You already know how much effort it’s taken to build your medical practice from the ground up. You have spent years pursuing your education, worked in the field to gain your hands-on experience, and sacrificed sleep and healthy stress levels to be able to do what you do. Now, you strive to improve the health of each patient you see, and you’re able to reap the fruits of your labor.
Unfortunately, being a doctor doesn’t always mean you’re immune to potential financial devastation. We live in a world of liability, where the slightest misstep could cost you not only your practice, but your personal livelihood. In spite of all of your tremendous efforts, bad things happen to good people, and that could have you exploring the concept of asset protection.
In layman’s terms, asset protection seems pretty self-explanatory—it’s a style of financial planning designed to help secure your cash and possessions in the event of a lawsuit. For doctors, it frequently aims to pick up where malpractice insurance leaves off, providing an additional safeguard against claims that could cost you millions. However, there are many elements within asset protection that you should understand to get the highest level of security, and we’re here to tell you all about them.
The “what” and “why” of asset protection
If there’s one fundamental rule to understand about asset protection, it’s that if your name isn’t on it, you can’t prove that you own it. Often enough, we prove ownership with our signature, and having your name on house deeds and car titles indicates that those tangible items are yours. This is useful for obvious reasons—if you can prove that it belongs to you, no one can take it from you, right? Not exactly.
In the event of a lawsuit or other hefty financial claim, assets are typically the first things to go, as folks often don’t have large sums of money simply lying around the house. Their assets are drained or sold, and they use the money to pay lawyers or cover settlements. Not only can this easily leave them without their savings or financial cushion, but it can cost them their homes and, in some cases, their entire practice. Imagine having one lawsuit take everything that you’ve spent your entire adult life working toward? It’s not a pretty picture.
As a result, one key element to asset protection is finding ways to have access to your personal effects while not holding them in your own name. Many medical professionals opt for things like protection trusts and retirement accounts to hold a vast majority of their wealth, as their inaccessibility to suits and settlements may make them seem like a safer choice than a singular savings account. Not only are these options sensical, but they can be enough to scare away any potentially senseless claims, as common sense suggests a smart lawyer might not want to tangle with too much red tape (and potentially lose).
If you think that these aren’t considerations you need to take seriously due to your track record or expertise, think again. Research suggests that, while the number of malpractice suit payouts appears to be dropping across the country, it still happens in every medical specialty. Of course, there’s no way to prove the merit behind any of those claims, which means that literally every practicing professional is vulnerable at any time. Beyond that, studies show that being well-established doesn’t do much to drop your risk level—a shocking number of doctors over the age of 50 have experienced a lawsuit in their career, to the tune of nearly 50%.