Two Physician Asset Protection

[GoPistons]

Does anybody know how to protect your assets if both spouses are physicians... as both would be subject to the risk of medical malpractice...

should all accounts be tenants by entirety? or should you keep all your joint $$$ in two separate accounts...

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[APACHE3]

I'm not sure but have you looked into a a Life Annuity? You can put in as much as you want, maybe even tax deductible, then when you hit 60 or 65, the annuity starts paying you back (again I;m not sure how much) I say this because Annuities cannot be subject to seizure from law suits or malpractice or maybe its just easier to put everything in the kids name. I'm curious my self, I hope someone who knows something can elaborate!!

 

[GoPistons]

nobody wants to protect their ass..........ets?

 

[Poety]

If you put your assets in your children's names are you able to access it? This may be a dumb question - but i'm a new mom

 

[APACHE3]

If you are the guardian of the child (hence, assets) then you should be able to exercise your access to the assets until they are 18, 21 etc. Hopefully they won't be too pissed off at you when they turn 18 and kick YOU out of the house!

 

[Poety]

That little avatar may be racking it in then And all for being cute? Oy, wish my life was that easy

 

[GoPistons]

how about living in states that have common property versus common law states??

Should you keep individual accounts??

Are joint accounts a no no?

Anybody out there that knows this stuff?

 

[f_w]

> Should you keep individual accounts??

Anyway.

> Anybody out there that knows this stuff?

There are plenty of books out there. Unfortunately, most of them focus on selling some off-shore tax-evasion schemes, less on legal means to structure your property.

I have the same problem. I am in a high-litigation specialty in a high-litigation state. My wife is in a low-litigation specialty in a fairly decent malpractice state. So far, there are no assets to protect (just debt), but I am still looking for a good accountant/attorney for the day that we actually have something to protect. For the time being, everything is in separate accounts, real-estate is owned by either of us separately, separate credit records etc.

I understand that the following items are off-limits for judgements (at least in most states):

- trust-funds for your kids if they are structured in a way that you don't have access to the money (529s ?)

- annuities and certain pension plans

- 'whole life' or 'cash value' life insurance policies

- your residence (in FL the entire value, in other states just a ridiculous 'homestead' value)

Many of the o so secure trust structures and even property in your spouses name can be penetrated by plaintiffs. If anyone knows of an expert in the asset protection arena (who doesn't want to sell me a 'double blinded undervalued 4th person trust' in Bermuda), please pm me.

 

[beriberi]

A couple of things I know:

It is incredibly rare for personal assets to become subject to judgement in standard malpractice settlements. (Can anyone find a SINGLE example to the contrary?)

Having said that, 401ks and IRAs are more secure than 403bs (which are usually the account offered by the hospital--because they are a non-profit organization.) 403b's factor into many financial situations in slightly different ways than 401ks. Unless you are getting matching dollars from the institution, it is probably wisest to put any money you have into a Roth IRA or a traditional IRA.

Your lawyer will be upfront with you, in the case of a suit, about how much the max payout will be (after reduced by ?appelate, which jackpot settlements usually are) and should advise you where your insurance leaves you exposed--if it does. Lawsuits churn for years, it seems that there is plenty of time to establish these things, if necessary.

 

[f_w]

if it does. Lawsuits churn for years, it seems that there is plenty of time to establish these things, if necessary.

If you start 'hiding' your assets after a suit it filed you might as well write them the check up front. Any asset protection structures you engage in after a suit is filed can be 'penetrated'.

It is incredibly rare for personal assets to become subject to judgement in standard malpractice settlements.

It is uncommon, but not unheard of that personal assets are used to satisfy a judgement. I won't put the guys name here, but a friend of the family lost his shirt when he got nailed for a f^(*@p committed by one of the NPs he 'supervised'. The plaintiffs didn't even bother to sue the NP (who had minimal malpractice insurance and no personal assets). They went right for the money, the person with the better insurance and assets to hold on to.

 

[Poety]

I'd also recommend everyone to get umbrella insurance on their homeowners and vehicle as well - people just LOVE to find out they hit/fell down on/walked by and realized its a doctors <insert owned property here>

Sorry to sound so cynical, but I live in Jersey, the sue happy state of America

 

[undecided3yr]

A couple of things I know:

It is incredibly rare for personal assets to become subject to judgement in standard malpractice settlements. (Can anyone find a SINGLE example to the contrary?)

