Question for MDs on protecting assets & insurance

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fundtalker123
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Question for MDs on protecting assets & insurance

Post by fundtalker123 »

Following up on the recent question about protecting assets against lawsuits, I have some questions for diehard MDs (EmergDoc, others?)

1. My wife is a MD (final year of residency) and will be potentially subject to malpractice lawsuits in the future. Besides insurance how can we shield our assets? Are assets in a joint account in risk? Would putting assets in an individual account under only my name protect them better? Or can we create some kind of trust that protects our joint assets better?

2. Should she have some kind of disability insurance? For example, if she suddenly goes blind and can't work, can she have some policy that would protect her income?

3. Any diehard-esque advice on choosing malpractice insurance? (in California)

4. Any other questions I should be asking? My wife has no interest in financial matters so its up to me to investigate these issues.

Thanks.
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goosecat
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Post by goosecat »

I'm a doctor and I recently asked a lawyer about ways to protect my assets in case of a malpractice suit. His answer was first and foremost to have enough malpractice insurance. He told me that an LLC would not be helpful. I didn't ask about trusts or putting assets under a spouse's name.

I have individual disability insurance through Berkshire (formerly Guardian). It was the best policy I found in my research 3 yrs ago. It is own-occupation which is a must IMO. Disability insurance is very expensive for a good individual policy but a good idea I think until you are close to financial independence.
Gregory
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tricky area

Post by Gregory »

I'm also a physician, and as a specialist I'm often called to see complex cases. In the event of a lawsuit, the physician with the best insurance is often the "deep pocket." Malpractice lawyers I know make no bones about the fact that they're willing "to build a case around the doc with insurance." The system is becoming untenable.

It's a personal decision. Some hospitals won't let you on staff without malpractice insurance. I personally have "defense only" insurance which provides for $100K of defense fees, and $0 for a settlement. This is a forme fruste of being self-insured. I'm responsible for any settlement. Because my assets are part of a family ltd partnership, home and profit sharing plan are ERISA protected, and IRA's can't be touched in my state, I'm not a good "target" for a lawsuit. I have essentailly no attachable assets.

She really should sit down with two people: (1) a senior physician who's been successfully sued to know "what it was like, and what I would have done differently to proctect myself" and (2) an asset protection attorney -- even if she decides not to pursue asset protection.

Good luck.

Greg
Pecuniae imperare oportet, non servire. | Fortuna vitrea est; tum cum splendit frangitur. -Syrus
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dm200
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Not in the field - but a little

Post by dm200 »

experience protecting (or not protecting) assets.

Some of this may depend on state law, so consult an attorney familiar with your state's laws.

Two asset areas protected me from being wiped out recently from a judgment from former employer lawsuit. Retirement assets in an IRA and equity in home owned jointly as tenants by the entirety with my wife.

I am sure there are tradeoffs, such as lawsuits against me or divorce settlement from my wife, and each situation is different.

In a somewhat curious twist (and completely unrelated), 2 years ago I got an infection following surgery, and have some ongoing consequences. It NEVER occurred to me to sue the surgeon, BUT lots of folks ask, "Are you planning to sue the surgeon?"

I guess this is the sort of thing doctors get sued for all the time, and are either expensive to settle, expensive to defend, expensive to pay if found "guilty" or all three.

Maybe some of the big bucks that go for legal defenses, payments, insurance premiums, etc. could go to prevent some of the stuff that happens to folks (like my infection).

dan
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Re: Not in the field - but a little

Post by White Coat Investor »

dm200 wrote:
In a somewhat curious twist (and completely unrelated), 2 years ago I got an infection following surgery, and have some ongoing consequences. It NEVER occurred to me to sue the surgeon, BUT lots of folks ask, "Are you planning to sue the surgeon?"
dan
These "nuisance suits" are very common, but rarely go anywhere. The physicians "win" something like 90% of the suits brought, simply because they weren't malpractice. They were simply a bad outcome, which happens all the time in medicine. All surgeries have a known rate of infection. If you do enough surgeries, some of them will get infected. Unless the doc left an instrument in or something it would be tough to win that suit.
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Re: Question for MDs on protecting assets & insurance

Post by White Coat Investor »

fundtalker123 wrote:Following up on the recent question about protecting assets against lawsuits, I have some questions for diehard MDs (EmergDoc, others?)

