By Dr. James M. Dahle, WCI Founder
Want to get the attention of doctors? Start talking about asset protection. While this is a topic I, historically, have rarely addressed on this site (for reasons you'll read below), it is one of intense interest to financially naïve doctors. As I've been around the speaking circuit, it is always a sure-fire attention-getter. Unfortunately, that same interest also leads doctors to spend a lot of money on less-than-ideal solutions to their asset protection worries—and a lot of sleepless nights.
Asset protection is actually an interesting ethical dilemma when you really think about it. You're trying to figure out a way NOT to pay someone that you have hurt what you owe them. The idea is to discourage lawsuits, cover any possible payouts with someone else's money, and/or declare bankruptcy and stiff your creditors without losing anything. Most doctors don't care, though. They view it as “not losing their hard-earned money to a stupid system.”
Before we start, there are two principles of asset protection that are critical to understand. The first is that all tort law is state-specific. With asset protection, we're talking about civil law (money), not criminal law (jail). This is tort law. When someone hurts you, you sue them. If you win, the other person pays you; they don't go to jail. These laws are all passed by state legislatures and, thus, are different in every state. When putting together your asset protection plan, it is critical that you understand the relevant laws in your state. It's best to read the actual laws for where you live and to pay attention to any possible changes, but here are some quick summaries that are mostly accurate in my experience:
You, of course, can also read The White Coat Investor's Guide to Asset Protection, which details every state law about asset protection.
The second principle is that any asset protection moves you make have to be done in advance and usually have to be done for a reason OTHER than asset protection. The reasons are typically for easier estate planning or better business management. All right. Let's get into it.
Best Ways to Protect Your Assets
Here are the top 16 ways to prevent other people from taking away your money, ranked from best (generally most effective, simplest, cheapest) to worst.
#1 Date Night
Weren't expecting this one at the top of the list, were you? It turns out you are far more likely to lose assets to your spouse than you are to your patient. The divorce rate for a couple where one member is a physician is 24%. That's actually better than most professions, and it gets even lower if you marry another doc. But that number is still three orders of magnitude larger than your risk of being sued above policy limits. If you look at 1,000 situations where doctors lost money to another person, 999 of them were divorces—not being sued successfully for an amount above policy limits.
Of course, a good asset protection plan also provides some comfort during those five years of sleepless nights while you go through a typical malpractice lawsuit, but the likelihood of a complex, expensive asset protection plan actually being needed is so close to zero that it can almost be ignored.
So, your best asset protection move is actually to make sure that your marriage lasts your entire lifetime. Make it your highest priority and spend plenty of time together. Date night may very well be your best asset protection move.
#2 Prenuptial Agreement
On the same subject, a prenup is a very good idea for a physician. Certainly, it is a no-brainer for anyone looking at a second marriage, anyone who already has kids, or anyone who has already accumulated substantial assets prior to marriage. However, even for the young and poor, it gives you a chance to have control over how assets are divided in that 24% of the time the marriage ends in divorce. You get to make these decisions while you still love each other without interference from the state. You might be surprised what your spouse would want in a divorce. I know I was. It turned out that what each of us views as “fair” are two very different things. You can do a postnup, but it's a little tougher to get what you want since you're no longer negotiating from a position of strength.
#3 Malpractice Insurance
In any lawsuit, insurance is your first line of defense. It pays for any judgments that may result, but it also pays for your defense (often a six-figure amount). “Going bare” is not a great idea given that the costs of the vast majority of lawsuits are completely covered by malpractice insurance. Nearly every doctor will get sued, and many will have a judgment against them. Malpractice isn't about your skills and competence; it's about a transfer of money. Make sure you're playing this game with someone else's money. Buy a policy as large as that of others in your specialty and state.
#4 Umbrella Insurance
Just like malpractice insurance covers work-related liability, personal liability coverage (inherent in renter's, homeowner's, and auto insurance but also including an “umbrella” policy stacked on top of those insurances) covers non-work-related liability. The good news is that a typical umbrella policy costs <5% of what your malpractice policy costs and works just as well.