Having said that, 401ks and IRAs are more secure than 403bs (which are usually the account offered by the hospital--because they are a non-profit organization.) 403b's factor into many financial situations in slightly different ways than 401ks. Unless you are getting matching dollars from the institution, it is probably wisest to put any money you have into a Roth IRA or a traditional IRA.

Your lawyer will be upfront with you, in the case of a suit, about how much the max payout will be (after reduced by ?appelate, which jackpot settlements usually are) and should advise you where your insurance leaves you exposed--if it does. Lawsuits churn for years, it seems that there is plenty of time to establish these things, if necessary.

After residency, no one in this forum will qualify for IRAs, due to too high of incomes; especially physician couples.

 

[GoPistons]

I agree it is extremely rare that lawyers will go after a physician's personal assets unless a) the physician is an arrogant prick and the lawyer thinks he can easily get the jury to award severe damages or b) the lawyer finds out that you are worth a ton... You are not in anyway required to disclose how much you have in various accounts (IRA, mutual funds, savings accounts, 401ks, etc.)... so often lawyers will just go after the maximum your insurance company allows...

I agree that if you live in states with community property statutes, you are screwed... your wife's and your assets are eligible to creditors no matter which one of you are sued... barring of course any exempt property...

but for common law states (most states)... what do we do?

I would like to have a joint banking account and joint accounts as we are a family, and I believe this to have some companionship/camraderie value to the relationship, but I am not willing to sacrifice asset protection if I can...

let's say you have a joint checking account in which you both direct deposit your paychecks... from there, if you transfer the money to individual mutual fund accounts, savings accounts, etc., is that considered asset protection? Basically, is it the "trail" of the money from whence it came or is it whose name the money is under at the time of the lawsuit?

Furthermore, I understand that you cannot by law begin to transfer assets after you are sued... that will guarantee that you are guilty of fraud and present its own legal ramifications...

 

[GoPistons]

also, I personally know of three cases in which lawyers went after physicians personal assets... one of which was successful... it involved a pain medicine doctor who had a number of clinics of his own... he was certainly a prick and they went after him hard... so it does happen... but extremely rare...

I would like to do simple things without getting into the laborious nature of setting up complex offshore accounts, etc. Doctors really don't have THAT much money to bother with things like that...

the laws in this country are really rather stupid when you think about it... what is available to creditors and what is not is completely state dependent and additionally dependent on very random things such as roth-ira vs. ira vs. 401k vs. 403b when in actuality they really serve identical functions... now we know why there are so many damn lawyers...

 

[f_w]

a) the physician is an arrogant prick and the lawyer thinks he can easily get the jury to award severe damages

Lawsuits are nothing personal. It is an industry and you are the raw material. Whether you are mother Theresa or Andrew Fastow, they will try to squeze the last penny out of you.

b) the lawyer finds out that you are worth a ton... You are not in anyway required to disclose how much you have in various accounts (IRA, mutual funds, savings accounts, 401ks, etc.)...

The first step in suing someone is to find out what they are worth. Attorneys won't touch a case unless they know that the potential payoff is worth the investment. Financial information is unprotected in this country, a couple $100 worth of a financial investigators work will uncover your real-estate stock and mutual fund holdings.

 

[sdn1977]

I don't think it matters if the situation is two physicians or just a high asset family. It matters more what state you live in and your assets. In our situation, a dentist & pharmacist, altho both of us are exposed to malpractice, our assets are more vulnurable because dental awards are greater than awards for pharmacist malpractice. We have never been sued (take all the CE classes you are offered on how to avoid being sued!), but we have had friends who have been. In our state, your personal assets are subject to the award. There are ways to limit your exposure though - S-corporations vs sole proprietorships, etc.....When you are ready to go into practice, retain an attorney whose practice involves medical professionals (you'll need him/her anyway because these same legal methods are required to limit your tax liability). These folks are easy to find - your colleagues in the area you are going to practice in have names of attorneys, accountants, other professionals you'll need to have use of over your professional life. But - there is no one answer - each state has different rules!

 

[sdn1977]

After residency, no one in this forum will qualify for IRAs, due to too high of incomes; especially physician couples.

Actually, thats not quite true. Everyone, no matter their income level, can contribute to an IRA. You just don't received the tax benefit of doing so, but you can (and we do) contribute. However, depending upon how you set up your practice, you have Keogh's or other vehicles for different corporate entities (S-corps, LLC's, etc...) which do allow a before tax contribution. Gets complicated though - you also have to contribute for employees in addition to yourself - thats why you need an accountant & an attorney!

