The dos and don’ts of asset protection for doctors

By Physician Sense, for MDLinx
Published August 8, 2019

Key Takeaways

When it comes to asset protection, W. Ben Utley of Physician Family Financial Advisors says that it’s irrelevant what your specialty is, whether you’re a surgeon, whether you’re an employed physician, or own your own practice.  

“There are two kinds of doctors,” Utley says. “Those who have been sued, and those who will be sued.” 

If you run the odds on any procedure you perform, drug you prescribe, or diagnosis you make, there will be a statistically predictable amount of bad outcomes and consequently, a malpractice suit. This has nothing to do with the doctor personally and everything to do with the imperfect nature of medicine.

With the high probability of facing a malpractice suit at some point in your career, the time to think about protecting your assets is now, before a patient sues.

“Afterward, the move might be interpreted as a way to delay a creditor,” Utley says. “A reasonable court of law will set those moves aside.”

The good news about asset protection

While the prospect of a lawsuit is terrifying, Utley says the good news is that most physicians already have the asset protection that they need. Malpractice insurance protects them up to a certain amount of damages, and most—if they’ve done their financial homework—will have their money in protected accounts. Examples of safe holdings include qualified retirement accounts like 401(k)s and equity in a primary residence. There are a few other things you can do to build layers of protection.

But first, a brief refresher. A few things need to happen to jeopardize your assets. To begin, a doctor must have a bad outcome. Second, the patient has to be willing to file a lawsuit. Third, the case has to go to court, and the doctor has to lose. Finally, the judge has to issue a verdict that exceeds the limit of their malpractice coverage. If the patient is in a hurry to collect, it’s going to be difficult and time consuming for them to come after your protected assets. If they’re willing to stick it out, it’s going to take a lot of legal wrangling and lawyer fees to pull it off. The strength or laxity of each state’s laws may hinder or help them.

The bad news about asset protection

Where most doctors get blindsided is when life outside of medical practice intervenes, Utley says. For example, their teenager injures somebody in a motor vehicle accident, the family dog bites someone in the park, or a worker falls at their home. These factors require what Utley calls orthogonal asset protection. 

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