#5 Tenants by the Entirety
This is one of the coolest asset protection “tricks” out there. In half of states, a married couple can title their home as “William and Mary Jones, Tenants by the Entirety” (or sometimes “William and Mary Jones, Husband and Wife”). In fact, in a number of states, you can title your personal property (like brokerage and bank accounts) as tenants by the entirety. When you title your property as tenants by the entirety, it means both you and your spouse each own the entire property by yourselves. So, if only one of you is sued, that asset cannot be taken away by your creditor because the spouse who wasn't sued owns the whole thing. I know, it sounds weird, but that's the way it works. This is a nearly free, very simple, and very powerful asset protection technique.
These states allow tenants by the entirety titling for all property: Arkansas, Delaware, Florida, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, and Wyoming.
These states allow tenants by the entirety titling for real estate only: Alaska, Indiana, Kentucky, New York, North Carolina, and Oregon.
#6 Retirement Accounts
In most states, retirement accounts like 401(k)s and IRAs (including their Roth equivalents) receive exceptional asset protection. Sometimes, the amount protected is limited to an amount that a judge thinks you need to support yourself, which is probably less than you think you need to support yourself. In some states, 401(k)s receive significantly more protection than IRAs do.
This protection allows for a fair number of asset protection techniques. The first is simply to max out your retirement accounts before investing in a taxable account. The second is, in states where it helps, to roll IRAs into 401(k)s. This may also facilitate doing Backdoor Roth IRAs. The third is to do Roth conversions. From an asset protection standpoint, on an after-tax basis, a Roth conversion allows you to take an unprotected asset (the cash used to pay the conversion tax bill) and place it into an asset-protected account. It might not make sense from a tax perspective, but it almost always makes sense from an asset protection perspective.
Bear in mind that other tax-protected accounts, such as HSAs and 529s, provide much more limited asset protection. Know your state laws.
#7 Give Your Money Away
Here's another great way to protect assets from your creditors—give them to someone else. If you don't own it, your creditors can't take it from you. This technique often leads to the classic physician asset protection move of titling everything in your spouse's name. While that is hard to recommend given that the risk of divorce is so much higher than the risk of a judgment above policy limits, it probably is an effective means of stymying your creditors. Also, if you're planning to give something to your kids anyway, just give it to them now. Within a year or two, that asset is no longer available to your creditors. If you wish to still maintain some control over the asset, consider using UTMA/UGMA accounts (a taxable investing account for your kids that becomes theirs at age 18-21) or an irrevocable trust. Obviously, this technique doesn't work for assets you actually want to use for you. Also keep gift tax laws in mind, although it is rare for a doc to have a federal estate tax problem anymore.
#8 Asset Protection Trusts
A domestic asset protection trust is an irrevocable trust where you are both the trustee and the beneficiary (i.e., self-settled). This can be a good option, particularly in the states that allow these but do not allow tenants by the entirety titling (in bold below). Downsides include the cost of setting it up, funding it, and maintaining it, among others.
The following states offer some form of domestic asset protection trust: Alaska, Delaware, Hawaii, Michigan, Mississippi, Missouri, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Virginia, West Virginia, and Wyoming.
#9 Limited Liability Companies and Corporations
A Limited Liability Company (LLC) and a corporation are business structures that are separate entities from the owners of the business. They can be used to shield “toxic assets” from the personal assets of the owner. A toxic asset commonly owned by physicians is a rental property, which is best placed in an LLC. Like everything else in asset protection, LLC law is state-specific but generally provides both internal (protects the assets in the LLC from malpractice lawsuits against an owner) and external asset protection (protects the personal assets of the owners from lawsuits associated with the rental property). The best protection occurs when there are multiple non-spouse owners of the LLC, but in some states, even a single-member LLC provides some protection.
