Privacy is important in asset protection
By Jack Stuart Beige, DC, JD

I hear many horror stories about frivolous malpractice suits — doctors being sued by former employees and by insurance companies on post-payment audits. I understand that trusts are one way to protect myself, but they are expensive. Someone else told me about incorporating in another state, such as Delaware, or off-shore. What do you suggest?

First we need to clarify the confusion many doctors have about asset protection vs. estate planning:

If your objective is to ensure your assets pass to the people you intend to have them, then trusts are appropriate. But in the context you describe — protecting assets from lawsuits — trusts are not as effective. They can be expensive to establish and maintain.

Trusts are also not private. They are “visible” and can be attacked successfully.

Asset protection — protecting assets such as the equity in your home, bank accounts, investment property, etc. against frivolous lawsuits, post-payment audits by insurance companies, or government seizure from Medicare or the IRS — requires one major ingredient: privacy.

Privacy is the first barrier that protects your assets, and this is when forming a corporation on-shore or off-shore comes in.

Delaware is the state that comes to mind most frequently when companies incorporate in a “foreign” or different state.

But Delaware:

• Is really structured for large public corporations, not for professionals; and

• It offers no privacy — all officers, directors, and shareholders are listed as a matter of public record.

This is true of all but a handful of states. And because of these problems, attorneys can find your corporation and attack it in court as your “alter ego” to try to pierce the corporate veil to get to those assets.

The only state that currently provides all of the right ingredients for complete privacy and anonymity is Nevada. Others can be listed as the president, secretary, treasurer, and director, and your name does not appear anywhere in the state records.

In Nevada, you can also open a corporate bank or brokerage account for your Nevada corporation with the nominee officer. Your social security number need not be used.

You can use this incorporation strategy to reduce the exposure of your assets. That can go a long way toward making you an unlikely source of easy money.

The privacy factor is also valuable to facilitate a quick settlement.

Jack Stuart Beige, DC, JD, of Jack Stuart Beige & Associates, LLP, practiced chiropractic until 1993, when he began the practice of law, concentrating in the area of personal injury and asset protection. He can be reached at 631-231-7725.