Year-End Tax Plan Sales Targeting Doctors, Business Owners

business legal planning | Year-End Tax Plan Sales Targeting Doctors, Business Owners

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, 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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