#10 Stealth Wealth
This is a simple, cheap, and possibly effective asset protection technique, although it has some downsides. The idea here is that you simply try to avoid letting people know you're wealthy. If you aren't viewed as having deep pockets, then maybe there will never be a lawsuit in the first place. This doesn't work so well for malpractice, but it may work great for personal lawsuits. This can be as simple as avoiding vanity license plates (“Plastics MD” or “Orthopod” are probably bad ideas) to as complex as placing assets inside revocable trusts. While a revocable trust provides no protection against a lawsuit once discovered, it is possible that a superficial search for your assets may not uncover it. Living in a small house, driving a beater, parking your boat somewhere else, dressing like a slob, and whining about your terrible financial condition may all help give the impression that you are far poorer than you actually are. As you can tell as we progress down this list, my enthusiasm for each technique is dropping dramatically.
#11 Avoid Risky Situations
Here's another method of avoiding lawsuits in the first place—don't do or have anything that brings on lawsuits. No trampolines, pools, boats, jet skis, 4-wheelers, second homes, dogs, alcohol, or rental properties. Drive the speed limit. Move close to work. Install excellent outdoor lighting, and use ice melt. Don't live and practice in litigious places like Florida and Illinois. Don't let your teenagers drive. Carried to an extreme, this technique might make your life rather dull, but it probably does have serious asset protection benefits.
#12 Whole Life Insurance
Regular readers know I'm no fan of this hybrid insurance/investment product and its cousins, universal and variable life insurance. But in about half the states, there is at least some asset protection provided for its cash value. If you value the asset protection benefit more than the higher returns available in real investments (and you probably shouldn't), then go ahead and buy some whole life insurance. Just don't blame me if you end up regretting your purchase.
#13 Family Limited Partnerships
We're getting down to that place on the list where these techniques are getting more and more complex and expensive. A family limited partnership is technically an estate planning technique with secondary asset protection benefits. The asset protection benefits come from the fact that, like an LLC, non-family members (like creditors) can't own or control the assets inside the partnership. Attorneys love these things, but they have a serious conflict of interest. There are downsides, so make sure you know them before going down this route.
#14 Annuities
In a few states, the cash value of an annuity is protected from creditors. This is much less commonly protected than permanent life insurance cash value, so be sure your state actually protects annuity cash value before buying one for asset protection. Annuities have serious downsides, too.
#15 Equity Stripping
Some states protect large amounts of home equity from your creditors via “homestead laws.” In those states, it often makes sense from an asset protection standpoint to pay off the mortgage rather than invest in a taxable account exposed to your creditors. Equity stripping is done in states with weak homestead laws. Basically, you borrow out your home equity and place it somewhere else that is protected from creditors, such as retirement accounts or whole life insurance.
Other similar techniques can be invented once you know your state asset protection laws. If retirement accounts are protected but whole life insurance isn't, perhaps you can borrow against your whole life cash value (or surrender the policy) and use it to max out retirement accounts or do Roth conversions. Or if whole life insurance is protected but 401(k)s aren't, you can borrow against your 401(k) and buy whole life insurance. The variations are endless and generally come with a downside, such as paying interest. Given the very low risk of a judgment above policy limits, it's tough to recommend most of these techniques for any but the truly paranoid.
#16 Offshore Trusts
Moving assets overseas involves a lot of cost and hassle, but it may keep creditors from both discovering and acquiring your assets. One previous guest poster even advocated for a “portable” offshore trust, where you don't move the assets overseas until you're actually sued. Like every other asset protection technique, this one isn't ironclad and it has serious downsides making it hard to recommend to the typical physician.
The best asset protection plans are simple, inexpensive, and effective. Treat your spouse, patients, and neighbors well; buy lots of liability insurance; max out your retirement accounts; use tenants by the entirety titling where available; place rental properties into LLCs; and learn your state's asset protection laws. If you have more than $1 million in assets not protected in some other way, consider some of the more “advanced” asset protection techniques discussed above, such as asset protection trusts, family limited partnerships, or whole life insurance.
