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The Intelligence of Integrated Asset Protection Planning

Adam O. Kirwan, J.D., LL.M.,
Christopher Prestera, JD, CPCU, and
Walter Parsons, MS Finance, RFC, Tax Advisor

The satisfaction for physicians in practicing the science and the art of medicine has been severely eroded by the business of medicine. Never before has it been as difficult for a physician to accumulate wealth and attain financial independence through the practice of medicine. The primary drivers of this reality are your ever-rising malpractice costs and the pressure of continual decreased reimbursements. Physicians work harder now for less money. In addition, recent law changes have only compounded the physician’s problems. Amendment 8 (i.e., the three strikes – you’re out rule) makes becoming less of a target essential to his or her continued ability to practice medicine, and the new bankruptcy act (which has passed the Senate and which President Bush has promised to sign into law if it passes the House), will make it impossible to use bankruptcy to eliminate an adverse medical malpractice judgment and receive fresh start. In short, it has never been more important to establish an integrated plan to protect your hard-earned assets.

What physicians need is an integrated plan to overcome these obstacles; not a one size fits all “solution.” Physicians are barraged these days with people pitching their given methods to protecting assets. Many of these individuals, including some attorneys, are quick to point out the benefits of their chosen ‘solution,’ but most are unwilling (or more likely unable) to adequately discuss the shortcomings that accompany any given asset protection method. Physicians need to have a clear understanding of (i) how a chosen method protects assets, (ii) any exceptions to that method, and (iii) the downsides to that approach, before they are able to make an intelligent decision as to which method is best suited for them. That being said, a good asset protection attorney will be able to (i) provide you with several options to protect your assets, (ii) explain the exceptions and downsides associated with each one, (iii) provide ways of minimizing these inherent shortcomings, and (iv) integrate your asset protection needs with your personal financial planning and estate planning goals and objectives. The plan should address protecting both your personal assets (including your future earnings), and your business assets (including your accounts receivable).

As hinted to above, another vital element of an intelligent, integrated asset protection plan is coordination with your numerous other non-asset protection goals and objectives. For example, you and your financial advisor may have established a financial plan, you have estate planning goals and objectives, and you also have tax planning objectives. All of these goals and objectives, plus numerous others, need to be taken into consideration when deciding what the best asset protection solution is for you. Most physicians forget that the greatest threat to their assets is from taxing authorities. Therefore, competent tax planning should be an integral part of your asset protection plan.

Unfortunately, physicians are often approached by financial and legal professionals who may be experts in their chosen field and well meaning, but take a one-sided view of your situation. It is as if they are horses wearing blinders in the Kentucky Derby working hard to win the race, but unable to see the rest of the environment around them. As the old saying goes, “to a man with a hammer, the world looks like a nail.”

A very common scenario we see on a regular basis is the client who has received conflicting recommendations from their various advisors. It is also common for one of these advisors to have told the client that one of the suggested planning options proffered by another advisor is faulty and should not be implemented. When this happens, I usually schedule a conference call with all these advisors. The interesting fact is that they are rarely that far apart in their views when they all have the opportunity to discuss the clients issues with each other. The problem is that actually getting all your advisors together to formulate an integrated plan is difficult in today’s busy business environment. Have you ever had your lawyer, accountant and malpractice professional in the same room working together towards the best integrated solution for your particular circumstances?

This is even more troubling when you consider that a reality in today’s world is that no one person can be all things to all people. From this basic truth, the only logical conclusion is that you are truly best served by building a team of experts, each focusing on a different discipline, whether it be financial planning, investment management, legal services, or accounting services. It is only through a “team approach” that you can feel secure that the advisors you are trusting to help you achieve your personal goals and objectives are working synergistically, each concentrating on their particular area of expertise, but with the benefit of the input from your other advisors.

This is where MedWealth comes in. MedWealth was founded by three respected and experienced professionals, an asset protection attorney, an accountant / tax expert, and a medical malpractice insurance expert who is also an attorney. Not only will the MedWealth professionals provide you with a team to help you formulate an effective asset protection plan customized to your individual facts and circumstances, but MedWealth will also work with the professionals already trusted by a physician or a group practice. If the physician has the confidence of a trusted financial advisor or legal professional, MedWealth will make him or her a partner to ensure the best solution for the unique circumstances of the physician or practice. MedWealth focuses on providing professional advice, and does not provide investment management services so there will be no conflict of interest with your financial advisor.

In short, physicians need a coordinated effort that allows for integrated planning without delays or components that are at cross purposes. To effectively meet this important objective, a design team composed of professionals, each skilled in there particular area of expertise, is needed. This is what MedWealth provides by directly addressing the issues of malpractice costs and strategies, protection of business and personal assets, planning for the reduction of income taxes, and the creation of alternative future income streams that are tax advantaged and/or asset protected.

If you have implemented some form of asset protection planning, do you know what to do if you are faced with a looming creditor? The MedWealth team not only helps you establish an effective asset protection plan, it will also explain exactly what needs to be done if you ever find yourself on the wrong side of a law suit. In addition, MedWealth will be there to support the plan as well. If you are confident that you have accomplished what we have described in this article, then you are one of the lucky few. If you have concerns, the time to start your planning is now.

The Medwealth Team

Adam O. Kirwan, J.D., LL.M., is an attorney and founder of The Kirwan Law Firm which concentrates in the areas of Asset Protection Planning, Trust and Estate Planning, Family Business Succession Planning, Federal Estate, Gift, and Income Taxation, State and Local Taxation, Probate and Post-Mortem Tax Planning, Charitable Planning, and Business / Corporate Law. Mr. Kirwan is the author of The Asset Protection Guide for Florida Physicians, a book that provides an unbiased explanation of the many ways for Florida physicians to protect their assets. Mr. Kirwan lectures frequently on the topic of asset protection planning at a national, state, and local level, has been a guest speaker on television and radio talk shows, and has authored numerous articles including “Ameliorating Your Practice Malaise”, and “Family Limited Partnerships May Not Be The Ideal Asset Protection Instrument” both published in the Florida Medical Association Quarterly Journal, and “The Top Ten Mistakes Physicians Make in Planning to Protect Their Assets” published by the Florida Physician’s association, to name a few.

Walter C. Parsons, MS Finance, RFC, CEA, Tax Accountant, is the founder of Parsons Financial Services, Inc. which has specialized in serving the needs of physicians since 1988. The areas of specialization include, business and personal Tax Structuring to avoid erosion of wealth, Maximizing Asset Base, Utilizing Dormant Assets, Estate Planning, Charitable Giving Strategies, Business Continuation Strategies and Business Performance Reviews. Mr. Parsons has frequently been interviewed by newspapers, television news casts, and used as a source by others writing books on his areas of expertise.

Christopher Prestera, JD, CPCU is President of The Physicians Advocate, an insurance brokerage firm based in Fort Lauderdale, Florida. The firm specializes in serving physicians and other healthcare providers in the Medical, Life Sciences and Managed Care industries. Chris has worked for the property / casualty insurance industry representing healthcare providers from entry level positions to senior management positions over the past 22 years. Along the way, he was also able to secure his law degree from Seton Hall University School of Law and passed the bar in two states.