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Pro Asset Protection http://www.proassetprotection.com Asset Protection Lawyer & Wealth Preservation Strategies Tue, 27 Oct 2015 22:16:53 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 Year-End Tax-Scams Targeting Doctors and Business Owners http://www.proassetprotection.com/2015/10/year-end-tax-scams-targeting-doctors-and-business-owners/ http://www.proassetprotection.com/2015/10/year-end-tax-scams-targeting-doctors-and-business-owners/#respond Tue, 27 Oct 2015 22:16:53 +0000 http://www.proassetprotection.com/?p=722  TAX FRAUDThe year-end planning rush so familiar to physicians has many pitfalls including a variety of serious tax scams. Some scams covertly target you externally, while others are actually brought to doctors and business owners by their own would-be advisors; today we provide some red flags to look out for on both fronts.

This is part of  a series of due diligence articles on planning strategies that are part of the year-end tax shelter and financial product sales rush nearly every business owner and doctor reading this has probably experienced. Our first discussion included tips on big-ticket purchases like life insurance and captive insurance  companies; today we examine two patterns of tax fraud to be aware of.

When You Are the Target – External Threats

In some cases threats come from professional criminals that target your identity or even your tax return itself. Every tax paying American doctor should spend a few minutes reviewing the I.R.S. Dirty Dozen List of tax fraud and tax scams, which is updated every year. While the list is not complete, it outlines twelve of the most common scams, some of which are relatively easy to spot when you know what to look for. About a third of the items on the I.R.S. list involve you being the “victim” of some form of fraud related to your tax returns and include phone scams, phishing and ID theft in several forms including filing false returns , posing as you you and collecting a tax return (that you often were not actually entitled to) on your behalf.

Scammers often get a six-month or greater head start with this type of fraud because they know that many doctors in particular tend to file their taxes late, with an extension on September 15th. It won’t be until after your actual return is filed that either you or the I.R.S is aware of the fraud.

Beware of Promoters and Accidental Taxpayer Fraud by YOU

A variety of strategies sold as “tax shelters” whether that exact verbiage is used or not put you in the hot seat as the tax payer and the individual whose signature is on the bottom line of the return, regardless of who you relied on in making those decisions. I cannot strongly enough reinforce

We’ve previously covered both the common frivolous arguments that often involve complex trust structures. If you see a plan involving a “Pure Trust,” “Admiralty Trust,” “Constitutional Trust,” “Patriot Trust,” or “Corporation Sole,” run and get a review of any actions you may already have taken by a third party CPA immediately, noting that there are many variations of this garbage sold under different names. Promoters of these highly illegal structures tell taxpayers they can opt-out of paying income taxes for a variety of reasons that contradict the U.S. tax code including on religious or moral grounds by invoking the First Amendment, that only employees of the federal government should be subject to federal income tax, and that only foreign-source income is taxable, among dozens of other spurious arguments. Some of these scams target a specific demographic and prey on our current economic and political tensions by target largely boomer aged, political conservatives. We took a look at these issues and provided specific tips on protecting yourself from this form of political affinity fraud in a previous article; if you are considering planning that emphasizes these issues either explicitly in its materials or implicitly through the opinions and conversations person selling it, tread carefully.

Not every scam involves a trust however, many other dangerous tax dodges are dressed up as abusive retirement plans (often involving a life insurance sale), disguised corporate ownership that somehow ends in no one ever paying taxes on some portion of otherwise taxable income or using abusive offshore tax structures that achieve a similar result, typically with similarly flawed legal status. I’ll note here that offshore tools have many legitimate and legal uses by doctors and other high income individuals, I use them for financially qualified individuals for whom they help achieve some specific articulable legal goal every week. There is however, no tax benefit to these structures and they are all fully reported and taxed.


This article was originally published in a different form at www.PhysiciansPractice.com, The Nation’s Leading Medical Practice Management Resource. The author, Ike Devji is an Asset Protection attorney with over a decade of experience in helping to protect thousands of HNW clients from a variety of risks and has written over 200 articles on related issues.