1. My wife is a MD (final year of residency) and will be potentially subject to malpractice lawsuits in the future. Besides insurance how can we shield our assets? Are assets in a joint account in risk? Would putting assets in an individual account under only my name protect them better? Or can we create some kind of trust that protects our joint assets better?

2. Should she have some kind of disability insurance? For example, if she suddenly goes blind and can't work, can she have some policy that would protect her income?

3. Any diehard-esque advice on choosing malpractice insurance? (in California)

4. Any other questions I should be asking? My wife has no interest in financial matters so its up to me to investigate these issues.

Thanks.
Insurance is obviously a biggie. So is making sure her new hospital/group has a good risk management office. Having skilled attorneys on your side is VERY helpful when you get into one of these situations. I don't know enough about trusts to answer all of your questions in # 1. It is difficult to generalize since so many of the regulations are state specific (and I don't know California much except that it has a horrible malpractice environment per the docs I've talked to out there.)

She definitely needs disability insurance. It is worth picking up an independent policy while still a resident. This is an "after-tax" policy which will pay tax-free benefits. You may or may not be able to get an own-occupation, specialty-specific rider. If you can pay extra for it. Guardian/Berkshire and Standard are the only companies I know of that do this for emergency medicine. She will probably also get a pre-tax policy as part of her benefits package, but it is unlikely to be as good of a policy.

I can't help you with the malpractice insurance as I have never had to buy my own.

Your wife is lucky to have you. If you two do it right her income and your investing prowess will likely serve you two very well. The main thing for new docs is to not bump up their standard of living when their income quadruples coming out of residency. This allows a doc to put away a ton of money those first 5 years out of residency to make up for the fact that they are 10-15 years behind their peers who started saving right out of high school.

Be sure to max out all retirement accounts available to you as these often have additional protection in the event of lawsuit. Purchase umbrella insurance ($2 Million.) This will protect you from your neighbors who assume you have deep pockets because you're a doctor. Little things like dog bites or trampoline accidents can add up in a hurry. Find out if your state is a community property state. If it is, it probably won't do you any good to put assets in your name. Go see an attorney who specializes in this stuff, just for a brief consultation and pay him well.
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johnoutk
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Re: Question for MDs on protecting assets & insurance

Post by johnoutk »

EmergDoc wrote:
fundtalker123 wrote:Following up on the recent question about protecting assets against lawsuits, I have some questions for diehard MDs (EmergDoc, others?)

1. My wife is a MD (final year of residency) and will be potentially subject to malpractice lawsuits in the future. Besides insurance how can we shield our assets? Are assets in a joint account in risk? Would putting assets in an individual account under only my name protect them better? Or can we create some kind of trust that protects our joint assets better?

2. Should she have some kind of disability insurance? For example, if she suddenly goes blind and can't work, can she have some policy that would protect her income?

3. Any diehard-esque advice on choosing malpractice insurance? (in California)

4. Any other questions I should be asking? My wife has no interest in financial matters so its up to me to investigate these issues.

Thanks.
Insurance is obviously a biggie. So is making sure her new hospital/group has a good risk management office. Having skilled attorneys on your side is VERY helpful when you get into one of these situations. I don't know enough about trusts to answer all of your questions in # 1. It is difficult to generalize since so many of the regulations are state specific (and I don't know California much except that it has a horrible malpractice environment per the docs I've talked to out there.)

She definitely needs disability insurance. It is worth picking up an independent policy while still a resident. This is an "after-tax" policy which will pay tax-free benefits. You may or may not be able to get an own-occupation, specialty-specific rider. If you can pay extra for it. Guardian/Berkshire and Standard are the only companies I know of that do this for emergency medicine. She will probably also get a pre-tax policy as part of her benefits package, but it is unlikely to be as good of a policy.

I can't help you with the malpractice insurance as I have never had to buy my own.

