Pro Asset Protection

Attorney Ike Devji

  • Articles
  • Contact
  • Facts and FAQ’s
  • Asset Protection Attorney Ike Devji – Bio
  • Home
  • Off the Record
  • Reputation and Recognition

A $500K Asset Protection FAILURE

March 1, 2017 by Ike Devji, Asset Protection Lawyer Leave a Comment

Successful business owners and doctors face many different kinds of risks. The following real story* illustrates significant exposures in one physician’s planning.

FATAL FLAWS

Failure to Adequately Insure and Implement Legal Planning

I was personally involved in this case earlier this year as an anti-fraud consultant.  A doctor’s husband was at fault in a car-pedestrian accident and struck and seriously injured someone walking their dog in the neighborhood and the medical bills and other economic losses incurred by the victim quickly exceeded $500,000, the limits of the doctor’s automobile liability insurance policy. Sadly, the defendant couple had been insured for a greater amount the year before and had cancelled their $1 million umbrella policy, presumably to save $400 a year.

Their insurance carrier quickly agreed to pay the limits of their policy and when they realized they’d be personally liable for medical bills, pain and suffering and other claims, the physician and her spouse went on a “fraudulent transfer” fire drill. They set up an LLC for the office building held in their own names, quit claimed the condo they had purchased for their son to use while in college to him, tried to equity strip their home and incorrectly claimed that the $900,000 vacation home they held as “tenants in common” in another state was unavailable to their creditors. All these moves (except keeping a full equity vacation home in your own name) would have been reasonable, prudent and fully legal if they had been properly done in advance of any problem. In this case, not only were their 11th hour moves ineffective against the existing exposure, they created additional jeopardy in the form of civil and even criminal penalties up to the level of a felony for engaging in conduct designed to delay, hinder or defraud a known creditor. Once the facts were explained to them and the legal counsel advising them on this issue at pre-trial mediation, they quickly wrote a check for $550,000 from their retirement savings to add to the policy limits of their insurance policy and wisely settled the case to avoid very significant additional liability in both the form of an award and in the required costs of defense, which would have easily been six figures.

Important Planning Lessons:

Act Today.

We’ve previously discussed that asset protection and risk management are always proactive and the single biggest mistake that doctors make in their own asset protection planning is doing nothing. You cannot plan against a pre-existing exposure or manage risk after a problem, you can only manage crisis, which is always more dangerous and expensive. Doing so is not only legally ineffective, it is illegal, can create additional civil and criminal penalty risk and even deprive you of your rights to other remedies, like bankruptcy.

Insure Until It Hurts

I’ve previously provided an article on why umbrella polices are vital basic asset protection for everyone, as well as a separate discussion on why umbrella polices on their own are insufficient protection. Insurance, perhaps after compliance and following best practices in all areas, is the first and most predictable and effective line of defense. As mentioned above a specific incident can create multiple exposures including both the award itself and the legal fees required to obtain adequate legal representation. A $1 million personal liability umbrella policy is the bare minimum every doctor should have, ideally more.

Pay Attention to How Assets are Titled

Relying on some form of tenancy is not a substitute for real legal planning that gets assets into appropriate legal wrappers like trusts and LLCs, as two common examples. In this case, as our defendant doctor and her husband are in a community property state, both of them were named with following result:

1. All their jointly held community assets were put at risk. Like many couples, they married young and the majority of their wealth was earned during the marriage and was exposed regardless of whether titled to her, him, or both of them.

2. The nearly $1 million vacation home, although outside the state, was fully available to the injured plaintiff who had a claim against both of them.

3. The vehicle was fortunately not owned by the medical practice, as it would have been sued as well.

*Actual example, only identifying details have been intentionally changed to preserve the privacy and attorney-client privilege of those involved.

This article originally appeared in an edited from at www.PhysicansPractice.com, The Nation’s Leading Practice Management Resource, where attorney Ike Devji is a regular columnist with over 200 bylines on asset protection, risk management and business law for doctors. 

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Tumblr (Opens in new window)

Filed Under: Arizona Asset Protection, Asset Protection Fraud and Failures, family liability, financial literacy, fraudulent conveyance, lawsuit awards, liability insurance

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

See Ike’s Work In Action

· Ike Devji on Acrimoney.com
· Ike Devji on CFO ADVISORS
· Ike Devji on Infosec Island
· Ike Devji on Risk and Threat Management

Money Matters Interview

Recent Posts

  • The Business Roundtable Podcast: Asset Protection
  • The Risks of Doing Business With Family Members
  • Campaign Contributions: What Business Owners Need to Know
  • Recession Asset Protection – Is My Bank Safe?
  • Asset Protection for Pain Management Doctors and Anesthesiologists