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Negative Publicity: Crisis Management for Businesses, Medical Practices http://www.proassetprotection.com/2015/10/negative-publicity-crisis-management-for-businesses-medical-practices/ http://www.proassetprotection.com/2015/10/negative-publicity-crisis-management-for-businesses-medical-practices/#respond Tue, 27 Oct 2015 21:55:06 +0000 http://www.proassetprotection.com/?p=717 CRISISIssues in the news like the recent Ashley Madison data dump prove how negative publicity related to your practice or  the personal activities of any of its owners or employees, can have devastating effects on your professional reputation and financial solvency. Regardless of the cause, every business and medical practice owner and manager should understand some PR crisis management basics.

In our last discussion we provided some specific cautions about the news value and relative high profile doctors and medical practice executives present to the media. Something seemingly far removed, like a guided lion hunt in Africa or the recent discovery that a Canadian company sold tainted, counterfeit drugs to dozens of American oncology practices can literally shut a practice down if not handled the right way. There is no perfect PR playbook that’s universally applicable to every situation, so use the specific tips provided below as a starting point and adjust them accordingly to fit your specific facts. Accounting for the legal nature of the crisis, your local community and the specific title and relationship of the individuals involved to the practice are always prerequisites.

Is this a Legal Issue?

If the crisis involves criminal or civil legal liability, a good first step is to consult with the attorney representing you about any statements you may wish to make and how they suggest you should (or if you even can) address media inquires before making any verbal or written statements. What you may consider general, conversational statements can and will be used against you either in court or in the much harsher court of public opinion and may affect your rights. You should also discuss how this information should be shared with your staff and any specific guidelines your legal counsel suggests you inform them of.

Put The Right Person In charge

Appointing a qualified Information Officer (IO) is vital first step. The IO, whether a part of the practice or a third party is the official source of contact and information for the media and the public. Choose carefully, it may not always be the best idea to represent yourself in this capacity and having a third party may depersonalize the situation and add objectivity. A good IO is articulate, informed, and has the professional temperament and authority to answer specific questions on your behalf. Inform your staff and family of the IO and their role and ask them to politely refer questions to that person. During such a crisis employees should also be reminded of any confidentiality provisions outlined in your office’s employment manuals and handbooks , which we assume you have in place and which are custom drafted to include such vital provisions.

In some cases, if your attorney has the appropriate level of media savvy it may be appropriate to have her be your IO, especially in cases involving potential civil or criminal liability. In other cases, if the attorney is not comfortable in that role for any reason, it may be wise to hire a professional crisis management resource, like a PR agency that will have the skill set and media contacts to get the right story out there.

Have One Message and Be Consistent

Information that you control and have outlined should be disseminated only through the IO. Answer what you can. Neither you nor your staff should be perceived as evasive and honest answers like, “I don’t know, I can’t comment on the personal life of Dr. Jones, this is not an issue related to our practice,” or “I’m not authorized to speak on behalf of the practice on that issue”, are completely reasonable when true. Your message should also empathetically acknowledge harm or injury to third parties in a simple and factual way, as you would address any similar situation involving people you don’t know personally. “We are saddened and surprised to learn of the injury (accident, allegations, etc.) and hope the matter is resolved soon…”

Finally, when appropriate, control speculation and demands by the media and the public by providing accurate updates and identifying a realistic course of action or solutions being considered, but don’t make promises you can’t or are unlikely to keep. Communicating the right things at the right time coveys that you are working to resolve the issue and that you and your practice are deserving of the trust and position you previously held in the community, both personally and professionally.

This article was originally published in a different form at www.PhysiciansPractice.com, The Nation’s Leading Medical Practice Management Resource. The author, Ike Devji is an Asset Protection attorney with over a decade of experience in helping to protect thousands of HNW clients from a variety of risks and has written over 200 articles on related issues.

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Year-End Tax Plan Sales Targeting Doctors, Business Owners http://www.proassetprotection.com/2015/10/financial-literacy-year-end-issues-for-doctors-business-owners/ http://www.proassetprotection.com/2015/10/financial-literacy-year-end-issues-for-doctors-business-owners/#respond Tue, 27 Oct 2015 21:25:26 +0000 http://www.proassetprotection.com/?p=718 Year End Sales HustleThe last quarter of the year is historically an active time for physicians and business owners and their tax, legal and financial advisors. Given increased regulatory issues, I.R.S. scrutiny and increased fraud, it’s vital that you do some basic due diligence before you pull out your checkbook.

