Asset Protection Strategies: Start with the Basics
Sure, there are plenty of exotic (and expensive) strategies available to protect your assets. But advanced strategies like offshore trusts should be employed only after you’ve covered the basics. The following tried-and-true strategies are a good first step in putting your assets safely out of reach of creditors:
Shifting assets to less-vulnerable family members is a good first step. Jointly held property is generally unappealing to creditors, who know they’ll have to share it with a spouse or children who have not been sued.
You’ll also want to move income and assets away from a medical practice, where they are vulnerable, and toward an entity that is privately controlled (corporations, limited partnerships, LLCs, etc.).
Protect what is often your biggest asset – your home– by titling it as tenancy-by-the-entirety ownership. This differs from joint tenancy in that neither spouse can convey his or her interest or force a partition of the property without the other spouse’s consent.
Another option is to give assets away. For example, you could give your children stock or the deed to your vacation home, or sign your boat over to your brother. Under current gifting limits, you can gift up to $14,000 per person, per year, tax-free.
By putting money in an irrevocable trust – which you don’t control and can’t revoke – the money isn’t considered to be yours any more, and won’t be available to creditors. By transferring ownership of assets from your name to the name of your trust, you can also reduce estate taxes and probate expenses, provide income for loved ones, and protect your assets when long-term care is required.
Healthcare Practice Strategies - Summer 2016