As you accumulate wealth, you need a way to protect your assets. WCI’s newest book is The White Coat Investor's Guide to Asset Protection, and it provides the techniques you can use to safeguard your money AND the most comprehensive list of state-specific asset protection laws ever published. Pick up the book today and protect your wealth!
What do you think? What is your asset protection plan? Have you ever been sued successfully above policy limits? Do you know anyone who has? What happened? Comment below!
[This updated post was originally published in 2019.]
As I keep telling my spouse, Swiss bank accounts etc. can not legally be used to hide assets (or avoid US taxes) #16.
You are spot on that the biggest risk to a physician’s net worth is divorce. Having gone through a brutal one myself I know my net worth took a 7 figure hit because of it.
I am not sure a prenuptial would have mattered as much for me as my ex wife came in at the perfect timing (when I had no real assets and in my last year of radiology residency).
Umbrella and malpractice insurance are no-brainers and should be in everyone’s plan. An umbrella insurance does require you to get higher than minimum policies on your auto and home insurance but again the price is negligible compared to the value.
Very well done! Enjoyed reading it.
Is there a reputable source for retirement account protections by state available?
Besides the ones linked in the article? The true reputable source is the state laws, but there are 3 or 4 nice compilations of them online like this one:
https://www.assetprotectionbook.com/forum/viewtopic.php?f=142&t=1566
You really need to consult an attorney who is expert in this field and the laws of your state.
The protection is more complicated than summarized in these tables. Not all retirement accounts are treated the same way. Not all 401(k) accounts are treated the same. 403(b) accounts are treated differently than 401(k) accounts. The protection is an interaction between state and federal law and depends on whether the person is considering declaring bankruptcy. Inherited retirement funds are not protected, unless they are inherited from a spouse, in which case they get the same protection as the original owner had. The protection, if you have any, applies only while the money is in a retirement account. Once you withdraw it the protection is gone. If one is approaching the age at which. RMDs begin, then the creditors can count on a steady stream of payments. If you need the money to live on before RMDs, then any funds you take out will be available.
As if often the case, reading the statute alone does not give a doctor a complete picture. You need a guide who knows the territory.
Your point about RMDs being susceptible to creditors is a good one. One strategy here is to covert a RMD producing IRA account into a non distributing Roth IRA. See: https://www.floridabar.org/the-florida-bar-journal/roth-ira-conversions-as-an-asset-protection-strategy-does-it-always-work/
The Roth conversion would get rid of the RMD problem. Of course, it would incur income taxes on the converted amount. For a doc approaching 70 who has been saving all along, the amount in retirement accounts is probably in the millions. That would be a big price to pay.
It does not help the person who needs to withdraw some money to live on. The assets would remain protected while in the Roth but lose any protection as soon as they come out.
Right. But as with many asset protection strategies-putting barriers between the plaintiff and your assets is a common method to force a settlement. Given the choice between a creditor sitting to take my RMDs for many years and paying the tax-it might be a more suitable option-then a settlement and the ability to take distributions from the Roth as needed.
In the end, the protection really only shows up when you declare bankruptcy. But this is honestly all just a mental exercise in the vast majority of the cases since judgments are nearly always covered by insurance.
Jim, you have not been sued in a case with potentially large damages. A wrongful death suit with (what is now typical 250K malpractice coverage) can ruin your life with worry for years. It may ultimately ruin you financially, and preparation is the key
The notice of claim was $5 Million. That seemed potentially large to me. How high do you think it has to be in order to call it “potentially large damages” and why in the world would you claim to know anything about my lawsuits?
And typical in my area/specialty is $1M/$3M. I agree that $250K is a very small policy and probably inadequate for most specialties in most areas.
I was not implying that I knew anything about your lawsuits, but that a large lawsuit might carry significant stress, especially with a small amount of coverage (which has become quite common). I think that any suit with potential damages is worth worrying about-the cost of long term care, loss of income, etc.