Doctors are heavily solicited for a variety of tax and investments schemes at the end of every year. As many physicians are high-income and thus, high tax bracket professionals this planning makes sense when done right but can be very dangerous when done outside the law or by inexperienced advisers and promoters. Remember, no matter whom you rely on for this planning the legal exposure is ultimately yours as the taxpayer and, “The salesman said it was legal…” is not a valid defense in the eyes of the law. In this discussion and over the next few weeks we’ll provide some insight on issues that doctors commonly face under significant time and sales pressures at year-end.

You May Be Asked to Buy Life Insurance.

Many retirement plans are funded with life insurance or actually use life insurance itself as the retirement vehicle because it offers both certain tax benefits by law and the traditional benefits most readers are familiar with. While insurance can be a great tax and retirement planning tool (and also offers unlimited dollar value creditor protection on policy cash values by law in more than half the sates in the U.S.) there are very specific rules on how and when it can be used. One of the most basic screening methods for any plan that heavily utilizes life insurance is the traditional “rule of three”; if it goes in tax free, grows tax free and then comes out tax free, be careful and get a third party opinion from your own advisors, not the promoter’s buddy. This holds true for both cash contributions to investment and retirement plans and premium you may be paying to an insurer.

Finally, know exactly what you are buying. As pro-life insurance as I am when used in the right way, there are significant differences between policy structures, benefits and commissions paid to advisors that may affect what is recommended. I’ve previously provided Physicians Practice readers a list of opening due diligence questions to ask about every life insurance policy being proposed, and that you should probably review to understand the insurance you may already have in place as well.

You May be Asked to Consider a Captive Insurance Company


I’ve covered Captive Insurance Companies (captives) in significant detail before. We discussed the very real benefits a professionally established and run captive can provide and some specifics on what a captive is, how to pick a qualified captive provider, where it should be established and perhaps most importantly, my own basic checklist of the questions I ask to determine if a medical practice meets the minimum qualifications captives require for legitimacy and a valid business purpose.

The main issue I’d like you to take away about this issue today is the negative view the I.R.S. has taken on captives that are openly sold and structured as tax shelters over those that are legitimate risk and cost management tools. Over the last 18 months captives across the U.S. have been increasingly audited as basic patterns of abuse have emerged and have created significant expense and legal and financial liability for their owners. To be clear, for those who fit the fact pattern and have a real business need for it, captives remain a legitimate and effective tool.  However, many captive “promoters” are abusing or encouraging their clients to abuse captives and these audits often start at the offices of such unskilled promoters. If you are being pressured to implement a captive before year-end for primarily for tax savings by those who have not advised you on these issues and you are being presented with sales materials, websites and brochures that emphasize tax planning over risk management, carefully reconsider who are in business with. Many doctors have been penalized for doing the right thing with the wrong people.

This article was originally published in a different form at www.PhysiciansPractice.com, The Nation’s Leading Medical Practice Management Resource. The author, Ike Devji is an Asset Protection attorney with over a decade of experience in helping to protect thousands of HNW clients from a variety of risks and has written over 200 articles on related issues.


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Are 529 plans creditor protected? Maybe. http://www.proassetprotection.com/2015/10/are-529-plans-creditor-protected-maybe/ http://www.proassetprotection.com/2015/10/are-529-plans-creditor-protected-maybe/#respond Tue, 27 Oct 2015 21:01:41 +0000 http://www.proassetprotection.com/?p=714 529 plansAsset Protection attorney Ike Devji was recently quoted in financial author Geri Detweiler’s article on creditor protection of 529 college savings plans that appeared at Yahoo Finance and Credit.com among several other sites.


SEE THE ARTICLE HERE:  http://blog.credit.com/2015/10/can-a-debt-collector-take-my-kids-college-fund-126590/  

The article explores the often complex and confusing laws surrounding the creditor protection of 529 plans and other college savings plans.  As college, high school and even grade school costs for those placing their children in the best private schools have climbed sharply this has become an increasingly important issue to the affluent individuals we serve. In Phoenix, the top ten private schools have grade school tuition as high as $24,000 a year, other markets are even higher.  If this issue is of concern to you as a parent, guardian or grandparent, it’s time to understand the law and look at alternatives, like trust structures that may give your family the peace of mind you want about educational expenses.

