Date of Publication:
Florida Medical Business
Howard Rosen, Esq. and Patricia Donlevy-Rosen, Esq.
December 21, 2004
Amendment 8 prohibits a physician who has been “found to have committed three or more incidents of medical malpractice from being licensed to practice medicine in Florida” (emphasis supplied). How do you protect yourself from that Draconian rule? You implement a comprehensive asset protection strategy.
What is the connection between Amendment 8 and asset protection? Simply stated, a properly structured and implemented asset protection plan (a “proper plan”) discourages lawsuits. Why? Because plaintiffs’ attorneys lose their enthusiasm for cases without a pot of gold at the end of the rainbow. If a lawsuit is deterred (i.e., not filed), then there is no finding of an incident of malpractice. Even if a lawsuit is filed, settlement is more likely when the plaintiff and his attorney realize that settlement (on the doctor’s terms) is the only viable option if any financial recovery is to be realized. Settlement also results in no finding of an incident of malpractice.
Since a proper plan is key, just what is it? First and foremost, a proper plan will be based upon legal advice provided by a competent, experienced US-licensed attorney. In this sophisticated area of law, as in a specialized area of medicine such as brain surgery, you want the professional who devotes 100% of his practice to the area and who is highly regarded by his peers. Second, a proper plan will consider the use of Florida’s creditor exemptions. However, such use will be tempered by the fact that Florida’s exemptions can be (and have been) disallowed by courts, and by the exemptions’ attendant hidden commission costs and investment limitations (e.g., only certain assets, such as annuity and life insurance contracts, are protected; your ordinary securities portfolio is not protected). In order to provide the ultimate protection with the greatest flexibility to the broadest spectrum of assets, the proper plan will always include an offshore trust.
Why use an offshore trust? Before answering that, ask yourself this question: “If I’m sued, will I be treated fairly by the US court system?” If your answer was “no”, or “I don’t think so..”, read on. If you don’t think you would be treated fairly by the US court system, then the logical conclusion is to rely on a system that will treat you fairly (or, perhaps, more than fairly). Back to the question: “Why use an offshore trust?” Because, if the offshore trust is competently created, no plaintiff (or US court) will have the ability to reach the trust assets. With assets unreachable, the plaintiff’s only rational conclusion will be to settle – on the physician’s terms. Why are the trust assets unreachable? Because no court in the US will have the power to order the trustee of the offshore trust to do anything, nor will any US court be able to seize trust assets.
Just as the state law creditor exemptions permit the physician to “have his cake and eat it too” – in the sense of being able to enjoy the benefits of certain assets while at the same time protecting them from claimants, the offshore trust provides these benefits without any investment limitations or the potential for being overturned by a US court. How does the offshore trust accomplish this? First, the offshore trust broadens investment opportunities – funds in the trust can be invested in anything from US bank certificates of deposit to stocks, bonds, and other securities anywhere in the world – US and non-US (the physician’s US investment advisor can continue to manage the trust assets). Second, as no US court can reach the trust, no US court can overturn or undo the trust. Finally, the physician, his family, and others designated by him are the discretionary beneficiaries of the trust. This means the trust can pay the physician’s mortgage payment, his auto lease, his credit card bills, his electric, telephone and other bills – the physician maintains his standard of living, even in the face of a lawsuit.
How much do these trusts cost? Typical fees for individually designed trusts – from competent counsel – range from $20,000 to $30,000. However, a group of four or more physicians can associate to form a “DR&R Group Trust®”, a cost saving technique developed and offered only by the law firm Donlevy-Rosen & Rosen, P.A. Legal fees and other costs are reduced by approximately 40% in the group trust plan, while the protection is identical to the individually designed plan. Each physician will have a separate subtrust under the plan, and a lawsuit brought against one participating physician will have no effect on any other physician’s subtrust. Absolute confidentiality of financial matters between physicians is maintained. Thus, physician A will not know what assets physician B has in his subtrust, and vice versa. Real estate (which should almost never be held directly in an offshore trust) and other immovable assets can also be effectively protected for each physician through the implementation of an ancillary loan structure (equity stripping). The DR&R Group Trust® plan is ideally suited for physicians who practice together, although that is not a requirement.
Considering the immediate savings available to most physicians in the form of reduced insurance premiums, and the potential for subsequent savings in the form of legal defense fees not paid, the plan will invariably save money, rather than cost money! In today’s economic and litigation environment, can a “target individual” really afford not to give asset protection planning serious consideration?
In view of the new “3 strikes” amendment, effective, competently implemented, asset protection planning has become more important than ever before. Interested persons should call either Howard Rosen, Esq. or Patricia Donlevy-Rosen, Esq. at 305-447-0061.
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