Safeguarding Your Financial Future

The cultural perceptions surrounding physicians tend to make them especially vulnerable to litigation. There’s no time like the present to ensure you have a proper asset protection strategy in place. In this year’s edition of Curi RMB Capital’s INVESTED Magazine , Jason Largey, Wealth Strategist, outlines six asset protection strategies for physicians and medical professionals to use as a starting point.

In a litigious society, wealth can invite risk. When a creditor or potential plaintiff knows their adversary is wealthy, the prospect of seizing those assets can be a strong motivator.
This risk is particularly acute for professionals in high-liability fields, such as medical practitioners. However, you don’t need to be a professional to be at risk; anyone who accumulates significant assets can become a target for those seeking to recover financial or emotional damages.

Ideally, individuals should begin protecting assets when they start accumulating wealth. This typically occurs after they complete their education and training, at which point, a professional such as a physician might join a medical practice. When valuable assets begin to accumulate, it is crucial to ensure that they are correctly titled, and to consider what types of entities might limit liability from potential creditors.

These six strategies are common starting points for at-risk individuals:

1. Ensure that you have adequate professional and personal liability coverage.
2. Create business entities to limit liability.
3. Maximize exempt assets, such as retirement accounts and primary residence.
4. Keep business assets separate from your personal assets.
5. Consider establishing irrevocable trusts for both asset protection and estate planning purposes.
6. Remove assets from your estate by using your lifetime gifting exemption to transfer them to family and charity.

Asset protection is one component of risk management within a financial plan. What works for one person may not work for another. Each financial plan developed by our advisors is tailored to the individual, a process that involves understanding the goals and motivations of the individual or couple, executing tasks in a timely manner, and regularly reviewing and updating the plan.

Safeguarding assets can come with trade-offs. One concern we often hear regarding certain asset protection strategies is that the asset owner is hesitant to give up full control of the account, as may be required when establishing multi-member LLCs or irrevocable trusts. These arrangements often involve registered agents or trustees who act as gatekeepers to potential creditors. Additionally, there are costs associated with hiring attorneys to create and implement these entities and tax professionals to comply with reporting requirements.

Implementing strategies for personal asset protection requires regular review of your financial plan and a comprehensive understanding of state and federal laws and regulations. Your Curi RMB Capital advisor can help you assess your risk level and make a plan that’s right for you. If you have questions, I encourage you to reach out to a member of our team to start a discussion today.

Key Considerations

Fraudulent Transfer Doctrine

Don’t wait to protect your assets until legal action is taken. Attempting to transfer or restructure assets after a claim has been made is known as the “fraudulent transfer doctrine.” In most states, if someone transfers assets as a gift or to an entity for protection purposes after a lawsuit claim is made, the plaintiff has the right to reclaim those assets. It’s vital to develop and enact an asset protection plan before any potential creditors emerge.

Federal and State Exemptions

The most powerful forms of asset protection are often federal or state exemptions. For instance, 401(k) or 403(b) accounts governed by federal ERISA laws offer absolute protection from creditors. Another example is the homestead exemption, which shields equity in one’s primary residence from creditors. The extent of this protection varies by state; in some states, it is absolute, while in others, it only covers a limited amount of home equity.

Afterword: Interested in reading more pieces like this from the Curi RMB Capital team? Check out the full edition of INVESTED Magazine here, for other timely and relevant content for investors and business leaders.

The opinions and analyses expressed in this blog post are based on Curi RMB Capital, LLC’s (“Curi RMB”) research and professional experience are expressed as of the date of our blog publishing. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is it intended to speak to any future time periods. Curi RMB makes no warranty or representation, express or implied, nor does Curi RMB accept any liability, with respect to the information and data set forth herein, and Curi RMB specifically disclaims any duty to update any of the information and data contained in this blog. The information and data in this blog do not constitute legal, tax, accounting, investment, or other professional advice. Returns are presented net of fees. An investment cannot be made directly in an index. The index data assumes reinvestment of all income and does not bear fees, taxes, or transaction costs. The investment strategy and types of securities held by the comparison index may be substantially different from the investment strategy and types of securities held by your account. RMB Asset Management is a division of Curi RMB Capital.   

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