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Employment Manuals Commonly Overlooked in Asset Protection Plans http://www.proassetprotection.com/2015/09/employment-manuals-commonly-overlooked-in-asset-protection-plans/ http://www.proassetprotection.com/2015/09/employment-manuals-commonly-overlooked-in-asset-protection-plans/#respond Mon, 21 Sep 2015 21:28:34 +0000 http://www.proassetprotection.com/?p=712 EMPLOYEE HANDBOOKSMedical practices and other businesses of all types face many types of risk outside the strict scope of their professional liability. One major lawsuit risk to business owners and doctors is employment-related lawsuits that must be mitigated with a professionally drafted employment manual.

I continually stress that a good asset protection plan has many layers, including management of all reasonably anticipatable risks. The stakes here are high on two fronts; first, the awards themselves can be financially devastating, with sexual harassment verdicts, as one example, regularly reaching hundreds of thousands of dollars. Second, the costs of legal defense alone can drive a medical practice out of business, easily reaching six figures in short time — without including the potential dollar value of any award that may be obtained against the physician.

The risk is growing

According to a recent EEOC press release the agency collected nearly $400 million in fines in 2013 alone — the largest collections year in the history of the EEOC — and receives close to 100,000 complaints a year. The most common causes of these complaints, in order, are; retaliation under all the statutes (about 40 percent); followed by race discrimination (about 33 percent); sex discrimination, including sexual harassment and pregnancy discrimination (roughly 27 percent); and discrimination based on disability (about 25 percent). Both race and disability discrimination claims increased as a percentage of all charges.

Step one: Have a professionally drafted employment manual

We consistently find that businesses and medical practices have one of the three following bad scenarios at play with their employment policies and manuals, which should be formal, written, distributed to all employees and enforced:

1. We have NO formal manuals.

2. We have generic manuals of speculative value that are not specific to our business and how it operates (i.e., we got it free off the Internet or from a buddy in another state.)

3. We have a custom manual but have NOT implemented it, distributed it to our staff in a formal way, or consistently enforced it.


So what? Why do I even need an employment manual and policy guide?

All of the scenarios above expose your business to very significant risk. Your employment manual is your compliance bible for both management and employees, and prescribes the rules and procedures for the vast majority of employment-related issues at your practice. According to Paul Edwards, CEO of CEDR Solutions, an employment law resource that specializes in medical practices:

“Your employee handbook is also your first defensive tool in deterring and fighting employment lawsuits. Policies that are well-written and in compliance with all state and federal laws can prevent 90 percent of legal exposures because an employee or manager was not aware of or did not understand a rule or regulation. A strong handbook will also often deter aggressive contingency fee attorneys who know it is much more difficult to fight and win when a medical practice has implemented written, legally compliant policies.”

Why does it have to be “custom”?

Edwards outlined some key legal areas that required custom drafting in an employment manual:

1. It should be specific to the laws of your state. Employment laws vary from state to state and some, like New York and California are more onerous for employers than others. Not citing the right laws can make your practice non-compliant or subject you to rules that are more onerous than they should be. If it’s in your manual you are required to follow it.

2. It should be specific to the number of employees you have. Your compliance burdens change with staff size, so the difference between 49 employees vs. 50 employees or even 14 employees vs. 15 employees can be significant.

3. It should be specific to your industry. You have many additional, unique compliance burdens as a medical employer and significantly extended liability on issues like HIPPA compliance, credentialing, etc., — these should be specifically addressed.

4. It should be specific to the “culture” of your practice. Every practice and its needs and expectations are different, your manual and polices should match how your practice actually runs and mirror your expectations.

In my next installment on this issue I will cover other  layers required to protect your personal and business assets against the risk of employment-related lawsuits. Until then, think about your own employees and which of the areas above needs professional attention.

This article was originally published in a different form at www.PhysiciansPractice.com, The Nation’s Leading Medical Practice Management Resource. The author, Ike Devji is an Asset Protection attorney with over a decade of experience in helping to protect thousands of HNW clients from a variety of risks and has written over 200 articles on related issues.

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Crisis Management: Dealing with Bad Press at Your Business http://www.proassetprotection.com/2015/07/crisis-management-dealing-with-bad-press-at-your-business/ http://www.proassetprotection.com/2015/07/crisis-management-dealing-with-bad-press-at-your-business/#respond Tue, 28 Jul 2015 22:12:43 +0000 http://www.proassetprotection.com/?p=709  CRISISEvents beyond your control and outside the scope of your business can cause reputational damage and receive media and public attention that can literally shut your business down. Knowing how to handle such an event should be part of your asset protection plan.
A previous article examined the different types of crisis plans required to operate any business, especially one that has or hopes to achieve any reasonable scale. Our first discussion centered on an extreme but timely scenario, the prospect of an incidence of workplace violence , like the random acts of a gunman. This week we look at a much more common medical practice and business crisis, an event that causes reputational damage and receives negative media and public attention.

