4 ways to protect your assets as a practice owner
As a doctor or dentist, protecting your assets is absolutely essential. Why? Because a person’s health is of utmost importance so if anything goes wrong, they will make you the target. As medical professionals usually make a substantial amount of money that built their wealth too, the chances of a lawsuit are increased.
It can only take one lawsuit to have devastating consequences when it comes to your wealth so to reduce this risk, here is how to protect your assets.
Protect your assets – what does it mean?
Simply means protecting your assets including your house, practice, car.
As well as patient claims, medical practice owners are also at risk from legal claims being made against them as an employer too. Issues such as unfair dismissal or bullying are the most common risks nowadays.
How to protect your assets
It is said that “the key to asset protection is to own nothing and control everything.” With this in mind, here are the 4 main ways to protect your assets.
Have sufficient insurance policies – medical professionals should have public liability, cyber insurance, business and medical indemnity insurance as well as building and contents insurance if they own property. Insurance policies should be discussed with your insurance broker.
Seek the advice of a specialist accountant – the earlier you speak to a specialist accountant the better as you can get specialist advice and avoid any future issues that could be costly. When acquiring new assets, you should always seek advice in terms of your ownership options so that you can consider both tax planning and asset protection benefits.
Benefit from using trusts – when a medical professional owns their practice, their name is usually tied to their Medicare number. This means that their business is under their name and therefore vulnerable. For this reason, using trusts is popular amongst medical professionals as they protect assets outside of their business from any (debt) enforcement action taken out against them or in the event that they go bankrupt. Different structures such as a Service Trust, Property Trust or Family Trust all lessen future risk. Trusts can be beneficial but it is important to remember to regularly review your trust deed to make sure that you have the best protection and tax planning opportunities.
Consider where to own future assets including your home – not only is this a must when thinking about how to protect your assets but if the medical professional and his/her spouse can both attest that their property is their primary residence, then it will be capital gains exempt.
Important things to remember!
While the best way to protect yourself as a medical professional is to have appropriate and adequate indemnity cover and to deal quickly with issues that arise by seeking advice from your insurer’s legal team, nothing can protect you personally from two things:
Medical malpractice – your insurance company will try but they also have an obligation to generate profits for their shareholders. Settling claims doesn’t always serve this purpose!
The bank – banks will always take guarantees and security over as many entities and people as possible.
This is why it is so essential to seek advice from a specialist accountant early in your medical career as there are various measures beyond insurance that will need to be put in place for complete and effective asset protection!
Avoid issues in the future by seeking personalised advice about your structure without limiting your tax planning opportunities. We can give you our insights to ensure that whatever decision you make is a success. Just contact me via mitchell@affluenceca.com.au and I’d be keen to help.