Bogleheads ? View topic - Legally Mine [Asset Protection Law Firm]

1. Your attorney can help you focus on loss prevention first. If your concern is professional malpractice, have someone take a look at what patients sign. Does your state & your professional organization allow you to require binding arbitration or mediation over disputes; what is your disclaimer language; do you put caveats in writing when suggesting treatment plans which have uncertain outcomes--each state has separate case law which will dictate how helpful any of these will be. [Studies have found that better communication prevents some claims. I haven't personally reviewed those, but the concept seems reasonable.] I would think that your malpractice carrier would have information on all of these steps.

If your concern is rental real estate, there will be additional steps to take.

2. Structuring your practice may offer some possibilities for insulation. You should have an entity (e.g. LLC) that is well-capitalized on its own, & for which you respect legal requirements (meetings; corp. recordkeeping & filings; don't commingle assets; deal with patients in name of LLC, etc.). If there is a legitimate business reason (which you would be willing to explain and defend under oath), consider separating valuable assets into separate LLCs--eg your office fixtures owned by an LLC that leases them to your practice LLC; your building owned by a third LLC which leases it to the practice entity. While you should be justifiably proud of what you are building, I'd suggest avoiding naming everything after yourself.

3. Check to see if your state gives greater protection from creditors to 401ks than to other retirement vehicles like IRAs. That may influence (but shouldn't mandate) your choice of plan. (If you have only part-time employees other than yourself, you may have flexibility.) Check to see if your state offers protection from creditors to annuities & if it's worth the often truly horrifying fees to get the protection. Then look at the asset protection trusts in your state; ask your lawyer to identify how effective they are. Please keep in mind that, IMO, only irrevocable trusts (ie you don't control whether & when you get payouts or how $ is invested) in favor of third parties not involved in the practice really work--so a trust in favor of your kids probably works, but you can't take that money back. Any irrevocable trust in which you are the beneficiary "works" but has the problem that, as money is disbursed to you, a lien creditor can seize it. Also, your current earnings outside the trust can be attached. As a working professional, your situation is different from a retiree.

All of these layers of protection make it more challenging for a plaintiff to collect from you; but few are foolproof. The goal is to encourage a plaintiff's attorney to settle with the insurer. Once a judgment lien is entered against you, judges have wide discretion in enforcing judgments.

4. When evaluating the cost (especially ongoing, annual costs which are much higher than the set up fees) & the risk (I personally wouldn't send my money to an offshore asset protection company, but there may be risk in all of these schemes--divorce & probate issues in particular), it would be helpful to have a reasonable assessment of how much risk there is--looking at real numbers, not anecdotal reports from a guy selling asset protection schemes. I would think that your professional association or your insurance carrier could give statistics on the maximum judgment against a dentist with your type of practice (& how much it exceeded insurance cover); what the average judgment is; what the frequency is; etc. You want to take all reasonable steps which, in the opinion of a lawyer licensed in your state, are likely to protect your hard-earned assets without unreasonable risk and cost to you.

Many people refer to the Adkisson & Riser book "Asset Protection: Concepts and Strategies".

As to an earlier discussion, I do have an umbrella insurance policy, but I assume that its main protection is in the event of accidents (either auto or in my home)--usually business activities (like your dental practice) are excluded from coverage.

Since my "rental from hell" experience, I don't currently own rental real estate. Friends who still do invest set up a separate LLC for each property which is owned by a "master" LLC, none of which contain their names (lawyer or accountant acts as party to receive service of process); master LLC owned by credit protection trust with neutral name. Each LLC has its own insurance policy with reasonable liability limits to cover e.g. slip & fall. Most important, good landlords don't skimp on maintenance. They also run background checks which include records of litigation to verify disclosure requested on application. Don't lease to a potential problem tenant. Conversely, don't be a problem landlord.

Good Luck

Source: http://www.bogleheads.org/forum/viewtopic.php?f=2&t=114671&p=1669928

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