Your wife is lucky to have you. If you two do it right her income and your investing prowess will likely serve you two very well. The main thing for new docs is to not bump up their standard of living when their income quadruples coming out of residency. This allows a doc to put away a ton of money those first 5 years out of residency to make up for the fact that they are 10-15 years behind their peers who started saving right out of high school.

Be sure to max out all retirement accounts available to you as these often have additional protection in the event of lawsuit. Purchase umbrella insurance ($2 Million.) This will protect you from your neighbors who assume you have deep pockets because you're a doctor. Little things like dog bites or trampoline accidents can add up in a hurry. Find out if your state is a community property state. If it is, it probably won't do you any good to put assets in your name. Go see an attorney who specializes in this stuff, just for a brief consultation and pay him well.
I'm also a doc and agree with what is posted above. I have at-work malpractice insurance as well as DI and a portable DI policy too. I have an umbrella policy as well. I think that Family Limited Partnerships, (FLiPs), are the most effective in protecting your personal assets, although you need to consult a lawyer. I've heard that living trusts aren't very effective in protecting assets from lawsuits however when our lawyer drew ours up he had our house put in my wife's name, (we're both docs, but he suggested we put our house in the name of the person less likely to be sued.)
donocash
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Claims-made vs occurence

Post by donocash »

The number one mistake physicians make with malpracitice insurance, in my opinion, is not understanding the difference between "claims-made" vs. "occurence" malpractice insurance policies.

"Claims-made" may be cheaper initially, but may cost you dearly in the long-run because you are protected only while the policy is in effect. Should your wife then have to change insurance or leave the field, you would have to buy a "tail", and that can be expensive, or even unavailable.
nyblitz
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Post by nyblitz »

Some very good advice above.
Regarding disability insurance:
1. It would be wise for your wife to look into it while still a resident - she can save a lot of money with group rates that usually are only available to residents. Females are charged more for DI policies, but as a resident, it's possible to get "male" rates if able to join as a group.
2. There are a lot of definitions and each company has slightly different wording to contracts. Each specialty will have different options available in which companies fit better. Here is a good place to start with a number of articles:

http://www.physicianfinancialservices.com/section6.cfm
Own-occ, noncanellable, gauranteed renewable is ideal.

3. DI changes fast. 2 weeks ago, Berskshire just made a major change in their policy for EM, anesthesia, and pain management docs. Unfortunately, this means that speaking to a doc even only a few years out, even in the same specialty, may not be up to date. Get a good insurance agent and get this done as a resident, if at all possible.

Regarding asset protection, I have little to add (I find it very state specific) - and will enjoy reading further posts.
Good luck!
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nick22
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MDs

Post by nick22 »

The laws are so state specific that your wife should consult a California attorney specializing in MDs and estate planning and wealth protection issues. The type of practice she is in will also make a difference. As far as the basics, usually a primary home, 401ks and IRAs are protected from lawsuit judgements. In some states, variable annuities are also protected and another way to protect assets from judgments. LLCs can be helpful in some states, but not all. An "occurence" malpractice policy is ideal, otherwise tail coverage will be needed if she leaves a job to keep her covered from old suits popping up. Long-term disability is also a must.

So there are a lot of issues and most have state-specific rules, so an excellent attorney specializing in MD issues will be the way to go. I am sure she can get good recs from attending MDs or local professional associations.
Nick22
snacks99
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Post by snacks99 »

No one here uses the AMA group disability insurance?
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Post by White Coat Investor »

snacks99 wrote:No one here uses the AMA group disability insurance?
They wouldn't give it to me. I'm currently active duty military. For some reason they are afraid to insure our soldiers.
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smackboy1
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Re: Question for MDs on protecting assets & insurance

Post by smackboy1 »

fundtalker123 wrote:Following up on the recent question about protecting assets against lawsuits, I have some questions for diehard MDs (EmergDoc, others?)

1. My wife is a MD (final year of residency) and will be potentially subject to malpractice lawsuits in the future. Besides insurance how can we shield our assets? Are assets in a joint account in risk? Would putting assets in an individual account under only my name protect them better? Or can we create some kind of trust that protects our joint assets better?

2. Should she have some kind of disability insurance? For example, if she suddenly goes blind and can't work, can she have some policy that would protect her income?

