Advanced planning for Physicians entails leveraging the legal, tax, and regulatory systems as well as the innovative use of financial products to provide one or more of four interrelated services.
- Asset-protection Planning
- Wealth Enhancement
- Estate Planning
- Charitable Giving
The four services interlock thematically and are important to varying degrees to affluent physicians, depending on each one’s individual circumstances. Moreover, when engaging in advanced planning with affluent physicians, synergies are created among the four services. And the ability to profit from these synergies can meaningfully benefit the Physician.
Asset-protection planning is what protects an affluent physician’s hard-earned wealth. There are a great many strategies that affluent physicians can employ to protect their wealth against potential creditors and litigants, children-in-law, and potential ex-spouses. The homestead exemption, interests in limited partnerships or limited liability companies, and the selective use of life insurance, Disability insurance, and annuities are all examples of transformation strategies.
There is a wide variety of advanced planning strategies that can be utilized to enhance wealth. One example of wealth enhancement includes deferred compensation programs, Advanced planners are able to enhance a physician’s wealth significantly when the physician’s practice can be integrated through dormant asset financing, synthetic equity strategies, and a number of tax-favored programs that move money and/or benefits from the practice to individual.
As long as there are estate and gift taxes, as long as there are intergenerational considerations, and as long as there are interconnected practice interests, there will be a need for wealth-transfer strategies and tactics. When it comes to estate planning, advanced planners are called upon to facilitate not only the transfer of wealth in accord with the wishes of the affluent physician client but to do so in as tax-efficient a manner as possible within prescribed parameters.
Estate planning also comes into play when action has to be taken to ensure the efficient and cost-effective transfer of a practice’s ownership or assets. The forced transfer of equity in medical practices due to the death or disability of a partner proves to be a major way for affluent physicians to abrogate their wealth.
Apart from wealth and success, a strong majority of affluent physicians want to give something back. Charitable gifting is an important component in advanced planning, especially when coordinated with the other three services. When an affluent physician client of ours is strongly philanthropic, that inclination can be coordinated to produce additional wealth enhancement and wealth-transfer strategies.