Combine your high profile (think newsworthiness) and assumed high standard of conduct you are assigned as a business owner or medical care provider with the threats of increased regulation, liability, media scrutiny, and the destructive and unchecked speed of bad and false information on the Internet and the scope of the exposure becomes clear.

What Kinds of Issues Are Doctors  and Entrepreneurs Facing?

Most successful business owners wrongly assume that any exposure or unwelcome publicity will be limited to issues surrounding their business itself; that’s unfortunately not the only case. A review of news articles that cite doctors and executives being, sued, arrested, or investigated covers a wide spectrum and extends in some cases even to members of their family and employees. The news loves to throw in, “A prominent local doctor (or businessman, CEO, etc.)  was arrested tonight…”

The first and most obvious warning is simple; don’t do things, or allow others to do things that you can control, that place you and your business in a negative light. Even a simple altercation with a neighbor or a DUI becomes newsworthy when a successful business is involved and even more so if that individual is locally prominent.

Common examples of things that will get you on the news and detract from your credibility and professional standing:

• Driving while intoxicated or any drug- or alcohol-related offense (or even behavior), including while traveling, flying, or on vacation. Think you are out of eye shot? I’ll bet you already know which congressman from the Southwest was embarrassed for skinny dipping in Israel on a state trip;

• Any offense involving sexual conduct, or misconduct especially with a patient but this seems to be a no-holds-barred category and you will be named in even remote cases involving the conduct of family members and employees that has nothing to do with you; and

• Any investigative report or government, law enforcement, or task force investigation on issues like billing, prescriptions, or ID theft. Regardless of what they actually find, (or don’t find), just being mentioned is pejorative

An Action Plan for Business and Medical Practice Leaders

What should you do if you find yourself in the limelight? Public relations experts’ opinions vary widely on the best defensive course of action and damage control, but most agree on all the following guidelines:

• Have an Information Officer (IO). This simply means appointing a lead source of contact and information for the media and the public. Pick carefully, it may not always be the best idea to represent yourself in this capacity. Pick someone objective, articulate, informed, and who has the judgment and authority to answer questions on your behalf. Make your staff and family aware of the IO and their role and welcome them to politely refer questions to that person, a lawyer or media consultant may a be a good choice, but only your discussions with a lawyer will be privileged and confidential.  

• The best defense is a good offense. Put out good information that you control through the IO, make sure it is true and factual and properly disseminated, you want it found first.

• If it’s an issue involving legal misconduct of any kind that requires you to have legal representation, or likely will require you to, check with your lawyer first. Don’t make any public statement either verbally or in writing. Innocent utterances, in your opinion, can certainly be twisted or used against you. In some cases, if your attorney has the personality and control it may be appropriate to have him be your IO, especially in cases involving potential civil or criminal liability.

• Answer what you can. Neither you nor your staff should be perceived as evasive and honest answers like, “I don’t know,” are completely reasonable when true.

• Be compassionate. Acknowledge the harm or injury if others are involved in a simple and factual way, as if you were just another citizen who heard it on the news, “We are saddened to learn of the injury (accident, allegations, etc.) and hope the matter is resolved soon…”

• Provide updates and identify a course of action or solution where possible. Show that you are actively working to help or resolve the issue and that you are deserving of the trust and position you had before the issue arose.

 Real Life Case Study: Who Killed Cecil The Lion?


Minnesota dentist named as killer of Zimbabwe’s famed, human-loving Cecil the lion
“Walter Palmer, a trophy hunter who operates River Bluffs Dental in Bloomington, is believed to have paid about $55,000 to bribe wildlife guards July 1 at Hwange National Park, reported The Telegraph.”

How would you like that headline written about you or one of your business partners?

See the story: http://www.rawstory.com/2015/07/minnesota-dentist-named-as-killer-of-zimbabwes-famed-human-loving-cecil-the-lion/

 This article originally appeared in an abridged form at www.PhysiciansPractice.com, The Nation’s Leading Practice Management Resource, where Ike Devji has authored over 200 articles on risk management, business law and asset protection.


