Legally Mine asset protection, family limited partnerships

[sambb]

I went with a friend to a presentation to medical professionals (I didnt go as a medical professional myself).
This company spoke about asset protection from lawsuits including family limited partnerships (?) or something else to keep assets out of lawsuits, and domiciled in Alaska. Also tax strategies to rent one's house to oneself. There were other things wiht specific IRS codes.
Any information on this? It was protection vs lawsuits (personal or professional)

[toofache32]

Doctor here. I have never attended their seminars. These guys have been covered on a few different medical forums I participate in. As I remember it, they like to obtain "legitimacy" by selling themselves to local medical societies to make physicians think they have already somehow been vetted. They tout plans which are pitched as unique to a mostly unaware physician audience, which can actually be obtained anywhere. They instill a sense of urgency on this and try to get docs to sign up ASAP. As I remember, they require about $5000 for that with a money back guarantee. I have heard from several physicians that a few days later did their homework and realized their mistake, and never got their $5000 back. Do a search here on bogleheads, there are several threads on this.

https://www.texmed.org/Template.aspx?id=33741

https://www.ripoffreport.com/reports/le ... ah-1284936

[afan]

The biggest risk seems to be using the schemes they will set up. That could get one into serious tax and fraud exposure.

There are some legitimate uses of some of these approaches to some problems for some people in some states. A one size fits all plan such as they seem to promote, cannot work.

Unfortunately, if you want comprehensive estate and asset protection planning it requires hiring an attorney who is deeply experienced in this area. They don't work cheap. A good one will create a plan that works for you and will not get you in trouble with the IRS or have you committing fraud. They will also explain that there is no magic wand they can wave and protect you from all lawsuits while giving you full access to your money.

I gather the cost of a legitimate expert varies by location but it would be a lot more than $5,000 in my area.

FLPs can be useful for discounting your assets for estate tax planning. There is constant speculation that the loophole may be closed. Of course, at current levels of the exclusion, not many people have to worry about federal estate taxes.

Depending on your situation, there may not be much to be accomplished by creating an expensive plan.

[J295]

Many professionals and others with a solid marriage and potential personal liabilities may choose keep this simple by .....

Dividing assets (including cash and brokerage accounts) between spouses from the start of their financial lives (rather than making a 50/50 split after getting served with a professional negligence lawsuit). They may choose to disregard 401k assets in this exercise due to its nature as being generally not subject to creditor claims -- see Patterson v. Shumate USSCT case).

Carrying a reasonable amount of professional negligence insurance, and other insurance coverage (to include umbrella).

State law may effect these decisions (such as the availability of homestead exemption amount ... i.e. Florida and Texas are rather generous with this exemption I believe.

Is it an absolute lock? No, but it's pretty simple and reasonably effective for most I would guess.

[Derby]

Have adequate insurance and save the $5000. The odds of a malpractice attorney going after personal assets is about zero. I've never heard of a case and I've never heard of anyone who's ever heard of a case.

[senex]

They will also explain that there is no magic wand they can wave and protect you from all lawsuits while giving you full access to your money.

I've been told that the standard mass-market text on this topic is Adkisson's ( https://www.amazon.com/Asset-Protection ... 071432167/ ), which says pretty much what afan summarized: no magic bullets, laws constantly change, the risks aren't where you think they are, it is complicated and costly, etc.

[aspiringboglehead]

Irrevocable trusts and family LPs/LLCs are a commonly used device for many reasons, one of which is that they can improve the likelihood of asset protection, even if (as others have said) the law is not certain. I obviously don't recommend particular providers of these services, particularly if they reach out via salespeople. But there are many legally sound uses of these structures, even if the protections they provide are not perfect.

Alaska's business law does have some provisions that favor owners of small business entities over creditors; that is, there are several cases in Alaska that do make it seem that business entities in that state can provide considerable and perhaps surprising protection against creditors in some situations.

Of course, many people are unlikely to need "asset protection" beyond insurance. The abstract threat of liability shouldn't be enough to motivate most people to adopt complex, potentially expensive legal structures.