The 10 Biggest Legal Mistakes Physicians Make When Attempting to Use State Exemption Laws to Shield Assets
By Patricia Donlevy-Rosen, Esq.
Executive Summary
All states provide some degree of asset protection through their state exemption laws. Many physicians attempt to implement asset protection on their own by using state exemption laws that shield certain types of assets, such as a homestead, wages, annuities, life insurance, and retirement funds. In doing so, physicians often invest in assets that provide neither the maximum return nor the optimum asset protection. In addition, investments in exempt assets are often made without proper estate tax considerations. Therefore, physicians need to proceed with caution and seek experienced advice before attempting to utilize state exemption laws.
Mistake 1 Not Getting Advice of Experienced Counsel Before Attempting to Use a State Exemption
Mistake 2 Not Knowing the Exemption Laws That Apply to the State of Current Residence
Mistake 3 Attempting to Convert a Nonexempt Asset into an Exempt Asset at the Wrong Time
Mistake 4 Moving One’s Principal Residence from One State to Another
Mistake 5 Losing the Exemption by Titling the Asset Improperly
Mistake 6 Relying on a State Exemption When Other Investment Properties or Vehicles Would Better Suit Physicians’ Goals for Asset Protection, Estate Planning, and Investing
Mistake 7 Using Life Insurance or Annuity Contracts As a Primary Investment or an Asset Protection Vehicle
Mistake 8 Placing Title to a Physician’s Life Insurance Policy in a Spouse, Children, or Other Family Members
Mistake 9 Purchasing or Owning a Life Insurance Policy on One’s Own Life and Making One’s Estate the Beneficiary
Mistake 10 Relying on Tax-Qualified Retirement Vehicles in Order to Be Protected from the Claims of Creditors
The above has been excerpted from the SEAK text, The Biggest Legal Mistakes Physicians Make and How To Avoid Them