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LLC Basics For Consumers: Asset Protection http://www.proassetprotection.com/2015/07/llc-basics-for-consumers-asset-protection/ http://www.proassetprotection.com/2015/07/llc-basics-for-consumers-asset-protection/#respond Tue, 21 Jul 2015 23:06:13 +0000 http://www.proassetprotection.com/?p=707


Business owners and Doctors are increasingly bombarded with a variety of asset protection information from different sources of varying skill and experience. One common tool that attorneys and non-attorney promoters alike often focus on is the limited liability company or “LLC.”

Unfortunately, because LLCs are relatively simple to create and maintain, they are routinely misused and over-sold, with promises that simply can’t be legally kept. As such, part of our ongoing discussion of asset protection must include the basics every consumer needs to understand before using an LLC for any purpose.

As always, this information is in general terms and is not fact specific to your situation, it also assumes that we are acting proactively against exposures that may occur in the future, that you have a legal right to manage and segregate. Finally, no asset protection strategy is license to commit harm and requires that you have taken steps to reasonably avoid any harm by implementing compliance, safety, and best practices policies in all areas, and that you have adequately insured against reasonably anticipatable risks. Asset protection is always a system and never a single-shot solution, even with an objectively “good” and well-proven tool like an LLC.

The Small Business Administration (SBA) of the U.S. government provides some excellent, consumer-friendly information on a variety of business and legal topics that I borrow from heavily below as an essential introduction.

1. What is an LLC?

An LLC is a hybrid type of formal legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. It can provide what I call two-way protection; it can protect the assets from the unrelated liability of the individual owner, and the owner from the internal liability the asset itself may create, like the liability associated with owning a rental home.

2. Who can own an LLC?

The LLC is highly flexible in this area. The “owners” of an LLC are referred to as “members.” Depending on the state, the members can consist of a single individual (one owner), two or more individuals, corporations, partnerships, or other LLCs.

3. How is an LLC created?

It’s more than just filling out a form and requires guidance on a variety of issues including where it is created, what it’s used for, and how it is run. First, “Articles of Organization” are filed at the appropriate local agency in accordance with laws of the state in which it is created. The articles of organization is a simple document that legitimizes your LLC and includes information like your business name, address for legal service of process and or place of business, and, in some states, the names of its members (more on this in our next discussion).Then, an “operating agreement” is created. Having an operating agreement is highly recommended for LLCs because it provides rules for the LLC’s finances, organization, and smooth operation. The operating agreement usually includes percentage of interests, allocation of profits and losses, member’s rights and responsibilities, and other provisions that will be vital if the LLC comes under external attack in the future or in the event of conflict between partners.

4. How are LLCs taxed?

Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses are “passed through” the business to each individual member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would. While the federal government does not tax income on an LLC, some states do. All LLCs must elect to file as a corporation, partnership, or sole proprietorship tax return and may be treated as S-corporations as well.

5. What Are the Advantages of an LLC?

• They “limit liability. Members are protected from personal liability for business decisions or actions of the LLC. This means that if the LLC incurs debt or is sued, members’ personal assets are usually exempt. This is similar to the liability protections afforded to shareholders of a corporation. Keep in mind that limited liability means “limited” liability, not “no” liability. LLC members are not necessarily shielded from wrongful acts, including those of their employees.

• They have simplified recordkeeping and profit sharing rules. Compared to an S-Corporation, there is less registration paperwork and there are smaller start-up costs. There are also fewer restrictions on profit sharing within an LLC, as members can create operating agreements that allow them to distribute profits as they see fit, equally or unequally, for instance, when members contribute different proportions of capital and sweat equity. -

This article was originally published in a different form at www.PhysiciansPractice.com, The Nation’s Leading Medical Practice Management Resource. The author, Ike Devji is an Asset Protection attorney with over a decade of experience in helping to protect thousands of HNW clients from a variety of risks and has written over 200 articles on related issues.

