Category Archive for ‘Asset Protection’
Asset Protection, The Planby Scott Einiger, Esq.
As risk management counsel to one of the largest malpractice carriers in the US for over 15 years, and currently as general counsel to various medical societies, I have heard countless physicians express their fear of litigation and concern about rising verdicts in the malpractice arena. The potential for malpractice liability should be a concern for any licensed medical professionals in interested in protecting their practice and personal assets. Doctors of all types are targeted for litigation because they are seen as deep pockets by litigants in actions involving malpractice claims, employment disputes and even motor vehicle accidents. Sometimes having MD plates on your automobile can backfire as it can act as a big neon sign flashing “sue me!”
Most doctors are aware of their professional liability and purchase malpractice insurance for protection. However, traditional malpractice insurance is not nearly enough. Cases brought against doctors each year can result in awards that are above coverage limits or the risks experienced are not being covered by insurance. These “hidden” risks can pose equally as devastating an impact to the financial, physical and mental well-being of physician business owners because they are much more likely to result in large out of pocket expenditures.
Doctors can expend substantial amounts to pay for defense cost related to matters where no insurance coverage has been obtained. Common areas where every practice owner has significant risk include: work related employment disputes, licensure investigations and insurance carrier refund demands, among others. Last year, in New York alone, there were approximately 6,000 licensure investigations brought against physicians – many of whom did not have adequate insurance to cover the cost of the investigation and defense costs. Cumulatively, employment litigations have skyrocketed in this country to the point where 150,000 such suits were filed in this country over the past six years.
In the event you are targeted and go through the full investigatory process, including a licensure hearing or employment investigation, you could literally spend hundreds of thousands of dollars privately funding the legal costs to defend against such charges when adequate insurance is not purchased. If you choose not to defend yourself, this charge could affect your professional license and ability to earn income in the future. What choice do you really have?
Most providers do not have insurance coverage to defend against claims made by commercial insurance carriers who seek refunds relating to coding disputes for medical services rendered. Refunds sought can go back six years in most states and can accrue into hundreds of thousands of dollars as carriers allege the same mistake was made over and over through extrapolation. In both of these areas, clients may expend a significant portion of their savings simply because they didn’t anticipate such liability potential and purchase the requisite insurance.
The intent of this book is to raise the level of consciousness of the professional business owner who needs to be cognizant of the risks that can result in financial ruin – and to provide practical solutions to avoid financial setbacks so Doctors can achieve their goals of working less and building more wealth for themselves and their families to enjoy.
The team of experts that have contributed to the making of this book have cumulatively over a hundred years of focus in serving the health care community and provide a multi-disciplinary approach to helping physicians accomplish their financial and business goals. As you review the chapters of this book, you will gain practical insights and tried-and-true strategies that have been successful implemented for physicians nationwide.
Before you get into the practical lessons of maximizing wealth, protecting assets from lawsuits and other financial disasters, reducing taxes, investing,a nd estate planing, there is a simply acronym to help guide you through your PLAN(TM).
PLAN – P is for Proactive Planning
Being proactive and implementing a PLAN before trouble is on the horizon is the first step to implementing a successful strategy. In the case of asset protection, if you wait until a lawsuit arises to address your concerns, the civil courts have the power to unwind any planning as a fraudulent conveyance. In addition, if you try to rely on additional insurance once and event has taken place, the risk will be excluded as a pre-existing condition. In the cases of premature death or disability, you cant go back in time and secure the necessary insurances. In the cases of taxes, if you wait until April 14th, nearly all of your options will be unavailable. In the case of bad investments, you can’t go back in time and undo what you did wrong. Reactive individuals who wait to attempt to implement a planning strategy when the issue has already arisen will likely be frustrated in their attempts. Being Proactive in your planning is the critical first step to proper implementation of an effective comprehensive financial planning strategy.
PLAN – L is for Loss or Liability
Protecting against losses requires anticipating the most likely liability exposures that an individual or business may have. These can be exposures to lawsuits, taxes, lost income or divorce. The liability can involve business and personal assets. In assessing a person’s liability loss potential, one must give thought to both the personal as well as the business exposures. Evaluating the individual’s totality of assets accrued in the personal and business endeavors, as well as how those assets are currently being held is therefore critical. So the L in PLAN(TM) stands for Liability Loss potential. Once you know how you can lose assets, you are ready to review exactly what you have to lose and PLAN to prevent it from happening to you.
PLAN – A is for Asset Assessment
In your Proactive planning, you first look at all the ways you can lose assets. Then, you analyze all the assets that need to be protected from potential loss or liability. The complete list will include tangible personal assets like real estate, investment accounts, insurance policies, and bank accounts. The list will also include real estate, equipment, and accounts receivable. Non-tangible assets from future income, business overhead expense protection, disability protection, among other assets. Once you know what risks you face and what assets you must protect, you are ready to work through For Doctors Only and meet with your advisory team to consider practical strategies to help you reach your personal protection goals.
PLAN – N is for Nothing
If you don’t have a plan for success, you should prepare to fail. Doctors typically spend a great deal of time working to make money and acquire assets and very little time planing how to get the most out of their hard work and how to protect these valuable assets. When most doctors finally start to address these important issues, it is usually too late. In order to effectively create a comprehensive financial plan that will help you protect your assets and build greater wealth, you need to be proactive in your attempt to gain a firm understanding of your liability potential and assess your particular assets. With this understanding and motivation to address these issues, you can create and implement a plan that will help you protect and build assets. Otherwise, you are likely to encounter a series of financial and legal losses that could result in your being left with Nothing.
Obviously, your business and personal wealth PLAN is fundamental to attaining your long term financial goals. I encourage you to read this book and speak with the authors about putting your PLAN in place.
