Asset protection : Umbrella insurance / Trusts and other legal structures

[onconc]

Not sure whether this type of finance related post is against the rules.

What do you all do for financial asset protection ?

1. Do you set up some trust or other legal structures etc that is bulletproof from lawsuits ?
   - What kind of trust (or legal structure) is it ; and how did you set it up ?
2. Do you have umbrella insurance as part of asset protection ? If yes
   - What is the coverage limit ? I mean is it 0.5x or 1x or 2x of your total assets ?
   - Who is the provider company that provides the coverage?

PS. I already have malpractice tail and nose that covers 1M. And 300k or so of auto liability insurance. But assets are much above those numbers. My field (Hem-Onc) doesn't face that many number of lawsuits; but yes they happen once in a while. And even when there are payouts, the monetary settlements are not that high.

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[gutonc]

There's a finance/investment forum that this would be better suited for. I'm happy to move it there if you like.

 

[onconc]

There's a finance/investment forum that this would be better suited for. I'm happy to move it there if you like.

yes please. And sorry for the bother

 

[RainerMaria]

My understanding is that above limits policy judgments are rare. More common in OB and NSGY.
More likely to undergo a divorce than have to pay OOP (so not always great idea to transfer all assets to non-MD spouse)

Ref: Malpractice Insurance - Above Policy Limit Judgments - Podcast #155 | White Coat Investor

 

[gutonc]

yes please. And sorry for the bother

Not a bother. But you should know about this forum.

Also, post moved.

 

[cpants]

Liability shelters will depend on what state you live in. Probably need to consult a local attorney for that. Definitely important to make sure the ownership of your practice is set up properly if you are in PP.

Umbrella insurance is a no brainer and cheap. I pay $450/year for $3M of coverage. It should be available from whoever you get your homeowner or auto insurance from. It kicks in after your standard liability limit hits.

 

[RainerMaria]

Umbrella is a must but it doesn’t cover any professional / malpractice overage. But yes to over limits homeowners, auto, bar fight claims. Which are all much more likely than an over limits malpractice claim.

 

[stillpremed]

My umbrella is 5M and the insurance company didn't ask for proof of income/net worth.

 

[onconc]

My umbrella is 5M and the insurance company didn't ask for proof of income/net worth.

Can I ask which insurance company is this ? I got it through my auto insurance and the max they would do is 3M

 

[stillpremed]

Can I ask which insurance company is this ? I got it through my auto insurance and the max they would do is 3M

Progressive. I left Geico a few years ago and I believe I had a 5M policy as well, not 100% sure on that one.

 

[The White Coat Investor]

Not sure whether this type of finance related post is against the rules.

What do you all do for financial asset protection ?

1. Do you set up some trust or other legal structures etc that is bulletproof from lawsuits ?
   - What kind of trust (or legal structure) is it ; and how did you set it up ?
2. Do you have umbrella insurance as part of asset protection ? If yes
   - What is the coverage limit ? I mean is it 0.5x or 1x or 2x of your total assets ?
   - Who is the provider company that provides the coverage?

PS. I already have malpractice tail and nose that covers 1M. And 300k or so of auto liability insurance. But assets are much above those numbers. My field (Hem-Onc) doesn't face that many number of lawsuits; but yes they happen once in a while. And even when there are payouts, the monetary settlements are not that high.

The basics of asset protection are:

1) Buy malpractice and personal liability with at least a 7 figure umbrella
2) Max out retirement accounts
3) Title your property and joint accounts as tenants by the entirety if allowed in your state
4) Learn your state asset protection laws
5) Evaluate whether more expensive, complex, and uncertain techniques (like trusts) are worth it for your situation

In my case, we do now have asset protection trusts in place, although mostly for estate planning purposes which we set up with an estate planning attorney in our state. We didn't have that when we were "just a doc".

We increased our umbrella from $1M to $5M, but $1M was probably fine when I was "just a doc". Ours is through the same company as our auto/home, USAA.

You don't need your umbrella to equal net worth, you need it to equal your liability. And since there's no way to know that, it's just a good idea to have enough that most creditors would feel like they got a lot if they were paid policy limits. Most people still view $1M as a lot.

Your likelihood of losing personal assets in a lawsuit is very low. Not zero, but very low.

 

[onconc]

The basics of asset protection are:

1) Buy malpractice and personal liability with at least a 7 figure umbrella
2) Max out retirement accounts
3) Title your property and joint accounts as tenants by the entirety if allowed in your state
4) Learn your state asset protection laws
5) Evaluate whether more expensive, complex, and uncertain techniques (like trusts) are worth it for your situation

In my case, we do now have asset protection trusts in place, although mostly for estate planning purposes which we set up with an estate planning attorney in our state. We didn't have that when we were "just a doc".

We increased our umbrella from $1M to $5M, but $1M was probably fine when I was "just a doc". Ours is through the same company as our auto/home, USAA.

You don't need your umbrella to equal net worth, you need it to equal your liability. And since there's no way to know that, it's just a good idea to have enough that most creditors would feel like they got a lot if they were paid policy limits. Most people still view $1M as a lot.

Your likelihood of losing personal assets in a lawsuit is very low. Not zero, but very low.

thank you ! great points.

I am contemplating #5 from your list right now.

As of now, I got a 3M policy from my auto/home insurance provider. 3M was the highest they said they could give. Anything beyond that they said requires some sort of commercial level policy with more paperwork and underwriting approvals etc.

You don't need your umbrella to equal net worth, you need it to equal your liability. And since there's no way to know that, it's just a good idea to have enough that most creditors would feel like they got a lot if they were paid policy limits. Most people still view $1M as a lot.

Your likelihood of losing personal assets in a lawsuit is very low. Not zero, but very low.

One thing our lawyer told me stood out to me. He said even if I have a policy limit that is more than my net worth, that doesn't mean my assets are safe. Say my networth is 1M and umbrella is for 2M, if there is a judgement for 3M, then there is a chance of losing my assets. And since I am a "high earner", they could even garnish my future wages in addition to losing existing assets.

As you said, the chance of that happening is very very low, but not zero.