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If you're a new doctor building your practice or a seasoned physician branching out on your own, it's time to give serious thought to asset protection planning. Did you know that doctors are among the top professionals targeted in lawsuits? It's not a matter of "if" but "when" you might face a claim. Too many professionals focus on earning and not protecting what they will earn and have earned.
In San Diego, protecting your hard-earned assets is even more crucial given the high cost of living and increased litigation risks. As a San Diego asset protection lawyer, I often hear some common misconceptions from doctors starting out, and I want to make sure you're not caught off guard.
Myth 1: "An LLC is all I need for asset protection."
LLCs are great for separating your business from your personal finances, but they're not a magic shield. A lawsuit or major debt could still pierce that corporate veil if you haven't taken additional steps.
Myth 2: "My malpractice insurance has me covered."
Malpractice insurance is essential, no doubt. But it's designed for specific situations and may not protect you from other lawsuits or claims. Think car accidents, real estate disputes, or even personal liability. California’s inflated lawsuit judgements have made it so that only the poor can have enough insurance to protect against the unexpected. If you don’t want to be poor, more than insurance is needed to assure your safety.
So, what's the real deal?
Asset protection is like a multi-layered cake. You need a variety of strategies working together:
- Insurance: Yes, malpractice is important, but consider an umbrella policy for broader coverage.
- Risk Separation Structures: Assets should be separated from risks. When it is not practical for you to separate an asset from the risk it generates, sometimes the value in that asset needs to be separated or stripped to keep it safe. In a medical practice, unless you protect them, receivables and equipment are low hanging fruit within potential claimants’ reach. Using multiple business structures can be an important first step to separating value from risk.
- Avoid Creating Additional Exposure: Whenever possible avoid taking on liability or personally guaranteeing performance. Although many providers of business services and goods ask for personal guarantees, many will do business with you without these guarantees on the same terms and with the same pricing they would have offered had you agreed to guarantee.
- Asset Shielding Structures: LLCs, LPs, and advanced structures like Spousal Access, Domestic and Offshore Trusts are critical to isolating your assets from any risks and potential liabilities which cannot be contained.
- Estate Planning: Don't forget about wills, trusts, and strategies for maintaining control and passing on wealth while minimizing taxes.
- Personal Finance: Smart investments and proper debt management can help you build your assets for the long run. Investments can serve to create a second income stream that continues when your time as a physician is done.
Each of these strategies has nuances, especially in San Diego. The right approach for you depends on your specific situation, goals, circle of support, and risk tolerance.
Don't leave your assets to chance.
Serving as a medical and business professional at the same time can be overwhelming. That's where we come in. Our experienced San Diego asset protection lawyers can help you create a comprehensive plan to safeguard your future.
Ready to take the next step?
Contact our law firm today for a confidential consultation. Let us help you create a safety net so you can focus on what you do best – healing and helping others. Simply call 619-281-1888 to get started.