Scott Einiger Esq.,
General Counsel, NY County Medical Society
In house Counsel- Health Professionals NYC
Asset Protectionby Scott Einiger, Esq.
Asset Protection-It’s all about the PLAN
If you would like more information about this topic or any other topic contact Scott Einiger
Fear of litigation and rising verdicts is cause for concern for any individual interested in protecting substantial business or personal assets. Physicians and dentists are certainly two groups targeted for litigation because of the large damage potential if a mal-occurrence should arise during treatment. As well, physicians and dentists remain personally liable for their professional negligence even if they incorporate their professional practice.
The risk of personal financial exposure for any business such as physicians or dentists is relatively small for risks that are carefully assessed and planned for. Medical or Dental Malpractice almost never causes asset depletion (as most practitioners have obtained adequate malpractice and excess insurance coverage to limit their personal exposure). Unforeseen and non protected exposures are much more likely to result in large out of pocket expenditures that can cause the greatest financial loss. Planning is Key!
Physicians and Dentists can expend substantial defense costs related to matters where no insurance coverage has been obtained. Areas including work related employment disputes, licensure investigations and insurance carrier refund demands are a few examples of areas that have resulted in large out of pocket expenditures for our professional business owners.
Last year in New York there were approximately 6000 licensure investigations brought against physicians many of whom did not have adequate insurance to cover the cost of the investigation. In the event that you are targeted and go through the full investigatory process, (including a licensure hearing), a licensee could literally spend hundreds of thousands of dollars in legal costs to defend against such charges that could affect their professional license. As well, most providers do not have insurance coverage to defend against claims made by commercial insurance carriers who seek refunds relating to coding disputes for medical services rendered. Refunds sought can go back six years and can accrue into hundreds of thousands of dollars as carriers allege the same mistake was made over and over through extrapolation. In both of these areas, clients may expend a significant portion of their savings simply because they didn’t anticipate such liability potential and purchase the requisite insurance.
That’s why a well thought out and comprehensive approach (PLANTM) to asset protection not solely limited to malpractice is critical. Professionals who wait until they are in the midst of litigation to implement an asset protection plan have lost valuable strategies that would have otherwise protected their assets.
PLAN — The P (Proactive Planning)
Being Proactive and implementing a PLAN before trouble is on the horizon is the first step to implementing an enforceable asset protection strategy. There are two primary reasons. First, the civil courts in New York have the power to set aside what is known as a fraudulent conveyance (i.e. where a transfer of assets made by a defendant or debtor occurs with the intent to subvert the plaintiff or creditor from collecting what is due). “Under fraudulent conveyance provisions of New York’s debtor and creditor law, a creditor is permitted to trace the transferor’s transactions over a period of 6 years”. In re All American Petroleum Corp., 259 B.R. 6 (2001). In this case, a Chapter 7 trustee moved the court to set aside, as alleged fraudulent conveyances, the transfer of a customer list which was made by the debtor’s president and sole shareholder to seize for himself the benefits of this list.
Reactive individuals who wait to attempt to implement an asset protection strategy when the issue has already arisen will likely be frustrated in their attempts to insulate the transferred assets since the courts can void such transfers.
Second, if a person is sued or is about to be sued and attempts to purchase insurance coverage, the insurance carrier will likely disclaim any such responsibility to cover that event (as a preexisting condition).
So being Proactive (PLAN'” well in advance of trouble) is critical first step to proper implementation of an effective asset protection strategy. Often times, clients spend so much time growing their businesses and net worth, they lose sight of the need to protect their growing assets. Starting early provides time to create a strategy to insulate assets from creditors.
PLAN – The L (Less/Liability)
Protecting against Loss requires anticipating the most likely Liability exposures that an individual or business may be prone to. It can involve a business asset and/or personal liability exposure that has grave consequences. As an example, an automobile accident can be devastating financially whether the accident occurred during business hours or occurred on the weekend at a family outing if not adequately anticipated. Either of which can cause grave financial hardship to the individual and his/her family if proper insurance and planning was not in place.
In assessing a person’s liability loss potential one must give thought to both the personal as well as the business exposures. Evaluating the individual’s totality of assets accrued in personal and business, as well as how those assets are currently being held is therefore critical. So the L in PLANTM stands for Liability Loss potential. Assessing an individual’s assets is the critical next step to create the strategies needed to properly protect against Loss and potential Liability.
PLAN – The A (Asset Assessment)
The asset protection strategies an individual can implement range from common sense simple solutions (putting assets in separate corporations) to implementation of the most sophisticated and expensive strategies (off shore trusts).
Asset Assessment is key in implementing strategies that are practical and always will depend on the individual’s goals and evaluating the Assets involved. Knowing the client and where they are in there career stage is critical to implementing a cost effective practical asset protection strategy solution. Doing an assessment of assets acquired and by a general knowledge of your states rules about what assets can be legitimately insulated and what other states provide with regard to asset protection is important for anyone interested in creating a comprehensive approach to asset protection. As an example, a primary residence in New York receives a $10,000 exemption of value from creditors whereas a domicile in Florida would receive unlimited protection from a creditor attaching that asset. However a New York resident if marred and holding the real estate in a joint tenancy with their spouse can prevent a creditor from attaching that asset until sale.
PLAN – The N (Nothing)
Business owners and individuals who have acquired substantial assets typically spend a great deal of time acquiring these assets and very little time planning how to protect them… sometimes until it’s too late. In order to effectively create an asset protection strategy that will insulate your growing assets being proactive, understanding the liability potential and assessing your particular assets is critical to avoid devastating loss that can result in your being left with nothing.