Asset Protection: Physicians Face Varying Seasonal Risks

From the Headlines

We've previously reviewed the legal use of captive insurance companies (captives) in a four-part series that covered a variety of issues including a stern warning that they are not legal "tax shelters," despite being aggressively marketed that way to physicians. Predictably, a very large number of captives are currently being audited across the United States. The physicians that used them abusively for tax benefits and insured against what's referred to as "sham risk" are facing significant costs and penalties.

As a result, the captive promoters, the same folks that put these clients into the captives now being audited, are scrambling to offer new solutions that will allow them to retain clients and keep working.  Attorney Jay Adkisson is an expert in this area and his recent article on this topic in Forbes cautions that many of these so called rescue plans than are meant to distract you from your current audit woes. It jumps into what may potentially be a new sphere of risk by using an offshore company with a similar structure, subject to many of the same risks and challenges by the I.R.S. Tread carefully, get second opinions, and don't be tempted by the increased premium levels available this year unless you have real risks and a solid team to run your captive in a legally compliant way.  The tool is subjectively a valid one, but is rarely a fit for small medical practices.

Summer Time Risks: Risk 1, Your Own Travel

Earlier this year discussed some specific personal and financial security issues to consider when travelling on your summer vacation and provided some specific tips  on securing your home, family and finances. Given recent events internationally consider your potential exposures and "weakest links" and plan travel around the hot spots that are considered to be the most dangerous for Americans.

Summer Risk Number 2, Your Kids

I've previously warned you about the so-called "100 Deadliest Days" that we are now in (the time between Memorial Day and Labor Day) when all of America is on vacation to some degree, which poses a sad and recurring risk to your children's personal safety. The counterpart to those personal safety risks is the serious financial risk parents incur for the acts of their children (and their children's friends in some cases) at a time when both your minor and adult children are out of school have more free time, are often unsupervised, and are using your home, pool, boat, cabin and etc. Don't assume that your kids are their friends are better behaved, smarter or otherwise somehow magically protected from the same risks of accidents or bad judgment that every other family in the United States faces.

Summer Risk Number 3, Employment Related Risk

I've seen a recurring set of liabilities at this time of year related to your status as an employer, here are some specifics:

1) Don't discriminate in how you allot vacation time requests among employees, have a published policy and stick to it;

2) Don't discriminate in how you provide vacation pay and benefits. Have a specific plan in your (custom drafted, state specific) employment policy manual and enforce it uniformly;

3) Beware of employee classification risk and your treatment of any employees you compensate as contractors in relation to their vacation time requests and compensation. Your actions on these issues have legal ramifications if it ever becomes an issue;

4) Watch the dress code. If you allow employees to vary from your official policy to account for holidays, heat waves (it was 120 here in Phoenix last week!) etc. make sure it stays appropriate and that all conduct their speech and interactions in their typical professional manner.

As always, proactively managing risks such as we've covered above is the surest and cheapest way to protect your personal and professional assets. Reacting to a problem is managing crisis, not risk and will always be more expensive, less effective and in some cases illegal.