The creditor lawsuit-virus plagues the physician market, and it’s sickening. The facts are scary, 40% of all California physicians have been sued in the last 5 years and 40% more will be sued in the next 2 years (note this includes personal suits outside professional business malpractice issues). Which means all these people have had a wealth-eroding creditor illness, and most of them never recover. Why?
The problem is that the typical wealth accumulation model for successful physicians is counter-intuitive to a strong asset protection plan.
Traditional Weak Defenses: doctors are well aware they have a short working lifespan and therefore need to capture as much income as possible during high-earnings capacity. But their weakness is in siphoning earnings out of their business to reinvest dollars into alternative investments, like real estate, with the goal of building an alternative income-producing balance sheet that can offset future income losses as their earnings capacity wanes and one day ceases altogether. Their goal is to have a self-sustaining balance sheet, but they have to build it fully exposed to unwanted threats and exposures.
So it’s to no great surprise that greatest fear for all physicians is the loss of income-replacement assets they have spent years working to build – if they get sued once and lose, then it all goes away and they have to start over, but there is not enough time to replenish the lost assets, which means they will live a lesser comfortable life at retirement.
As a Dr. earns monies and routes funds to their private balance sheet, they have a choice. They can:
(1) maintain current asset character for personal use in which case the assets and income will be fully exposed to creditors, or
(2) re-characterize assets for their private retirement, in which case all plan funds would be “exempt” from both bankruptcy and lawsuit creditors during accumulation and even after distribution or death benefit payout to beneficiaries.
So the strategy is to get a shot BEFORE you get sick with the lawsuit virus to prevent an attack. It’s the same for all asset protection and creditor defense planning – you need to exempt assets BEFORE you get sued. A Private Retirement Plan allows you to convert “non-exempt” exposed assets to “exempt” protected assets without having to sell or disrupt your current financial plan or negatively impact your tax savings strategies. So you get your booster-shot and kill off the creditor-virus which enhances your chances of having a healthy financial life at retirement.
As doctors all know, there is no miracle cure, but a PRP Diagnostic is the place to start to identify and quarantine an illness. Once your balance sheet is healed and the creditor-virus is killed off, then maintaining balance sheet health with ongoing checkups (administration) is the best ongoing defense to increase your chances for a long healthy financial life.