Asset protection isn’t just for wealthy, established doctors. Safeguarding what you’ve built matters at every stage of your career.
In this brief video, we explore helpful strategies for taking charge of your finances and mitigating risk. Watch now to learn how insurance, careful financial structuring, and other strategies can help you move toward real financial freedom.
Transcript:
Why Asset Protection Planning Matters for Physicians
Risk and reward—boy, are the two of those connected. If you want to see a lot of reward in life, you often have to take a lot of risk with it.
The problem with risk is that it’s risky. Risky business sometimes leads to things going sideways and outcomes you would rather not see happen. That’s why we want to talk about asset protection planning.
Hi, I’m Ben Martinek with Bona Fide Finance. One of the things I think young physicians (and really physicians at any stage of life) don’t always give enough consideration to is the relationship between their income, wealth, and financial risk.
Physicians often receive the reward of a high income because of the risks and sacrifices they took early in their careers. They went through medical school, residency, and ultimately became attending physicians. They’ve seen the benefits of that high income, and high income often leads to wealth accumulation.
Those are good things. But the work you’re doing wasn’t just risky to pursue; it can also be risky work in and of itself, which means there is potential liability.
Protecting Yourself From a Potential Lawsuit
What happens if something doesn’t go the way it’s supposed to go?
You do your very best. You’ve tried to do everything right. But a mistake happens because you’re human, just like the rest of us.
What do you do to protect yourself in the event of a lawsuit? That’s where asset protection planning comes in.
The first item, and often the best line of defense, is insurance.
Malpractice Insurance As a First Line of Defense
In a professional workplace setting, this comes in the form of malpractice insurance. If you’re a physician, it’s malpractice insurance. If you work in a field like mine, it’s called errors and omissions insurance.
It’s all essentially intended to address the same concern: What happens if I make a professional mistake and someone else is harmed by it? How am I protected?
Unfortunately, insurance can have gaps or limits, or it may ultimately not be enough.
Malpractice insurance for physicians is a complicated subject that requires guidance from an expert who specializes in that area.
Personal Liability Risks Outside the Workplace
The truth is that mistakes in the workplace are not the only situations in which something can go wrong.
Just like the rest of us, you can make a mistake while driving your car. An accident can happen at your home. Maybe you have a trampoline, and someone gets hurt—whether you wanted them using it or not.
Now, you may be named or blamed as being at fault for that injury.
In those situations, people’s eyes may light up when they find out you’re a doctor. Unfortunately, there is a subset of attorneys who may try to take advantage of these circumstances.
It can be predatory. Their intent may be to get their hands into your pockets. They may go after the people they consider the weakest, most vulnerable, most naïve, or easiest to pursue.
Going Beyond Insurance With Asset Titling and Placement
Asset protection certainly starts with insurance and doing the best you can to have the right policies in place.
But it also involves additional strategies, including asset placement and asset titling.
Depending on the state in which you live—and state laws vary—how your assets are titled or where they are held may determine how protected they are under that state’s statutes.
The right asset protection strategy depends on where you live and where your assets reside. Your assets may not all be held in the same state where you live. They could be scattered across the country.
How State Laws Affect Asset Protection Strategies
For many people, keeping everything domestically held is probably as far as the planning needs to go.
However, there are more advanced and complicated strategies that may become relevant as your wealth, income, and financial situation grow.
Some people explore offshore planning, where assets are held not only in the United States but also in foreign countries. That can involve navigating different legal jurisdictions at the country level.
I can’t speak extensively about foreign offshore planning. It isn’t within my wheelhouse, and it generally isn’t needed for the clients I serve.
However, we regularly work with people who need thoughtful asset protection planning involving insurance, asset titling, and asset placement.
Review Your Auto Insurance Coverage
Here’s a practical takeaway: if you haven’t recently reviewed your auto insurance, take a look at your bodily injury coverage on a per-person and per-accident basis, along with your property damage coverage.
This is an area where people consistently may not have sufficient insurance.
Be sure to review your auto policy as an immediate takeaway from today’s discussion.
Financial Planning and Asset Protection for Physicians
If you’re looking for more guidance from someone who can point you in the right direction, show you what to consider, and help protect the money you’ve worked hard to build, give us a call.
I’m Ben with Bona Fide Finance, and you can reach us at hello@bonafidefinance.com.
Thanks.
Frequently Asked Questions
What is asset protection, and why is it important for physicians?
Asset protection refers to strategies that help reduce exposure to financial risks that could impact your personal wealth. Physicians often face unique liability concerns due to their profession, making it important to review insurance coverage, ownership structures, and financial planning strategies throughout their careers.
How early should physicians begin planning for asset protection?
Asset protection is not just for physicians nearing retirement or those with significant wealth. Many doctors begin evaluating asset protection strategies early in their careers because income growth, professional liability, and increasing financial complexity can create risks long before retirement becomes a priority.
Can insurance alone provide adequate asset protection for physicians?
Insurance is often an important component of an asset protection strategy, but it may not address every financial risk. Physicians may benefit from reviewing their coverage limits, understanding potential gaps, and exploring additional planning strategies that align with their personal and professional circumstances. That’s what we at Bona Fide Finance can help with. Get in touch to start the discussion!