The Professional’s Guide to Asset Protection
If you have a professional license, you may as well wear a sign that says “Please Sue Me.” The general belief of the public is that a profession is very wealthy and highly insured, which leads to an easy payday if they can make a claim that you did something wrong or that the result of something you did correctly was not ideal for them. In this economy, the problem of frivolous lawsuits has grown even worse. About 50 million lawsuits are filed each year; if you earn a dollar, there is someone out there trying to take it from you. Implementing a comprehensive asset protection plan is an absolute necessity.
The first step in the protection of a professional practice is to choose the right form of business entity. You should always choose an entity that limits your personal exposure. After all, if someone is successful in a lawsuit against you as a professional, it should not permit them to recover against assets you own as a spouse or parent. Usually a limited liability company (LLC) will most effectively shield your personal assets from the debts and liabilities of your professional practice. A professional corporation (PC) or professional association (PA) will also offer protection from the debts of your practice and any errors made by any of your employees but it will not personally protect you if you are sued personally for your own malpractice.
A limited liability partnership (LLP) is a terrific vehicle for professionals who wish to join together for the purposes of business but still separate their personal assets from professional liability while running their practice. While an LLP will protect you from the mistakes of your partners, it will not shield you from the mistakes you make personally. A general partnership is very high risk when running a professional practice since it opens you up to liability from the actions of any of the partners.
The most important step you can take as a professional looking to insulate yourself from any liability arising from your practice and protect your personal assets is to conduct a risk management and liability audit. Business structure, policies, procedures, operations and contracts need to all be reviewed in order to create an airtight asset protection plan. As your asset protection attorney, my job is to identify problems before they turn into lawsuits. The earlier we find a breach in your armor, the more successful we will be in shielding you from any loss. If you wait until you are served with a lawsuit to form your asset protection strategy, it will be too late.
For more information on how to shield your personal life from the risk and liability of your dental or professional practice and to schedule a free consultation, please contact our South Florida asset protection firm.