3. Any diehard-esque advice on choosing malpractice insurance? (in California)

4. Any other questions I should be asking? My wife has no interest in financial matters so its up to me to investigate these issues.

Thanks.
My wife is an MD too, and in a high risk specialty to boot. Living and working in a part of the country (Philadelphia, NJ metro) which pays out some of the highest med mal judgments in the country doesn't really help much. You are lucky, California has a $250K pain and suffering cap so insurance premiums are reasonable. Here, premiums for surgeons can exceed $100K/year. In answer to your Q's, here are some tips we've picked up over the years:

1) Have a reasonable amount of malpractice coverage. Make sure to get "occurrence coverage". This covers incidents which occur during the period the insurance is in effect. The other kind of insurance is "claims made" which is cheaper (employers like it) because it only pays claims made during the period the insurance premiums are paid. She will then need to purchase a "tail" when she leaves the job to cover subsequent claims made. Definitely have an attorney review any employment contract before signing. California does not recognize tenancy by the entirety so joint accounts don't offer much protection at all. Putting all the property solely in your name is not a good idea, what if you accidentally run over Tom Cruise on the way to the Circle K?

2) ST and LT disability insurance (and life insurance if you have dependents) are must haves. Disability insurance should be "own occupation" so she will still be considered disabled even if she is employable, albeit in another field.

3) Malpractice is usually provided by the employer and should be negotiated carefully.

4) Do some reading by starting here http://www.assetprotectionbook.com/phys ... ection.php
and then seek out legal counsel when negotiating employment contracts. If she is just starting out then there probably aren't that many assets to protect yet, so you have time to consider the pros and cons and build defenses accordingly.

We know physicians who have defended and lost million dollar lawsuits, the insurance pays and life goes on. If she can find seminars for physicians teaching them how to avoid malpractice lawsuits when caring for patients, that can be helpful (although some of these "courses" turn out to be hosted by companies trying to scare doctors into buying their asset protection services, so beware).
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.
nyblitz
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Post by nyblitz »

One subject that has somewhat eluded me to this point is the timing of when to get professional help regarding asset protection. Disability is pretty easy – in general, get it as early as you can. However, it’s not as clear cut about asset protection.
As a senior resident who is moving to a new state to practice, I have virtually no assets at this point. Most texts recommend getting protection in place before suits – but when?
For the more experienced physicians out there, when do you recommend meeting with an asset-protection lawyer specialist? Also, please list how your specialty may / may not effect this decision. Possibilities that I’ve considered:
1) Always as early as possible – ex – when med student/resident/fellow?
2) When moving to new state?
3) When net worth is positive?
4) When become a partner?
5) When you have finally filled up retirement accounts and are going to be contributing to taxable?
6) When you purchase a home / rental property?
7) When your patient says, “I’m going to sue you!” (Just kidding)
Thanks for any ideas!
Gregory
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nyblitz

Post by Gregory »

Remember, protection varies state by state, but here's what I would do since your present and future assets are in danger with your very first case on you first day out of training. I would meet with an asset protection attorney before starting in practice and set everything up.

I have an acquaintance who's husband is an ortho. He was sued by his first patient out of residency.

Good luck.
Pecuniae imperare oportet, non servire. | Fortuna vitrea est; tum cum splendit frangitur. -Syrus
smackboy1
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Post by smackboy1 »

nyblitz wrote:One subject that has somewhat eluded me to this point is the timing of when to get professional help regarding asset protection. Disability is pretty easy – in general, get it as early as you can. However, it’s not as clear cut about asset protection.
As a senior resident who is moving to a new state to practice, I have virtually no assets at this point. Most texts recommend getting protection in place before suits – but when?
For the more experienced physicians out there, when do you recommend meeting with an asset-protection lawyer specialist? Also, please list how your specialty may / may not effect this decision. Possibilities that I’ve considered:
1) Always as early as possible – ex – when med student/resident/fellow?
2) When moving to new state?
3) When net worth is positive?
4) When become a partner?
5) When you have finally filled up retirement accounts and are going to be contributing to taxable?
6) When you purchase a home / rental property?
7) When your patient says, “I’m going to sue you!” (Just kidding)
Thanks for any ideas!
I don't work in the asset protection/bankruptcy field but this is from my research for myself. I'm a big believer that seeing a lawyer is like seeing a doctor, don't wait until you are really sick, a little prevention goes a long way. Waiting until an incident happens will limit the protections available. Estate planning is the same way.

