The Double Edged Sword of Doctors’ Affluence

Two recent articles caught my attention and brought into focus many of the topics I write about and address through planning for physicians across the country. 

The first was a nationally published article on the highest paying jobs in the United States that ran in various incarnations in a variety of news sources. That article listed a number of professions and the average income from each of those professions. The second article was local, but is of the type published in every major metropolitan city in the United Sates, the real estate report on the “Most Expensive Homes Sold,” in this case in the Phoenix-metro area.

What both lists had in common was a large number of doctors. In the first instance, by profession or specialty, and perhaps worse, in the second case, by name, location and the exact price paid for a series of painstakingly detailed and photographed seven figure homes in some of the city’s most desirable neighborhoods. As I casually perused the list I was pleased to see the name of a client, then a friend, and finally a relative. Being an asset protection attorney however, that pleasure quickly turned to concern over how those homes had been purchased, the degree of unforeseen exposure, and the level of detail disclosed.

Of the three, only my client had purchased the home through an appropriate legal structure, in this case an irrevocable trust, as opposed to the revocable living trusts that the majority of the families on the list had used, doubtless unaware that their, “stunning 8.950 square-foot Mediterranean with custom finishes and imported marble, etc, etc.” was completely exposed to a lawsuit or most other liabilities. A few others had used LLCs and my experience from years of practice told me that many of those LLCs were thinly purposed single-member LLCs that likely lacked defensible, legitimate business purpose, especially if the LLC owned a home that functioned as a personal residence. Put another way, only a couple of the 20 people on the list had appropriate counsel and training or had put enough “tactical” thought into how they approached the preservation of this asset that in many cases was listed for the public as a “cash sale” and how that asset could be breached.

I completely defend you and your family’s right to buy and own anything you want and enjoy the fruits of your labors and education; in fact I do it for a living. However, wealth is finite and fragile and must be nurtured as carefully and proactively as possible. This is especially true in tough economic times like we now face. Doctors must understand that merely being skilled at your profession, being right, or being careful is not enough and that they carry the burden of perceived wealth, which itself draws both good and bad attention. That perception is acutely increased by the visibility of your wealth in many cases, intentionally or unintentionally displayed by your zip code, your vehicle, and in other details right down to your watch and the vacation pictures in your office.

Patterns of success emerge among those who are good at both making money and those who are good at keeping it; two very distinct skill sets. What costs more of your time and money; replacing 10 or 20 years of earnings or making the time and allocating the resources to protect your life’s work and all that you have yet to earn?

Here are some things to consider:

• You have a high level of professional and personal liability and statistically face multiple lawsuits during your career.

• As an American doctor you are among the highest income earners and highest net worth individuals in the world, even you feel like “just a working person.” Know your value on the lawsuit food-chain.

• Act and think in a way that is tactical, that is forward looking and defensive, or even better, preventative.

• Be conscious of the visibility of your wealth and the reactions it creates. Stealth wealth is typically longer term.

• You have the legal power and resources to implement planning that can protect the majority of your life’s work in a safe, legal way. Choose to be protected.
 

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