Categories

  • 2012 Economy (3)
  • 2013 Economy (3)
  • 2020 Recession (1)
  • 529 and College Savings Plans (1)
  • abusive tax schemes (13)
  • APT (3)
  • Arizona (19)
  • arizona anti-deficiency statutes (5)
  • Arizona Asset Protection (33)
  • arizona bankruptcy (4)
  • arizona economy (13)
  • Arizona Estate Planning (11)
  • arizona forclosure (8)
  • arizona real esate (12)
  • Asset Protection (174)
  • Asset Protection Education (16)
  • Asset Protection for Doctors (36)
  • Asset Protection for Your Home (7)
  • Asset Protection Fraud and Failures (22)
  • asset protection law (25)
  • asset protection strategies (42)
  • asset protection trusts (33)
  • Baby Boomers (5)
  • Banking and Bank Solvency (5)
  • Bankruptcy (8)
  • Best Money Market rates (1)
  • brokers (1)
  • Business Asset Protection (3)
  • business law (3)
  • business legal planning (72)
  • business owner and entrepreneur (15)
  • Business Owners (28)
  • business survival (48)
  • business valuation (6)
  • buy sell agreement (5)
  • captive insurance company (8)
  • Cars and Automobile Liability (4)
  • Cash Alernatives (2)
  • CEO (27)
  • children (8)
  • chiropractors (35)
  • CIO (1)
  • closely held business (30)
  • commercial real estate (8)
  • Coronavirus (2)
  • cpa (20)
  • creditor negotiation (4)
  • creditor protected cash alternatives (5)
  • Crisis Management Planning (7)
  • CTO (1)
  • DAPT (3)
  • debt (4)
  • deficiency judgment (2)
  • defined benefit plans (2)
  • dentists (57)
  • Director and Officer Liability (10)
  • disability insurance (2)
  • Divorce (5)
  • doctor sued (44)
  • Doctors (54)
  • Domestic Asset Protection Trusts (2)
  • Due Dilligence (11)
  • economy (9)
  • employee social media usage (3)
  • Employment law (25)
  • Entrepreneurs (5)
  • equity (1)
  • ESTATE MANAGEMENT (2)
  • estate planning (29)
  • estate tax (12)
  • estate taxes (3)
  • Expatriation (1)
  • face book (3)
  • family business (19)
  • Family Legal Planning (7)
  • family liability (11)
  • family limited partnership (4)
  • Family Office (8)
  • FAMILY OFFICE ISSUES (6)
  • FDIC Insurance Limits (2)
  • finacial advisors (7)
  • Finance (12)
  • financial advisors (23)
  • FINANCIAL ISSUES FOR DOCTORS (47)
  • financial literacy (56)
  • financing (6)
  • firearms (5)
  • forclosure (2)
  • foreclosure (3)
  • foreign bank accounts (7)
  • fraud (18)
  • fraudulent conveyance (3)
  • funding (3)
  • Geri Custer (1)
  • gifting (1)
  • Gifting – Wealth Transfer (4)
  • Greg George (5)
  • GTI ADVISORS (5)
  • Gun trusts (1)
  • guns (7)
  • HEALTH CARE LAW (6)
  • high net worth (17)
  • HIPPA violations (1)
  • homeowner's liability (13)
  • HR (3)
  • IAPT (2)
  • id theft (4)
  • Ike Devji (100)
  • Ike Devji – Asset Protection Expert (5)
  • ILIT (2)
  • information security (5)
  • intangible assets (3)
  • intellectual property (1)
  • investing (12)
  • investment exposure (14)
  • IRA creditor protection (1)
  • IRA Trusts (1)
  • Irrevocable Life Insurance Trust (3)
  • IRS (7)
  • Jeff Christenson (4)
  • Jumbo CD Rates (1)
  • kids (6)
  • lawsuit awards (23)
  • lawyers (8)
  • Leadership & Management (12)
  • leading wealth and legal advisors (2)
  • legal documents and records (3)
  • Legal Strategies (19)
  • liability (46)
  • liability insurance (35)
  • Life Insurance (13)
  • life Insurance conversions (1)
  • LIFE INSURANCE CREDITOR PROTECTION (2)
  • Life Insurnace Conversions (2)
  • Limited Liability Companies (2)
  • Limited Partnerships and FLPs (1)
  • linkedIn (1)
  • LLC Asset Protection (3)
  • LLC Myths (2)
  • Loan default (4)
  • Lotzer Law Group (1)
  • malpractice (14)
  • malpractice insurance (2)
  • marketing and reputataion management (2)
  • Marriage and Family (2)
  • Medical Marijuana (1)
  • Medical Practice Management (23)
  • medical practice mangement (31)
  • Medical Practice Risk Management (14)
  • mexican real estate (1)
  • Mortgage (1)
  • Municipal Bonds (2)
  • Nevada (1)
  • offshore (16)
  • offshore banking (9)
  • offshore trusts (13)
  • parenting (7)
  • partnerships (2)
  • personal finance (2)
  • personal injury (8)
  • personal security (9)
  • physicians (41)
  • physicians personal finance (3)
  • privacy and identity (2)
  • professional athletes (27)
  • professional entertainers (17)
  • property insurance (7)
  • rachel weiss (5)
  • Raisng Capital and Funding Your Business (1)
  • real estate investing (14)
  • recession (12)
  • recession lawsuits (13)
  • recession survival (32)
  • Reputation and Recognition (1)
  • reputation management (1)
  • Retirement Plan Creditor Protection (2)
  • retirement plan funding (2)
  • Richard Arnold (1)
  • risk management (11)
  • scams (13)
  • Scottsdale (1)
  • Sean Shepherd (3)
  • SEC (1)
  • secret bank accounts (6)
  • SECURITY (5)
  • shelf corporations (1)
  • small business (3)
  • social media (5)
  • start-ups (7)
  • startup (5)
  • Strategic Default (4)
  • Succession and Transition Planning (5)
  • Surgeons and Surgical Centers (5)
  • tax deductions (19)
  • tax fraud (7)
  • taxation (17)
  • taxes (23)
  • THE VAULT (2)
  • Trisha Lotzer (1)
  • trusts (4)
  • twitter (1)
  • Uncategorized (52)
  • up front fees (1)
  • Urgent Care Centers (1)
  • vacant real estate liability (4)
  • venture capital (6)
  • wealth transfer (5)
  • Wealth Transfer Strategies (13)
  • women & money (8)
  • Workplace Violence (2)
  • worth magazine (4)

Copyright © 2021 · Dynamik-Gen on Genesis Framework · WordPress · Log in