Asset Protection for California Dentists
As a dentist, you may be confronted with claims related to malpractice, alimony, child support, a former business partner’s liability, or premises liability. Malpractice litigation, for instance, may result in large settlements or damages in favor of your patients. It can be helpful to have insurance in place to handle any claims. However, if insurance does not cover the claim or covers only part of it, the rest of your personal assets may be subject to seizure by a judgment creditor. You should develop an asset protection plan before claims arise. If you are interested in learning more about asset protection for California dentists, you should talk to the San Jose asset protection lawyers at Sowards Law Firm.Asset Protection for California Dentists
Our attorneys can help you arrange your assets and finances in a way that reduces your exposure to possible creditors. There are a range of legal tactics that we may be able to use, including establishing trusts, determining insurance needs, assisting with retirement plans, developing an estate plan, developing a premarital agreement, transmuting assets, and creating a separate business entity to hold property. If the proper steps are taken, you may protect your assets against claims.Trusts
Trusts are fiduciary relationships whereby a settlor places assets under the control of a trustee, who manages these assets for the benefit of beneficiaries. Certain trusts provide asset protection, while others do not. Living trusts do not provide protection; a settlor can still control the funds or assets in the trust and take them in and out. However, certain irrevocable trusts may provide some protection. For example, you can use a qualified personal residence trust to move your personal residence out of your estate into an irrevocable trust. The property will be assigned a low gift tax value. You can live in the residence for a specific, predetermined term of years. The rest of your interest in the residence will be reserved for beneficiaries.Retirement Plans
You may be able to protect against potential creditors’ claims by placing funds in a retirement account established under ERISA. Under California Code of Civil Procedure section 704.115, you can also set up a private retirement plan, whereby funds from the dental practice can be paid and held in trust for your retirement. As long as you keep the funds within the plan, they are protected from creditors. Funds can be protected even if they are withdrawn from a plan, as long as they are not commingled with other funds.Prenuptial Agreements and Transmutations
If you are a dentist worried about divorce, you may wish to set up a prenuptial agreement that protects your property in the event of divorce. Another way to protect your assets, assuming that divorce is not a significant risk, is by transmuting assets. Transmutation turns an asset into your spouse’s separate property. The transmutation needs to be in a writing that expressly changes the character of the property, and it needs to be accepted by the spouse who is adversely affected. Your spouse’s separate property will be beyond the reach of creditors, but creditors can reach any community property.Forming a Business Entity
In California, you can structure a dental practice as a sole proprietorship, professional corporation, general partnership, or group practice. However, you cannot structure it as a limited liability company. Additionally, you may be able to create structures to shield against other types of claims. For example, you may be able to shelter dental practice equipment in a distinct limited liability company that then leases equipment to your dental practice.Retain a Knowledgeable Asset Protection Lawyer in the San Jose Area
It is important to devise an asset protection plan before you anticipate that a claim may be filed against you. If you put an asset protection plan in place after you know that a claim has been or will be filed, you can be penalized by fraudulent transfer laws. These penalties can exceed the original judgment or claim. If you are concerned about asset protection for California dentists, you should discuss your situation with the San Jose attorneys at Sowards Law Firm. We also represent clients in Campbell, Mountain View, Palo Alto, Santa Clara, Berkeley, Oakland, Concord, Walnut Creek, San Rafael, Salinas, San Mateo, Santa Cruz, and San Francisco. Call us at (408) 371-6000 or complete our online form.