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Asset Protection

Special Asset Protection Needs of Medical Professionals

Medical Professionals

Well-founded or not, there is an assumption that medical professionals have deep pockets. Coupled with the very real influence that doctors have over people’s everyday well-being, it makes them prime targets for lawsuits.

Meritless claims aren’t always tossed out, either. In more than one-quarter of meritless claims, compensation was made through settlement. What’s more, overhead costs like litigation costs and attorney fees account for half or more of settlement costs. And since it takes an average of five years between the time an incident occurs and its resolution, a liability claim can be hanging over a doctor (and his or her practice) for a very long time.

In some states, laws that cap tort damages have helped prevent frivolous claims. Also, hospitals in some states are protected under “charitable immunity” doctrines. But individual physicians are not. In the state of Washington in 2014, 51 medical malpractice lawsuits were resolved, with payments totaling $70.6 million (an average of $1,383,686 per claim). The trend appears to be headed toward fewer lawsuits, with larger average payments, so the need for physicians to protect their assets is as keen as ever.

The Strengths and Weaknesses of Medical Liability Insurance

Medical liability insurance is necessary, but nowhere near sufficient for asset protection. Despite the fact that medical liability premiums have gone up in recent years, it provides limited protection from tort liability. For instance, medical liability coverage does not protect physicians from, say, employment-related lawsuits, or liabilities that have to do with running a business (like a slip-and-fall accident on the premises). And malpractice jury awards can exceed coverage limits. When this happens, unless a physician has an asset protection plan, his or her personal assets and revenue stream could be collected upon by the plaintiff. Physicians, dentists, and other medical professionals need both liability insurance and asset protection measures.

An Asset Protection Strategy Is Essential

Asset protection uses a strategic combination of statutory protections, business structures, and financial transactions to limit financial risk to personal assets. While the specifics for each physician will be different, in general, asset protection steps may include the following:

• Placing a physician’s family home in a land trust owned by an LLC or LP to protect the equity in it while still allowing mortgage interest deductions and capital gains benefits
• Putting some assets into a limited partnership with a legitimate business purpose of investment management
• Transferring vehicles leased by practice for the physician’s use to the physician personally (to ensure the practice is not liable in the event of an accident) and ensuring adequate insurance coverage
• Replacing a normal will with a Revocable Living Trust with “return of premium” benefits that can be cashed out if they’ve never used
• Transferring practice property to an LLC to potentially provide tax breaks and reduce liability for this major asset
• Ensuring a practice has sufficient employment practice and HIPAA breach insurance

Asset protection plans should be personalized to offer maximum protection.
Asset Protection Is a Strong Foundation for Asset Growth

Working on asset growth doesn’t make much sense if those assets aren’t protected from liability where possible. By developing a comprehensive asset protection plan, a physician or other medical professional protects the assets he or she already has and knows how to protect new assets as well. Without asset protection, asset growth can be severely threatened because of personal liability.


If you’re a medical professional, rightly or wrongly you are a target for liability lawsuits. While adequate medical malpractice insurance is essential, it simply isn’t enough to protect personal assets including housing, cars, business real estate, and medical equipment. A customized asset protection plan can protect more of your assets should you be named in a lawsuit.

We invite you to join our upcoming three-day summit, where you’ll learn how to protect and build your wealth, how to run your business so your assets have maximum protection, how to lower your income taxes, cut capital gains tax, reduce estate taxes, and probate fees, and which business expenses you can deduct to reduce your tax liability. Asset Protection Academy is here to help, and if you would like to know more, we hope you will call us at 800-276-1430.

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