For doctors, years of training, long hours, and personal sacrifice culminate in a rewarding profession, but also in increased visibility and liability. Asset protection isn’t about expecting the worst; it’s about planning wisely so your life’s work remains secure.
Start with malpractice insurance
The first and often most powerful line of defense. Carry robust malpractice insurance tailored to your specialty and state and ensure your coverage limits match or exceed typical judgments in your field. Most policies are claims-made, covering only incidents reported while the policy is active. This creates a gap: if you switch jobs, retire, or the policy ends, prior acts lose protection unless you add tail coverage. Tail coverage is crucial, it extends your ability to report claims for past incidents, protecting you from delayed lawsuits that could surface years later.
Layer on personal liability coverage
Even with malpractice coverage, the risk of litigation extends beyond clinical practice. Maintain strong auto and homeowners policies, then add an umbrella policy – you can often add several million of coverage for relatively low premiums. This “umbrella” extends protection to non-professional incidents like auto accidents or premises liability, shielding personal assets when underlying policies max out.
Choose the right entity structure
If you own a practice, your legal structure matters. Entities such as a Professional Corporation (PC) or Professional Limited Liability Company (PLLC) can help separate business liabilities from personal assets. For additional exposure (such as rental properties or side businesses) consider limited liability entities like LLCs. Placing risky assets (i.e., investment real estate) into separate LLCs isolates potential claims, preventing them from reaching your personal wealth or practice.
Maximize protected accounts
any physicians underutilize the powerful protections embedded in qualified retirement plans. Accounts such as 401(k)s, 403(b)s, and defined benefit plans often receive strong federal protection under ERISA. IRAs receive meaningful protection as well. Maximizing these accounts provides security from a liability perspective and is also a wise choice in planning for retirement.
Act in advance with advisors
Reactive moves after a claim arise rarely hold up. By coordinating with your CPA, attorney, and financial advisor, you can create a unified strategy designed to preserve both your practice and personal wealth. With thoughtful steps, you can focus on what matters most to you, knowing your family’s financial future is safeguarded.
Want More?
Sign up for our newsletters and magazines here.
Contact
Visit ballastplan.com to set up a free consultation, call 859.226.0625, or e-mail info@ballastplan.com.
About Ballast
Ballast, an employee-owned financial planning and investment management firm based in Lexington, KY, specializes in providing tailored services to high-income earners, high-net-worth clients, and individuals/businesses with complex financial situations. Our team of fiduciaries proactively anticipates and solves your needs by taking the time to understand your goals, passions, and what truly matters to you and your legacy. Ballast is built for financial security by financial experts. You work hard every day. Let us take on some of the work for you.
Disclosure
Ballast, Inc. is a registered investment adviser with the SEC. Registration with the SEC does not indicate that the adviser has achieved a particular level of skill or ability, nor is it an endorsement by the SEC. All investment strategies have the potential for profit and loss. Ballast, Inc. is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Any specific strategy or market/economic commentary may or may not be appropriate for your individual situation, may not have discussed all material implications of implementing said strategy, and may be reliant on data provided by outside resources. Before implementing any strategy or investment decision discussed in a Ballast commentary, please consult with the appropriate professionals to confirm the thoroughness of the strategy presented and its appropriateness for your individual situation.