All suits have potential damages. If you wish to spend your time worrying, that’s your right. 🙂
I noticed UT was not on the list of states for tenants by the entirety. Is that enough for the WCI to consider moving? Has this effected your asset planning strategy?
I live and work in different states. Should I tailor my asset protection plan to the state I work in or the one I live in?
No. Only in that I would use it if it were available and thus I am not.
I live and work in different states. Should I tailor my asset protection plan to the state I work in or the one I live in?
Jim, well done as usual, but a few comments:
1) Love “date night” as an asset protection strategy. So true!
3) There is a good debate about whether having a large malpractice policy makes you a more attractive target or not. Worth considering
4) Few physician families have enough umbrella liability protection-we recommend a minimum of 3M and often more
6) Note that in many states-inherited IRAs are not protected from creditors. Also there is limited if any ERISA protection for Self Employed 401k plans
7) Note that establishing large UTMA accounts opens these funds to the kid’s creditors-of which they may have many (at least per the way my kids had car accidents when growing up)
11) I’d add keeping only the name of a primary driver to each car title-especially with adult children and in states with ATBE ownership protection.
4) How do you decide how much is enough before you get sued?
6) There is some variation by state. That illustrates the importance of knowing your state laws and demonstrates how leaving money in a 401(k) instead of rolling it to an IRA not only facilitates Backdoor Roth IRAs, but asset protection too.
7) The problem with a large UTMA is there is no tax benefit. After a certain amount of income, it’s all taxed at your rate anyway. Not much point to a 6 figure UTMA in my view.
11) Not a bad idea, but probably makes estate planning a little more complicated.
4) It is often hard to get more than 5M of umbrella liability and that amount is inexpensive (I pay about $1100 per year for this amount), so that’s usually recommended. That’s a lot of money for a plaintiff’s attorney to make a settlement with.
6) Agree completely. But many do not know that inherited IRAs are not offered asset protection in many states. I am encouraging elderly clients with large IRAs to consider using conduit trusts to hold the corpus of their IRA when it will pass to heirs.
7) Agree that the tax benefit goes away quickly, but few realize that they may be taking protected assets (kept in an ATBE account in a state like Florida) and moving it to an unprotected asset account (UTMA).
11) I have not seen this as an issue-executors can dispense of cars easily. But I’ve seen several families get dragged into lawsuits solely because more than one name was on the title.
Why conduit rather than accumulation trusts for the retirement funds?
Both a conduit trust and an accumulation trust would work. The latter requires a good trustee that would try to minimize the high inherent trust tax brackets through distributions around/between litigation. But that’s a good point you make.
Be careful about the tenants by the entirety protections. At least one, perhaps many, of the states on the list as offering this are far more restrictive than portrayed. In many states the PROTECTION applies only to real estate, usually only to the (single) family primary residence owned by the married couple.
In some states you are welcome to title anything else as tenants by the entirety, but you don’t get any asset protection from doing so.
From checking with estate planning attorneys over the years, the answer for asset protection trusts seems to be the same, at least for most docs. Umbrella and malpractice insurance are the way to go. The trusts are expensive to set up and expensive to maintain. You have very limited access to the money in the trust if you want the asset protection to work. Even if you set it up and maintain it properly and do not take any money out (which could destroy the protection of the trust overall, not just for the money you took out), there is no assurance that it will prevent creditors from getting at it. It probably would not stop the federal government for getting the money if you owe taxes.
The lawyers say that the trusts do not so much make it impossible for the creditors to get at the assets as make it difficult. For many plaintiffs the difficulty will make them more willing to take a settlement that does not include this money, or much of it. If your state or the feds think they are owed money, the cost and hassle might not matter as much to them as to an individual or that person’s attorney, who just want to get some money and be done with it. The government lawyers are not laying out any of their own money in chasing the case. They are just showing up for work.
There have been lots of cases where the domestic asset protection trusts failed when pushed to the limits. Lawyers say that the “successful” uses are the favorable settlements that do not become case law. Hard to know how often this happens.
