Any high-income professional must expect that at some point there will be a bad outcome and a lawsuit against them and/or their practice. Doctors, in particular, need to be sure that they have the correct protection in place.
Whether you are a surgeon, chiropractor or cardiologist, at some point in time, some patient is going to commence a lawsuit alleging malpractice, warns Physician Sense in the article “The Do’s and Don’ts of Asset Protection for Doctors.”
With a good chance of being involved in a malpractice suit at some point in your career, the time to think about protecting your assets is right now, before a patient sues. After the fact, this might look like a way to avoid a creditor. Many courts will cancel those actions.
While no one wants to dwell on the possibility of a lawsuit, the good news is that most doctors already have the asset protection they require.
Malpractice insurance protects them up to a certain amount of damages, and most have their money in protected accounts, like qualified retirement accounts (401(k)s) and equity in a primary residence. However, there are a couple of other things that can be done to add protection.
If, in a lawsuit, a judge issues a verdict that exceeds the limit of a doctor’s malpractice coverage and the patient wants to collect immediately, it may be hard and time consuming for them to come after protected assets. However, where most run into trouble is when life outside of medical practice comes into play. This could be when a doctor’s child injures somebody in a car accident, the family dog bites the paperboy, or the handyman is injured at their home.
To avoid these situations, physicians should have the following:
- A personal umbrella insurance policy that will protect against life’s non-malpractice-related mishaps;
- Disability insurance to insure your ability to earn an income; and
- Auto and homeowner’s insurance.
Your best bet is to speak with a Houston attorney, before any kind of lawsuit occurs. You should also speak with an estate planning attorney to learn how to protect your assets through the use of trusts and other strategies.
Reference: Physician Sense (August 7, 2019) “The Dos and Don’ts of Asset Protection for Doctors”