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Gainesville, FL Estate Planning, Will & Trust Law Blog

Friday, January 11, 2019

3 Liability Planning Tips for Physicians

3 Liability Planning Tips for Physicians

 

The practice of medicine is a fulfilling and altruistic profession fraught with the risk of liability.  It’s not just medical malpractice claims (although those are certainly scary enough), but also the entire scope of risk from being in business, including employment-related issues, liabilities created by business partners and employees, and contractual obligations, as well as personal liabilities.

 

Below are three liability planning tips physicians can incorporate as part of their estate plan to protect their assets from creditors. 

 

Tip #1 – Insurance is Always the First Line of Defense Against Liability

 

Liability insurance is the first line of defense against a claim.  Liability insurance provides a source of funds to pay legal fees as well as settlements or judgments. Types of insurance to be considered are:

 

  • Homeowner’s insurance
  • Property and casualty insurance
  • Excess liability insurance (also known as “umbrella” insurance)
  • Automobile and other vehicle (motorcycle, boat, airplane) insurance
  • General business insurance
  • Professional liability insurance
  • Directors and officers insurance

 

Tip #2 – State Exemptions Protect a Variety of Personal Assets from Lawsuits

 

Each state has its own laws and/or constitutional provisions that partially or completely exempt certain types of assets owned by residents from the claims of creditors.  While these laws vary widely from state to state, in general, the following types of assets may be protected from a judgment entered against you under applicable state law:

 

  • Primary residence - homestead laws of Florida
  • Qualified retirement plans (401Ks, profit sharing plans, money purchase plans, IRAs)
  • Life insurance (cash value)
  • Annuities
  • Property co-owned with a spouse as “tenants by the entirety” (only available to married couples; and may only apply to real estate, not personal property, in some states)
  • Wages
  • Prepaid college plans
  • Section 529 plans
  • Disability insurance payments
  • Social Security benefits

 

Tip #3 – Business Entities Protect Business and Personal Assets from Lawsuits

 

Forming a partnership, limited liability company, or a corporation is another estate planning strategy that can be used to protect one’s assets from creditors. Assets held within a business entity are separate from the individual; and depending on the type of asset and how structured, if a physician is sued individually, the assets held within the business entity may be insulated from attachment by a judgment creditor. Many considerations come into play in addition to asset protection, including ownership (a multi-member entity generally being preferred), taxation, management, and transfers of interest in the entity. Physicians who are business owners have the opportunity to mitigate the risks and liabilities associated with owning a business, just as real estate investors mitigate the risks and liabilities associated with owning real estate, through the use of one or more entities. 

 

Business entities can also be an effective tool for protecting your personal assets from lawsuits, a topic beyond the scope of this short blog.

 

Final Thoughts for Protecting Your Assets

 

Liability insurance, exemption planning, and using business entities are three planning tools that create a multi-layered liability protection plan.  Please call our office if you’d like to make sure you have appropriate protection in place.  


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From our office in Gainesville, the estate planning firm of White, Crouch & Mills, P.A. advises and represents clients in communities throughout Alachua County, Marion County, Levy County, Putnam County, Clay County, Bradford County, Union County and Gilchrist County in North Central Florida. Call us at 352-372-1011 or contact the firm by email to arrange an initial consultation with us today.



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