How to protect your property from lawsuits and taxes

There is a story of a little boy who goes to the dentist and asks, "Do I really have to floss?" The dentist replies, "Only the teeth you want to keep!"

If you don't protect your valuable equipment, accounts receivable, and real estate, a mistake by you or by anyone in your office could result in the loss of all of these assets. This article provides practical advice on how to avoid these potentially devastating losses.

It doesn't matter that the accounts receivable are used to pay salaries and expenses. Once there is a lien against the accounts receivable, it is the property of the creditor.

How do you protect your accounts receivable? You need to encumber your accounts receivable. By "encumber," we mean you have to either sell your accounts receivable (accounts receivable factoring) or take a lien against them (accounts receivable financing). In fact, by implementing one of these strategies, you may not only shield your accounts receivable, but you will turn a non-productive asset (the accounts receivable balance) into a productive one and can leverage it to greater retirement income for you and death protection for your family.

The asset protection value of this technique is maximized by use of a limited partnership or limited liability company.

Real estate and equipment

Real estate and equipment can be protected through a simpler strategy known as asset segregation.

There are three reasons to separate the ownership of the real estate and equipment from the operating practice. First, like accounts receivable, the real estate and equipment estate are valuable assets that should be isolated from any liability created by the practice, the employees of the practice, or the physicians who work at or own the practice.

Second, the real estate and equipment itself may cause liability, most likely slip-and-fall claims from those coming and going on the premises or the equipment injuring someone. If the real estate and equipment and the practice are operated by the same legal entity, all eggs are in the same basket, exposing each to the other's potential liabilities.

Third, by separating the real estate and equipment from the practice, you have also protected the assets of the practice better by isolating the practice from any premises liability and equipment liability created by the real estate. This way, each entity is a superior shield and the valuable "eggs" of the real estate and equipment is not in the same "basket" as the medical practice.