Offshore trusts are even much more expensive. The principle is the same- make it very difficult for creditors to get at the money. Same challenge in finding out how often the succeed in fully protecting assets or forcing a more favorable settlement. Some have failed spectacularly.
For most docs, the beauty of malpractice insurance is that it reliably works. The cost of carrying excess insurance is hard to guess. The insurance company knows that your underlying insurance will probably cover any liability that comes up, so the excess policy is unlikely to be triggered. But the insurance company does not know what the doc may know to make them so willing to pay for extra coverage.
I have never seen data on the incidence of malpractice suits where the judgement exceeded policy limits and the doc lost personal assets. If you know of any, it would be great to see them.
You’re right, tenants by the entirety varies by state, so know your state laws.
Got a citation for your assertion that “lots of cases where the domestic asset protection trusts failed when pushed to the limits.” My understanding is that they had not really been tested much. I don’t know of a single case and you allude to “lots” of them.
There is some data, but it’s not recent. I think it was from the 1980s. The interesting thing is that most of the judgements were only $50-200K over policy limits, not millions over.
As an aside-we tell physicians that are being sued to always formally request that the malpractice carrier “settle for up to policy limits.” If the malpractice insurer refuses to do this, they are potentially on the line for a bad faith action if a judgement comes in for more than the policy will pay.
Interesting. Wonder how often that actually works. Also wonder how often a doc asks the carrier to settle and they don’t. I get the impression it usually works the other way.
What states are those? And what do you mean by “always”? If it’s a clear, cut and dry case like a wrong sided surgery or clear negligence, that might make sense to automatically settle for up to policy limits, but the majority of med mal cases are defensible.
The purpose of a letter instructing the malpractice carrier to settle to policy limits is designed to reduce the risk of a judgement greater than one’s coverage limit. The insurance company usually has the asymmetrical power to settle or not at their discretion. They will not necessarily settle based on your demand, but it gives you some protection if things go poorly.
In many states, the insurance company has complete discretion on whether or not to settle regardless of what the physician being sued wants. This “demand to settle” offers potential protection for the insurance company’s actions leading to a judgement exceeding coverage. I’ve had a few attorneys suggest this (and did it myself in my one malpractice lawsuit a long time ago).
Asset protection trust problems
“ACTEC FOUNDATION
First Place Winner 2006 Domestic Asset Protection Trusts: The Risks and Roadblocks Which May Hinder Their Effectiveness
Michael A. Passananti”
“after analyzing DAPTs within the context of the Full Faith and Credit Clause, the Supremacy Clause, and the new bankruptcy laws, the weaknesses of the DAPT as an asset protection vehicle are exposed. Unfortunately, there are many situations whereby the “creditor proof” provisions of the DAPT will be ignored or at least weakened. There are many scenarios where jurisdiction may be obtained over the trust assets or the trustee.”
“ASSET PROTECTION TRUSTS: TRUST LAW’S RACE TO THE BOTTOM?
Stewart E. Sterkt
Cornell Law Review”
“A Fresh Look at State Asset Protection Trust Statutes
Ronald J. Mann
VANDERBILT LAW REVIEW [Vol. 67:6:1741]”
This is particularly comprehensive and includes this summary
“Still, there is little reason to hope that the onshore APT will be any more effective at insulating assets from creditors than the offshore APT. Given the long-standing results in Portnoy and the cases that followed it, the inhospitable reception should come as no surprise. With the cases to date providing some confirmation that judges are not (so far) inclined to abandon the reasoning of the offshore trust cases, the likelihood of enforcement remains bleak…”
All are filled with citations. Some to state cases, some to federal, many to bankruptcy or fraud proceedings. As one reads them one gets visions of $$$ signs flying out the window to the lawyers who are trying to defend the trusts.
The purpose of UTMA accounts is moving assets out of the parent’s estate for estate tax purposes. By giving the assets away, one does protect the assets from the parent’s creditors (assuming they were not fraudulent conveyances), but not from the minor’s creditors. Here an irrevocable trust for the minor would be better. But more hassle.
