Advice for doctors: protect your assets

By: John Henry McDonald

This story should be of interest to those in the medical field.

Medical doctors, especially, are given proposals by life insurance agents for asset protection if they are caught in a malpractice suit. These are typically Variable Universal Life insurance proposals of one kind or another.

Now, much of what is said is true. Cash value built up in life insurance is protected from creditors in Texas. The S&P 500 has averaged more than 12 percent in the last decade. Death benefits do pass to your beneficiaries income tax-free.

Those insured can borrow money from their life insurance cash value built up and pay no taxes on the loans. This all comes with quite a price however, as the loads and charges in most Variable Universal Life insurance contracts are extremely high.

There are ways to keep assets protected from frivolous lawsuits starting with common sense low-cost methods and ultimately using higher cost, and in some cases, more complex forms of ownership.

How doctors can protect their assets from creditors if they face a malpractice suit.

First off, it’s important to practice sound medicine. Texas now has litigation caps on malpractice, so you may have been able to reduce your coverage lately. Check deductibles, as they may be too high

Be sure to maximize your retirement options, especially if you work for a company that offers very good ones. They are exempt from your creditors, along with your children’s college savings plans, or 529 plans. Since education is so expensive, be sure to put money in those plans.

In Texas, home equity is exempt from malpractice suits after 40 months, so accelerate mortgage pay down and buy a bigger house when you are through.

If you still have discretionary income, Vanguard & TIAA-CREF have some fine, inexpensive, efficient annuities, referred to as “no load� annuities.
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