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Discuss Latest WCI Blog Post: The Ethics of Asset Protection

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  • Discuss Latest WCI Blog Post: The Ethics of Asset Protection

    Yes, asset protection will potentially help you keep you and your family's money safe, but is it actually the ethical thing to do?

    The post The Ethics of Asset Protection appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.



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  • #2
    Interesting take.

    with respect to med Mal, nearly all the judgments I have seen have nothing to do with malpractice. Is it ethical that the unlucky doc who picked up the chart/phone has to pay for a patient who is suffering the result of decades of unhealthy living and/or simply a body that doesn't last forever?

    If your answer is this is why doctors carry liability insurance, how does that solve the underlying moral issue?

    If some idiot slips and falls at your house, Jim, is it ethical that they cannot deal with those consequences themselves as opposed to expecting you to pay for their clumsiness?

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    • #3
      I can comfortably say that most of the malpractice suits I've seen among my peers in practice were unjustified. Physicians are often held to the standard that any bad outcome is their responsibility. To argue that protecting one's assets is unethical in this milieu makes no sense.
      Having been sued, I can assure you that it focuses your attention on the possibility of losing the rewards of years of hard work and responsibility. To make light of this risk, and to argue that protecting assets is unethical does the medical profession a disservice.

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      • #4
        privacy thing is spot on

        definitely a group of people for whom accumulation and protection are the whole ball game.

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        • #5
          If asset protection is not ethical, maybe all of us should get rid of Umbrella insurance since it is a form of asset protection.

          I had thoughts of taking job offers in FL until I saw that doctors there were going "bare". Building huge multi-million dollar homes in postage stamp lots to take advantage of the homestead rule. But who can blame them when people see physicians as free piggy bank and malpractice insurance rates becoming more and more unaffordable.

          Nothing wrong with complex asset protection if you can afford it. The more money you have, the more complex it gets.

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          • #6
            question for the group. I know people here are very pro-umbrella insurance and I understand why. I must confess we don't have any yet. Is one substantially less likely to be sued if they work as a W2 in an academic out-patient clinic working in internal medicine? All retirement money is in tax-protected accounts so no taxable account. I think we'll eventually get umbrella insurance but not in a rush partially because I think it's very unlikely due to current insurance policies in force, no taxable account, and wife in a low at-risk area. We do have a house with a mortgage though

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            • #7
              Originally posted by JBME View Post
              question for the group. I know people here are very pro-umbrella insurance and I understand why. I must confess we don't have any yet. Is one substantially less likely to be sued if they work as a W2 in an academic out-patient clinic working in internal medicine? All retirement money is in tax-protected accounts so no taxable account. I think we'll eventually get umbrella insurance but not in a rush partially because I think it's very unlikely due to current insurance policies in force, no taxable account, and wife in a low at-risk area. We do have a house with a mortgage though
              Your biggest chance of needing to use the umbrella policy is a car accident.

              Umbrella insurance is not used in a malpractice lawsuit.

              i would get it. Umbrella insurance is cheap and devastating MVAs are not all that uncommon.

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              • #8
                Originally posted by JBME View Post
                question for the group. I know people here are very pro-umbrella insurance and I understand why. I must confess we don't have any yet. Is one substantially less likely to be sued if they work as a W2 in an academic out-patient clinic working in internal medicine? All retirement money is in tax-protected accounts so no taxable account. I think we'll eventually get umbrella insurance but not in a rush partially because I think it's very unlikely due to current insurance policies in force, no taxable account, and wife in a low at-risk area. We do have a house with a mortgage though

                The second you/family are in a car accident the other people involved will start googling each others name. Do you think you are more or less likely to get sued if your name comes up as a physician? I have spoken to multiple insurance agents who had clients who were saved by their umbrella polices and other clients who were screwed because they didn't have one. It is very cheap.

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                • #9
                  What Anne and Sampter said. And will add children's or pets' misadventures.

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                  • #10
                    also umbrella is really cheap- a few hundred dollars a year for a few million in coverage. I spend more on restaurant/date night outings in one month than I do on my umbrella insurance/year.

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                    • #11
                      Disappointing post. We don’t make the rules, we live with/by them. Protecting your own money is no different than choosing to do the BDR, or not. If the rules change we adjust to the new rules.

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                      • #12
                        No substance to this post. It is my opinion that you have an ethical obligation to protect your family, which is why you obtain insurance and use legal means to protect your assets. Is tax avoidance, while legal, unethical? Obviously tax evasion is illegal. It’s not like we are using illegal methods to protect our assets.

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                        • #13
                          "You don't feel it is fair that you should lose everything for one mistake? Well, who gets to determine what is fair if not a dispassionate, professional court interpreting the laws passed by hundreds of government officials elected by hundreds of millions of your fellow citizens?"

                          i lol'd at this part

                          Comment


                          • #14
                            Originally posted by WCI View Post
                            You don't feel it is fair that you should lose everything for one mistake? Well, who gets to determine what is fair if not a dispassionate, professional court interpreting the laws passed by hundreds of government officials elected by hundreds of millions of your fellow citizens?
                            This is where the whole argument falls apart. You don't have to be a woke social justice warrior to realize that the legal system is anything but fair and dispassionate. One problem is the institutional biases. The second problem is the fact that outcomes are decided by peers and laymen. Unfortunately, people are stupid and ignorant, and we deserve outcomes decided by experts who understand the actual facts.

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                            • #15
                              If one is concerned about the ethics of protecting assets, note that some of the protection strategies give the owner the option of paying out from them:

                              Most retirement accounts are protected so that a creditor cannot force you to use retirement assets to pay a judgement or settlement. However, that does not prevent you from doing it anyway. By the same token, you could borrow against a cash value life insurance policy, or surrender it, and use the proceeds to pay a creditor.

                              Some of the approaches put the money in trusts that cannot be used to pay creditors, for which the grantor is not the trustee, or both. Those are the only ones that would prevent using your assets, even protected ones, to pay creditors.

                              I am with most of the commenters who have a far less positive view of the courts and politicians. I wish I trusted them the reach good decisions and set up honest structures. We are so far from this situation that the idea is absurd. I have no confidence that the legal system will treat parties with competence or fairness. Quite the opposite. Trial lawyers bribe politicians to set up tort systems that line their pockets. Both get rich and the rest of society suffers the consequences.

                              The bigger problems with many asset protection maneuvers are the cost to set up and maintain, complexity they impose on one's financial life and doubts about how well they work. I suspect that having many different entities form a shell game to confuse creditors only makes one look even worse to judges. I assume that plaintiff's attorneys see this regularly and know how to attack it.

                              Titling assets as tenants by the entirety, homestead protection, having spouses own assets separately, giving money to heirs, or trusts on their behalf, while alive, keeping money in protected retirement accounts are all low cost, simple and of known effectiveness. Cash value life insurance also works in at least some states. I suspect it is usually too expensive for the overall approach to be worth pursuing.

                              For docs, I suspect that the above plus enough malpractice insurance would give you as much protection at far lower cost than some out of state DAPT or FAPT. It is probably worth it to consider increasing malpractice coverage, depending on your field, local malpractice climate and the cost.

                              Those trust structures might be worth it for people who sign off on personal guarantees for business projects. There is no insurance to protect you if things go south. Having a DAPT, might be the only thing you can do. If you live in an asset protection state and follow the rules, that might work and may be all you can do.

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