 

[beriberi]

If you start 'hiding' your assets after a suit it filed you might as well write them the check up front. Any asset protection structures you engage in after a suit is filed can be 'penetrated'.

If I hypothetically was named in a lawsuit right now (as a resident), it will take an average of 4 years to complete--longer if goes to trial (according to my local risk management office). In the next four years I will have significant income and can make many choices about what I do with that. Placing a large portion in retirement, buying the most expensive house I can afford, deferring compensation (joining a practice that has significant buy-in). I am not talking about bank accounts in the Cayman islands. I am suggesting that between being served an settling/trying a case, there are many choices one makes that maximize or minimize one's exposure.

Until one has serious assets (very rare on this forum) or a serious threat one should not let the threat of malpractice guide personal finance.

 

[LADoc00]

I have never heard of an MD getting their personal assets taken unless its something huge(massive fraud, sexual misconduct/rape etc). That sounds scary tho, certainly. Has to be extremely rare.

 

[f_w]

Until one has serious assets (very rare on this forum) or a serious threat one should not let the threat of malpractice guide personal finance.

If you are in california or any other state with a court-tested waterproof cap on non-economic damages (or a working compensation fund), you don't have to worry too much about asset protection. Anywhere else, it would be foolish to ignore the issue.

If I hypothetically was named in a lawsuit right now (as a resident),

Residents get often named, but most of the time they get dropped before trial or settlement. I know of one case where a pediatric intern got nailed for 26mill (This was another case that demonstrated the 'deep pockets' principle very well. The 2 attendings that f###ed up the case big time were allowed to walk because their liability was capped. Through a glitch in the law the interns liability was not capped, so the jackaals went after her instead.)

 

[LADoc00]

If you are in california or any other state with a court-tested waterproof cap on non-economic damages (or a working compensation fund), you don't have to worry too much about asset protection. Anywhere else, it would be foolish to ignore the issue.




Residents get often named, but most of the time they get dropped before trial or settlement. I know of one case where a pediatric intern got nailed for 26mill (This was another case that demonstrated the 'deep pockets' principle very well. The 2 attendings that f###ed up the case big time were allowed to walk because their liability was capped. Through a glitch in the law the interns liability was not capped, so the jackaals went after her instead.)

Ummm an intern got a 26 million dollar judgement against her??? How could that possibly be justified? Did she kill a whole village of kids??

 

[f_w]

Did she kill a whole village of kids??

No, just one (unfortunately the kid didn't die that night but lived on for a couple more years and ultimately died of complications of a small bowel transplant). The peds-GI, the ED attending and the inpatient peds attending who all missed this case of small bowel volvulus and admitted the kid as 'gastroenteritis' where dropped from the suit. The intern, who just happened to be on call that night was left out to dry by the hospital system.

 

[viostorm]

Does anybody know how to protect your assets if both spouses are physicians... as both would be subject to the risk of medical malpractice...

should all accounts be tenants by entirety? or should you keep all your joint $$$ in two separate accounts...

I am engaged to another med student, and your post really got me worried about how we are going to structure our assets.

Check out this link, it has a TON of info on asset protection, including the use of LLC's, US trusts, offshore trusts, et cetera, lots of stuff specifically for physcians.

http://www.rjmintz.com/

It is really scary how vulnerable all of our assets are as a physcian:

http://www.rjmintz.com/question-and-answer8.html

 

[beriberi]

Does anyone have more information about the resident named in the lawsuit? I know this story--I think I remember that it happened in Wisconsin a couple of years ago. I have tried to search the web for more information, but I couldn't find any.

I seriously doubt that the resident paid a single cent out of pocket for this (except maybe in psychiatry fees--but asset protection would not have helped with this). I also doubt that the 26 million was the final number--these things are nearly always reduced on appeal to the "sustainable number" (according to a lawyer I know.)

26 million is scary. 432 million is scary. 2 million is scary. None of these numbers have anything to do with money that someone is going to make you pay.

 

[f_w]

Sarah M. Hegarty (deceased) vs. Angela Beauchaine, M.D & Children's Hospital of Wisconsin, Inc.

 

[GoPistons]

viostorm,

thanks for the link... that one is extremely good...