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Four asset protection steps doctors should take for themselves and their money

Written by Shane O'Hara, CFP®

On September 10, 2021

ProVise Management Group is a local financial planning firm and both our Clearwater and Tampa, Florida offices are very close to hospitals. By both geography and individual interest, much of our team’s community involvement is devoted to ensuring high-quality health care. As a result, many of our friends and clients are physicians and health care professionals.

The medical professionals we help range from chiropractors, surgeons and oncologists to veterinarians, pharmacists and dentists. All these professionals practice medicine in vastly different ways. They have disparate job descriptions, too. But one thing they all have in common is a greater than average risk of a liability suit because of their specialized professions. 

We find that asset protection is typically the biggest financial matter on the minds of these professionals. It is also generally an area they feel is already protected. However, most individuals in our initial consultations find that they are not as protected as they think. We find that these potential clients’ portfolios have a large concentration of life insurance, annuities and other “liability-protected” products sold by their current advisor. We typically find that many of these products are inappropriate for their goals.

However, the goal for this article is not to recommend one strategy over another. So, we will save our thoughts on many of these commission products sold for another time. Instead, here are four asset protection suggestions that can help doctors better protect themselves, their money and their other financial assets:

1. Title assets in the name of the non-doctor spouse — There may be a reason to put assets in the name of the spouse who has a higher probability of being sued. Yet a simple asset protection solution is to put the asset ownership into the name of the other spouse. You can also put accounts in the name of children (Uniform Gift to Minors, 529 Education Accounts, etc.) and/or place assets in a trust for your family whenever possible.

2. Use Tenants by the Entirety titling — Florida is a unique state because it allows married couples to own financial assets and real estate as “Tenants by the Entirety.” This label means that the couple owns a house or investment account together. This helps with asset protection because these assets cannot be separated. As a result, creditors of a single spouse cannot submit a claim on that asset. However, suits that name both spouses would likely be able to name a joint asset as a potential source to settle the liability claim. Even then, a homestead property, such as your primary residence, is exempt in the state of Florida.

3. Register cars in one name only — This is really the opposite of #1. In the event of being at fault in an accident, the person injured may potentially sue both the driver of the vehicle and the owner of the vehicle. If the vehicle is owned jointly, the individual harmed in the accident could name both spouses and the driver. This places all the assets titled as joint tenants in danger. For this reason, we typically recommend that cars be registered in the name of the primary driver of that vehicle only. 

4. Have high liability coverage and an umbrella policy — We have clinicians who come into our office all the time without adequate liability coverage on their home, cars, boats and other personal property. As a result, they have a significant hole in their asset protection plan. Making sure that the vehicle or home could be replaced in the event of a total loss is important. The coverage we believe to be equally important is the injury liability coverage in all these policies.

Florida requires that drivers’ car insurance policies have a minimum liability of only $10,000 per person you injure or up to $20,000 for all injuries caused in the accident. However, we often suggest that clients with substantial assets and risk of liability have a much higher amount of liability coverage, often at least $250,000/$500,000.

In addition to having the underlying coverage on any real or personal-use assets, we usually advise our clients to have what is known as an umbrella policy. This is a policy that sits over top (like an umbrella) of all other coverage. It helps cover you in the event that a lawsuit is settled for more than the $500,000 example given above. These policies are relatively inexpensive. You can typically obtain a few million dollars of coverage for less than $1,000 per year. That is a small price to pay for significant asset protection.  

Have more asset protection questions? ProVise is here to help

While not a complete list, these are some of the most common asset protection strategies. It is unfortunate, but in today’s environment, doctors and others who have saved well are often unfairly targeted by personal injury firms and individuals looking for a winning lottery ticket. Next time you see another billboard ad or TV commercial with someone holding a large six-figure check, make sure you, your family and your savings are protected. As many of these matters involve the law, you should also speak with your attorney.

If you would like to chat about asset protection or any financial matter, please contact ProVise to set up a complimentary one-hour consultation at either our Clearwater or Tampa office.

Shane D. O’Hara, CFP®

Vice President & Senior Financial Planner

ProVise Management Group, LLC

611 Druid Road E, Suite 105

Clearwater, FL 33756

727-441-9022

info@provise.com

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services may be offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS, or Provise Management Group, LLC. Kestra Financial’s Reg BI disclosure information and Form CRS can be obtained at https://www.kestrafinancial.com/disclosures. ProVise’s Form CRS can be obtained at https://www.provise.com/wp-content/uploads/2021/04/FormCRS_040121.pdf. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and are subject to change.

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