind their male counterparts in these areas;

All are concerned about their future and the adequacy of their retirement savings.

We will soon address these issues again and, in turn, will feature discussions with experts in areas like the use of 401K and self-directed IRA plans. We’ll also focus on financial behavior patterns from the perspective of advisors who work with a heavily female professional client base. Until then, here’s a quick look back at just a few of the ideas we’ve introduced for your further discovery.

Estate Planning and Life Insurance

We’ve covered a variety of estate-planning-related topics and taken a look at common estate planning mistakes made by doctors; we’ve also published a multi-part article series on specific tools like limited partnerships (a.k.a. family limited partnerships) and asset protection trusts. On a related note we also addressed issues like the tactical use of life insurance and took a look at ways to help determine how much life insurance your family needs.

Investing and Retirement Planning

Our most recent of nearly one dozen columns in these areas have covered issues like the liability associated with administering a 401K plan for your practice as well as common issues related to investment fraud targeting doctors. We’ve also covered due diligence issues in dealing with an investment advisors. Of course, inherent to any such discussion must be a good look at tax planning by doctors and we’ve addressed issues like the right corporate formation, tax fraud targeting doctors, and even provided a basic two-part checklist of legal and financial essentials that we will soon be updating for 2013.

My goal in our discussions has been to share information on issues that I’ve personally seen doctors affected by and to provide a simple introduction to the options available to proactively address them. We will continue to do so throughout the year and I welcome your direct questions or suggestions for coverage on areas of specific concern to you. Finally, if you are heading out on vacation over the next few weeks along with the rest of the country, please take a second look at our personal security tips. We want you safely back with us to continue the journey.