Armor-plated assets: How to protect your property

Asset protection is a way to keep your possessions safe from legal costs. Here's what to know before you use this technique.

By Katherine Vogt, AMNews staff. June 23, 2003.

Harold Labinsky, MD, a general surgeon in Elk Grove Village, Ill., recently attended a planning meeting for a medical liability reform rally. One physician told Dr. Labinsky, chair of the Chicago Medical Society council, that he wouldn't be rallying. He wasn't concerned about liability, the doctor said, because "I put everything in my wife's name."

That physician had discovered asset protection, a hot topic among physicians who hear horror stories about liability judgments or settlements that tap into family coffers and suck them dry. Asset protection, simply put, is a strategy for putting money, possessions and even some practice assets in a legal structure that would keep them off-limits from any litigation, whether it be liability, divorce or some other civil dispute.

Experts say there are plenty of ways to build a moat around your assets, and the perfect recipe for protection is probably different for each individual. Everything from creating business entities to trusts can be employed -- for a price and a little effort.

Many financial experts agree that the first gatekeeper to protect wealth is good medical liability insurance. Without it, physicians risk bankrupting their practices or being forced to come up with their own money to pay a lawsuit judgment or settlement. At the very least, experts say liability insurance can be used to pay for a legal defense.

But when good insurance is combined with good asset protection, which often means transferring ownership, a physician is less likely to be a target for lawsuits, said Charles Clawson, a certified public accountant and attorney in Las Vegas.