4 Critical Ways Doctors Can Protect Themselves Against Malpractice Lawsuits
Trusts, Corporations, and Other “Fancy” Stuff
We’ve now gone through MANY ways to protect your assets from creditors and malpractice lawsuits.
What about all the fancy trust stuff? Family limited partnerships, family foundations, family corporations, credit shelter trusts, Q-tip trusts, irrevocable trusts, etc, etc.
All of these really are meant for ONE thing- to SEPARATE one part of your estate from the government and from your creditors.
With each of these, you will establish a NEW tax ID and file the entities own tax returns. Your social security number isn’t mentioned.
These entities are SEPARATE from you.
Here’s an example of how you can use one of these vehicles:
What if at the same time you need to protect your family from themselves? Sometimes we can be our own worst enemy.
I love my cousin. He is the sweetest person in the world. He has a heart of gold. He would give away the last strip of clothing off his back to somebody in need. He gives and he gives and he gives, but unfortunately to his own detriment at times.
He has dealt with a lot in his life, but just simply hasn’t developed various life skills. He doesn’t have the drive to succeed that many of us do. He can’t hold a full-time job and has had to declare bankruptcy once, almost twice if he wasn’t bailed out by her parents.
I find more and more clients are helping their kids in retirement. Perhaps, it’s a bad economy. Perhaps, it’s a lifestyle choice. I’m not quite sure. Many people are very concerned about how their kids would spend money if they inherited it. They want to protect it from divorces and greedy spouses and sometimes from the kids themselves.
This is why various forms of trusts exist. You can DICTATE how much and where funds can go. For example, you can form an IRREVOCABLE TRUST that can specify the care of a given beneficiary. They can only spend 3% or 4% (or whatever you choose) of the assets per year- so that you can ensure that they will have an income for the rest of their lives. This can protect the kids from the divorces and even from themselves.
CAVEAT: Revocable Living Trusts ARE in your social security number. They will be within the reach of your creditors! All these other entities we have mentioned are IR-REVOCABLE.
P.S. In my opinion, these vehicles are very helpful when you have a sizable amount of non-qualified money- think $300,000 or above. Anything below that, it isn’t even worth considering!
If you have missed any of the other 3 Critical Ways Doctors Can Protect Themselves Against Malpractice Lawsuits check out my blog at www.davedenniston.com/blog
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