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LLC Sales Myths Harm Doctors, Business Owners: Asset Protection http://www.proassetprotection.com/2015/07/llc-sales-myths-harm-doctors-business-owners-asset-protection/ http://www.proassetprotection.com/2015/07/llc-sales-myths-harm-doctors-business-owners-asset-protection/#respond Tue, 21 Jul 2015 22:21:08 +0000 http://www.proassetprotection.com/?p=704 LLC USAGE - PHYSICIANS PRACTICE
It is important for every doctor and business owner to understand some basics about the Limited Liability Company, commonly known as an LLC; what it is, how it is created, and some of the benefits a well-drafted and maintained LLC can provide.
Unfortunately I regularly get reports from my own clients that have been at medical seminars and hosted financial dinners where dangerous myths and misinformation, already popular among laypeople are being reinforced. The level of this misinformation ranges from incompetence to outright fraud in the very worst cases.
Much of this information is disseminated by non-attorney promoters, who don’t provide legal counsel or advice but “document preparation,” with no professional oversight or liability — leaving the  client holding the bag and on his own when things go wrong. Even using a law firm is not a guarantee of good advice unless the attorneys are qualified and experienced in this area of the law, so make sure you have good help.

Here are a few important distinctions to be aware of:

1. No LLC is “secret,” but they can be “private”
If you see the word “secret” used in any LLC marketing or advertising be very careful. Despite what physicians are being told, there is no such thing as secret in legal and financial planning; what you are doing is only secret until you are asked about under oath, under penalty of perjury. Secrecy is never part of any competent asset protection plan and basically provides you with a plan no more sophisticated than trying to hide assets and hoping no one ever asks you if you did so. Nevada LLC promoters in particular are notorious for this, but it’s not unique to Nevada, several states offer similar “private registration” including New Mexico, Delaware, and Wyoming. All this really means is that some states like those listed above require a lower level of disclosure about who the members (owners) of an LLC are in their public records. As such, they are considered more “private” which never hurts, and frankly is something I myself do for doctors and business owners who want privacy with the very explicit admonition that there is no real increase in the asset protection value of such a structure, and that it will be fully discoverable in any kind of legal proceeding. There are a variety of very legal, ethical, and legitimate reasons why you might want privacy, including wanting to keep your nonmedical (and possibly controversial) business and investment activities private, keeping a low profile  to avoid being perceived as a financial target, and simply to avoid jealousy and resentment about your success among patients or clients and even your staff and colleagues, to name just a few.


2. Using a “private” LLC usually won’t provide a tax benefit

Another common marketing ploy is the general statement that using a Nevada (or similar) state LLC will reduce your tax liability. While this may be true for those who actually live and operate in one of these LLC friendly states that have tax benefits, it is often not the case for those living in one state and registering their LLC in a different state.

EXAMPLE:  California resident Dr. Jones created a Nevada LLC that owns her California rental homes, but still pays all applicable California taxes and fees, and in some cases additional fees to register as a “foreign corporation” doing business in her state. Add to that questions about conflicts of law and the recurring annual costs of having a registered agent for service of process in the state where the LLC was registered and the benefits promised start to erode quickly.

3. A word on divorce

Among the most egregious promises I’ve seen made by scam artists is a blanket statement that LLCs “help in divorce.” Putting assets that are already community property or marital property, including income earned during the marriage or an investment made with marital assets, into an LLC your spouse does not have an interest in will not help you in a divorce, in fact it may adversely affect you if it seen to be fraudulent, theft, conversion, or concealment. Using a properly drafted LLC may however be one good device for keeping what is legitimately separate property legally distinct.

This article was originally published in a different form at www.PhysiciansPractice.com, The Nation’s Leading Medical Practice Management Resource. The author, Ike Devji is an Asset Protection attorney with over a decade of experience in helping to protect thousands of HNW clients from a variety of risks and has written over 200 articles on related issues.

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IRA Creditor Protection Issues – Asset Protection http://www.proassetprotection.com/2015/06/ira-creditor-protection-issues-asset-protection/ http://www.proassetprotection.com/2015/06/ira-creditor-protection-issues-asset-protection/#comments Fri, 12 Jun 2015 21:17:50 +0000 http://www.proassetprotection.com/?p=701 IRA TRUSTSAlthough IRA asset protection is provided by law to most personally owned and funded IRA accounts there are several other important asset-protection issues doctors, business owners, and other successful individuals need to consider.

The (very) general rules of thumb about IRAs: For the purposes of brevity in the context of this column, in most cases, your own IRA accounts are protected up to about $1 million in total assets for you and your spouse by both state and federal law, with slight differences in state law and with notable exceptions for both divorce and federal tax liens.

A game changing case from last summer — inherited IRAs A case from 2014 made ripples across the estate planning and asset protection legal communities, but is still largely unknown to the general public.

