Minnesota Asset Protection Strategies for Doctors and Dentists that Anyone Can Use
Asset protection is a major concern for most medical and dental professionals. It is probably no surprise that these professions are fraught with liability. It’s not just malpractice claims that create potential liability for these professionals. The medical and dental professions are not immune to employment law issues, careless business partners and employees, contractual obligations, and personal liabilities, which all add to the risk assumed by a physician in private practice.
Unfortunately, these liability risks are not unique to medical doctors and dentists. The United States has 1 lawyer for every 300 people and is one of the most litigious societies in the world. Business owners, board members, real estate investors, and retirees all need to protect themselves from a variety of liabilities too. Below are three asset protection tips anyone – not just physicians or dentists – can use to protect their hard-earned money.
Tip #1 – Insurance is the First Line of Defense Against Liability
Liability insurance is the first line of defense against a claim and is a key piece of asset protection. Liability insurance provides a source of funds to pay legal fees as well as settlements or judgments. The following are types of insurance you should consider having in place depending on the assets that you own:
- Homeowner’s insurance
- Property and casualty insurance
- Excess liability insurance (also known as “umbrella” insurance)
- Automobile and other vehicle (motorcycle, boat, airplane) insurance
- General business insurance
- Professional liability insurance
- Directors and officers insurance
Tip #2 – State Exemptions Protect a Variety of Personal Assets From Lawsuits
Each state has a set of laws and/or constitutional provisions that partially or completely exempt certain types of assets owned by residents from the claims of creditors. These laws vary widely from state to state, but you might be able to protect the following types of assets from a judgment entered against you under applicable state law:
- Primary residence (referred to as “homestead” protection in some states).
- Qualified retirement plans (401Ks, profit sharing plans, money purchase plans, IRAs).
- Life insurance (cash value).
- Motor Vehicles.
- Section 529 plans.
- Disability insurance payments.
- Social Security benefits.
Knowing which assets are exempt under your state law will help you determine which assets are exposed, which assets are protected, and to what extent these exemptions provide asset protection. Click here to see the exemptions under Minnesota law for 2018.
Tip #3 – Business Entities Protect Business and Personal Assets From Lawsuits
Business entities that can provide asset protection include partnerships, limited liability companies, and corporations. Business owners need to mitigate the risks and liabilities associated with owning a business, and real estate investors need to mitigate the risks and liabilities associated with owning real estate, through the use of one or more entities. The right structure for your enterprise should take into consideration asset protection, income taxes, estate planning, retirement funding, and business succession goals.
Business entities can also be an effective tool for protecting your personal assets from lawsuits. In many states, assets held within a limited partnership or a limited liability company are protected from the personal creditors of an owner. In many cases, the personal creditors of an owner cannot step into the owner’s shoes and take over the business. Instead, the creditor is limited to a “charging order” which only gives the creditor the rights of an assignee. In general this limits the creditor to receiving distributions from the entity if and when they are made.
Final Thoughts on Protecting Your Assets in Minnesota
Liability insurance, exemption planning, and business entities should be used together to create a multi-layered liability protection plan. If you are concerned about your assets being exposed to creditors or business liabilities, contact our office today to discuss the different planning strategies that will protect your assets and help you sleep better at night. Keep in mind that there are other types of asset protection to be mindful of. Protecting assets from nursing homes costs, creditors of your children, or your children’s ex-spouses are other common concerns when clients are discussing asset protection in Minnesota.
Zach Wiegand is a Burnsville, Minnesota estate planning attorney and the owner of Gold Leaf Estate Planning, LLC. Gold Leaf Estate Planning is an estate planning law firm that handles probate and trust administration in Minnesota. We serve the Twin Cities metropolitan area with a focus on estate planning for clients in Burnsville, Eagan, Savage, Prior Lake, Lakeville, Apple Valley, Eden Prairie and the South Metro. The firm also handles probate in Dakota County, Washington County, Scott County, Hennepin County, and Ramsey County. Zach was named a Minnesota Super Lawyer – Rising Star for both 2017 & 2018 and he is a member of WealthCounsel – a national organization of estate planning attorneys dedicated to practice excellence. You can contact Zach via e-mail at firstname.lastname@example.org or by calling (952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000 County Road 42 W., Suite 310, Burnsville, MN 55337.