That being said, all states have "fraudulent transfers" or "preferential transfers" laws. The idea is that when creditors are at your door, you can't just give your assets away to your sister or move it into a trust in the hopes to keep it safe. Courts will order that money returned. States differ in the period of the statute of limitations for challenging a transfer but I think 4 years is the period in the Uniform Fraudulent Transfer Act which many states have adopted in some form. When looking at a transfer, courts use a sort of smell test: does the debtor's actions smell like they were for the purpose of defeating an imminent creditor or do they have some other legitimate purpose e.g. good business practices?

But, if you are about to graduate from residency and have not much assets (and maybe some debt), don't get all stressed out now. Make sure you get adequate malpractice insurance and read up on asset protection so you will be a smart consumer when the time comes.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.
janakybrent
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Re: tricky area

Post by janakybrent »

Gregory wrote:I'm also a physician, and as a specialist I'm often called to see complex cases. In the event of a lawsuit, the physician with the best insurance is often the "deep pocket." Malpractice lawyers I know make no bones about the fact that they're willing "to build a case around the doc with insurance." The system is becoming untenable.

It's a personal decision. Some hospitals won't let you on staff without malpractice insurance. I personally have "defense only" insurance which provides for $100K of defense fees, and $0 for a settlement. This is a forme fruste of being self-insured. I'm responsible for any settlement. Because my assets are part of a family ltd partnership, home and profit sharing plan are ERISA protected, and IRA's can't be touched in my state, I'm not a good "target" for a lawsuit. I have essentailly no attachable assets.

She really should sit down with two people: (1) a senior physician who's been successfully sued to know "what it was like, and what I would have done differently to proctect myself" and (2) an asset protection attorney -- even if she decides not to pursue asset protection.

Good luck.

Greg
Gregory, a beautiful post! I'm elated you have done your homework regarding asset protection. This is a highly specialized area of law, and physicians should, in my opinion, be consulting with an accomplished asset protection attorney. I am not a physician, but because of my firm (wealth management), it is one of the areas which is important to our high net worth clients, including MDs.

From speaking with asset protection attorneys, I have been told that one should speak with his/her estate planning attorney, who will then recommend a good asset protection attorney. The idea is to have the asset protection attorney work as a consultant for the estate planning attny. Why is this? This is to remove the asset protection-client (physician) link. It's wise to keep your asset protection efforts on the quiet side. Anyways, this is better explained by an attorney.

I would like to recommend a SUPERB asset protection forum. I am a member, and have enjoyed the help I get from the asset protection gurus that post there. http://www.assetprotectioncorp.com/cgi- ... matebb.cgi

Good luck everyone and I hope you find the information you're looking for.

Regards,

Brent Janaky, MBA
Last edited by janakybrent on Tue Apr 10, 2007 12:47 pm, edited 1 time in total.
smackboy1
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Re: tricky area

Post by smackboy1 »

janakybrent wrote:I would like to recommend a SUPERB asset protection forum. I am a member, and have enjoyed the help I get from the asset protection gurus that post there. http://www.assetprotectioncorp.com/cgi- ... matebb.cgi
That's a good forum. Jay Adkisson, who co-wrote this book posts there http://www.assetprotectionbook.com/.

BTW, just to show the MDs what a scam looks like, see here http://www.nationalmedicalfoundation.org/ It looks pretty legit and the venues they present at are legitimate. But it's BS. At an annual ACOG (American College of Obstetricians & Gynecologists) meeting my wife attended what was nominally a seminar about preventing physician malpractice and instead got a sales routine for DIY cookie cutter plans. They are barred from hosting seminars in FL for illegal practice of law without a license (the presenters are not attorneys). Caveat emptor.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.
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fundtalker123
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Post by fundtalker123 »

Thanks for all the replies.
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