Planning Potpourri


o Physician investment planning needs to consider malpractice worries, not just investment returns. The structure (who owns an investment) is important. Significant assets rarely belong in your own name.  Titling assets in your spouse's name is also insufficient. LLCs and trusts are likely a better option. Be sure the accounts are set up in the name of the entity and that an investment policy statement is signed in the name of the entity by the appropriate person. The income tax ramifications of using a trust or LLC are important and need to be addressed with your accountant. If you are setting up a domestic asset protection trust the investment structure should be reviewed. Will the trustee directly invest assets or should the trust own an LLC that owns the actual assets and someone else addresses investments? State income tax issues may be very different since these trusts are almost always in a state other than the state you reside in. Insurance should be evaluated from a different perspective. For example, even if term insurance meets your insurance needs, it might be preferable to have a permanent insurance product owned in an irrevocable trust to safeguard a cash value. Your spouse could be a beneficiary and have access to the cash value in the policy through trust distributions. Non-deductible IRAs are almost always recommended, for asset protection not tax benefit, because the assets in them are protected up to $1M under the revised bankruptcy act.


o Regression Analysis: If you're involved in litigation over the value of a business interest (divorce; business dispute), consider a regression analysis of prior valuations (e.g. for bank financing, proposed sales) against revenues (or another relevant variable) as a means of testing the reasonableness of the value being advocated. Your valuation consultant can even visually plot all the prior data points on a graph and demonstrate how your adversary's current valuation is inconsistent with prior values.


o Beneficiary Designations: Retirement plan beneficiary designations prepared on pre-printed bank and brokerage firm forms can treat contingent beneficiaries in different ways then you intend. If you have three children who you name as beneficiaries, and one child dies, you might wish that deceased child's heirs (contingent beneficiaries) receive his share. But some forms mandate that the contingent beneficiaries only receive distributions if all primary beneficiaries (your children) die. Exercise caution when completing such forms to make sure they really adhere to your wishes. If not modify them accordingly.

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