In my state, transferring defined contribution plan assets to a rollover IRA would retain the original asset protection.
Great post, as always! Once we have reached financial independence or financial freedom, our worries shift to different problems. I do not know if anyone can have a worry-free life. Things that keep me up at night sometimes are not a 30% drop of the stock market, a major hurricane that blows a few rental properties away or I become disabled and can’t work for what ever reason. We have enough diversified assets to protect against these losses. Taxes and liability are my major concerns. Knowing that taxes account for more than all my personal expenses combined, it’s a reasonable reason to be concerned. It keeps us away from getting a fair shake on Wall Street. Back to the topic, I set up defense after defense for liability protections. Here are some of them: 1) house is paid and named under tenants by entireties, and also has 80% HELOC (so creditors will see that the bank owns most of its value), 2) having a few LLCs for rentals, S Corp for practice and maximum liability protection with an umbrella on top of them, 3) keeping all retirement accounts (401k, IRA, etc. fully protected in FL) at my old employer instead of rolling over to Vanguard even if it costs 2% more in annual fees, and 4) I set up a Vanguard account under my parents and contribute maximum amounts yearly (60k this year to avoid filing for gift tax). These keep me sleeping better at night knowing that only Uncle Sam can take them (house or ira). Keep in mind that many doctors get sued, not because they did somethings wrong, but because they have something that is worth an attorney’s time.
And your parents’ creditors.
You mention not living in a litigiousness state. Any advice how to figure out which states are the worst and how bad it actually is? I’m considering a move to Florida for family reasons. You hear it’s a high litigation state, but it’s not clear if there is really a big difference between Florida and other states or a small difference blown out of proportion by paranoid doctors.
I don’t know that the whole thing is bad, but Dade County certainly is. It’s like Cook County in Illinois. Not a great place to defend a lawsuit. At least Florida has strong asset protection laws, unlike Illinois.
Thanks for this article. I really appreciate everything this site offers. I’ve wondered about this before, on previous posts where umbrella insurance is mentioned, but haven’t asked. Do you mean an umbrella policy through home/auto insurance? Or is there some kind of umbrella policy paid through the malpractice company? I have malpractice insurance through my employer and the house is in my spouse’s name only. There is umbrella insurance for personal liability (ie someone slips on our driveway and sues above the homeowner’s policy limits). Do I need an umbrella policy to cover being sued above my malpractice limits? Is there such a thing? Or does the personal umbrella policy cover that? Thanks in advance to anyone who can help with this!
Umbrella liability insurance is purchased in amounts of millions per claim It sits on top of homeowners and auto policies (and can usually be obtained from either source) and covers liability in excess of your auto/homeowner’s benefit maximums. It does not cover malpractice at all, nor usually any other business liability.
Thanks so much for the quick reply! That’s what I was thinking. I really appreiciate the clarification.
Yes, it’s on the personal liability side, not the professional side. No, it won’t cover malpractice. I don’t know a single doc with a malpractice umbrella policy.
Thanks again! Great site, very helpful information.
Is there any way to buy a supplemental or secondary malpractice insurance policy beyond that provided by my employer? I practice in Illinois.
Also, would practicing in Indiana (which has a cap) help if both the patient and I live in Illinois?
Yes, but when I ask attorneys whether they are worth buying I’m told no.
Good question for a malpractice defense attorney in Illinois. I don’t know. Certainly it wouldn’t hurt.
If I use tenants by the entirety to increase asset protection, is that compatible with also using a revocable trust for estate planning purposes? Or does using one preclude the other?
No, you can’t do both. You either own it personally as tenants by the entirety, or your trust owns it. I don’t think there is any way to do both. So I guess so TBE while your greatest concern is asset protection, then switch to the trust when your greatest concern is probate.
I heard of a man who put his rental properties in his sister’s name to avoid his creditors. She fell ill and the hospital took the properties as payment for her expenses.