Our clients are doctors as well as other professionals and business people who wish to engage in their profession or business with minimal risk to their personal and business assets. Having a comprehensive Asset Protection plan may, in difficult times, be your best asset.

Segregate Risk and Assets. Establish holding entities for your assets, so that your assets may be preserved in the event of a claim. Asset Protection Planning involves defining and structuring ownership of assets in a way that would preclude the attachment of judgments and claims to the assets. To accomplish this task, we use a combination of legal entities, such as Delaware Series LLC, Family Limited Partnerships and Trusts to hold the assets separately from the business or professional activity that involves risk.

Reduce Equity in Assets. Equity in your receivables, “good will”, trademarks and even employment contracts, as well as in hard assets such as equipment, inventory and real estate is at risk from claimants and creditors. In some instances, due to professional regulations, tax reasons or other restrictions, these assets cannot be completely removed from the risk associated with your practice or business. Your creditor’s and claimant’s strategy will be to attach their claim or judgment to your equity. Your strategy is to minimize this equity by assigning debt, creating mortgages or other obligations to other entities under your control. For example, the equity in the physician’s receivables, equipment and other assets may be levied by your Family Limited Partnership or a Trust. Under the right circumstances, the interests of the Family Limited Partnership in a physician’s practice receivables would trump the interests of claimants or judgment creditors whose claim has arisen after the fact. This strategy also works as a double layer of protection even when the assets can be segregated from risk into a different entity.

Plan Ahead. While the law recognizes the public good of maximizing asset protection,(reduced personal risk encourages business), it prohibits the transfer of assets “after the fact” to avoid paying imminent legal obligations. In fact, there may be circumstances, where even a notice of a claim will affect your ability to transfer business assets or even to draw money out of your practice or business. Asset Protection Plan therefore, involves setting up protective structures before a claim is made and optimally, before a liability is incurred. It also involves reviewing and understanding all assets, such as trademarks, good will, receivables, contracts, real estate equity, foreseeable future opportunities, life insurance proceeds, inventory and equipment. Both, business and personal risks have to be assessed: potential claims not just from patients or customers, but from employees, business partners, insurers, third party claimants, lenders and creditors, the government, as well as potential claims stemming from personal activities of the client or family members, such as claims for personal injury, harassment, fraud, paternity, marital and companionship claims, and so forth.

Asset Protection Planning – Not Same as Estate Planning. The Asset Protection strategies will not replace a comprehensive Estate Plan. However, an Estate Plan should be drafted with the Asset Protection strategies in mind.

When Insurance Is Not Enough.

Professional Corporations and LLP’s do not offer corporate protection for professional liability, which is personal. There are a multitude of pitfalls associated with professional liability policies, which may result in a lapse of coverage.

Typical insurance policies such as General Liability, Workmen’s Compensation, etc., are limited by how they are drafted and the information provided to them by the insured. Understating a number of employees to the insurance company is a common practice, sometimes intentional and sometimes accidental, but resulting in unintended personal liability to the owners.

Even large dollar amount business and personal umbrella policies may not cover some of the larger claims.

Suits for fraud, harassment, battery and other personal matters may not always be covered.

When buying insurance, we often rely on the agent’s expertise, or the staff, who is hired to process the claim or pay the premium on time, and so forth. There are many circumstances, where the insurance company may refuse a claim and where the client’s best asset is his Asset Protection Plan.

When Corporate Protection Is Not Enough. Incorporating a business is “Asset Protection 101”. However, in a world where the corporate veil and even the LLC protection is pierced regularly and additional liability stems from personal activity, more comprehensive Asset Protection strategy is required. Here are a few circumstances where a corporation or an LLC is not enough:

Many business loans, contracts and insurance binders require personal guarantees or representations, exposing shareholders or LLC members to personal liability.

Inter-company disputes between shareholders or members do not offer corporate protection.

Tax liability is often persona to corporate officers in closely held corporations or to LLC members.

Suits for fraud, harassment, gross misconduct and many torts and similar type claims are personal in nature and may be outside of the scope of personal protection.

Companies need to be funded for the purposes for which they are established. Underfunded companies may result in personal liability to the officers or members.

Corporate veil may be pierced for failure to follow minimal corporate meetings and other formalities.