In the case of Clark v. Rameker, a parent left her adult daughter, Heidi Heffrom-Clark (Clark) an IRA account with some $450,000 dollars in it. Clark took distributions without issue for nearly a decade before she and her husband were forced to declare bankruptcy in 2010. Clark claimed that the remaining $300,000 was an “exempt” (meaning creditor protected) asset not available to bankruptcy creditors because they were IRA proceeds. The bankruptcy court and the bankruptcy trustee disagreed and the fight was on. It lasted four years, went through four separate courts, and with what I can only imagine were devastating legal fees, before finally being resolved by the Supreme Court last summer.

Essentially, the court held that an Inherited IRA is not creditor protected because it has a very different structure and purpose than the interests the law protects for the person who originally created it, including a lack of access restrictions, the inability of the beneficiary to contribute, mandatory withdrawals, and other differences.

As such, the person named “beneficiary” of an IRA (the person who inherits it after you) is an issue that should be of significant concern.

Who should be worried about this?

Those leaving money to non-spouse heirs. Many of my successful clients have six and even seven figure IRA accounts that they may be fortunate enough to be able to leave to their heirs in whole or in part. Your heirs’ liabilities and creditors, including various lawsuits, bankruptcy, potential divorce, and professional liability all put that money at risk. You should also have a concern if your state law simply says that “IRAs are protected” — leaving that statement open to interpretation whether that applies to your circumstances. It would likely be a long and expensive legal process like Clark suffered above.

Those who stand to inherit IRAs from their own family. We are also find that many of our physician clients have parents and other relatives who were successful (and frugal) enough to not have depleted their own IRA accounts, a number of which have grown at a compound rate for decades and amount to very significant sums. If you stand to inherit such an asset it will very likely be subject to your own professional liabilities and asset protection concerns as well.

What if my state law explicitly protects inherited IRAs?

Then you’re probably in decent shape with two exceptions, which are really pretty braod:

1.  If  you as the beneficiary ever move to a state that does not protect inherited IRAs or;

2.  If the beneficiary of your inherited IRA ever moves from a state with statutory creditor protection to one without it. Remember it is the law of the state in which the beneficiary (as a debtor or defendant) has residence that applies, not the law of the state where the person who originally set the IRA lived, that controls creditor access to the funds.

 What the solution? An IRA trust.

One solution is to name a trust as the beneficiary rather than an individual or group of individuals directly. These special purpose trusts (which are separate from your general estate planning and other trusts) are built to comply with applicable IRS regulations and are drafted with creditor protection features that allow the trust to hold the funds and make distributions to the beneficiaries as required at the discretion of a trustee, who is in turn controlled by a variety of tax rules including minimum required distributions.

While this structure provides a great deal of creditor protection it also adds some complexity and expense in the form of legal fees to have a competent attorney draft the trust, a corporate trustee if one is desired, and an annual tax return for the trust as a minimum.

That said, these relatively  minor issues (and the cost of the trust which is only a few thousand dollars) are significantly outweighed by the benefits provided to finically qualified individuals with large IRA accounts. Most people in this category use their IRAs last, as it is “safe money”, creditor protected and for a variety of other reasons which makes the estate planning surrounding this asset increasingly important.


This article was originally published in a different form at www.PhysiciansPractice.com, The Nation’s Leading Medical Practice Management Resource. The author, Ike Devji is an Asset Protection attorney with over a decade of experience in helping to protect thousands of HNW clients from a variety of risks and has written over 200 articles on related issues.

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Urgent Care Centers: Asset Protection for Doctors, Owners http://www.proassetprotection.com/2015/06/urgent-care-centers-asset-protection-for-doctors-owners/ http://www.proassetprotection.com/2015/06/urgent-care-centers-asset-protection-for-doctors-owners/#respond Fri, 05 Jun 2015 17:55:45 +0000 http://www.proassetprotection.com/?p=697 URGENT CARE CENTERAsset Protection attorney Ike Devji was heavily featured in a recent article in The Ambulatory M&A Advisor titled “Asset Protection for Your Urgent Care Business” by Brittany Belli.

Devji works with physicians nationwide and is a frequent CME presenter for medical groups on issues including asset protection, wealth preservation and the specific risk management techniques, that most attorneys overlook.

Devji has been quoted as an expert in dozens of medical journals and is a frequent source for journalists and authors seeking practical, street smart info on these topics.

See the article here:


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