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So, you’ve learned that the only real way to build and maintain wealth is by leveraging effort, assets, and people. You’ve learned that leveraging people is the most powerful method of Leverage and that leveraging advisors is the most powerful way to Leverage people. It wouldn’t be a stretch to say that once you figure out how to use Leverage to achieve even a modest level of wealth, learning how to Leverage advisors is the single most important thing you can do if you want to save time and money and get the most out of your medical career.
To help you better understand this lesson, you need only look at the practice of medicine. A primary care physician is generally the first line of contact for a patient. Though the Doctor has a very wide range of general knowledge, he or she will have to refer patients to a number of specialists. In some instances, the Doctor may request the help of radiologists to review tests. In other instances, there may be a referral to surgeons who will undoubtedly need to work with anesthesiologists. The Doctor will encounter cases in which patients will need referrals to obstetricians, gynecologists, urologists, cardiologists, orthopedists, oncologists, and other specialists. The situation with respect to your finances is very similar.
In this Article—Accept Referrals to Specialists—we will examine the types of advisors who can help you Leverage your time and money, review the benefits and limitations of each specialist, point out some common pitfalls, and ultimately recommend how to assemble the right team of advisors.

The Value of Financial Specialists
The best way to maximize your benefit from leveraging people is to work with experts in many financial and legal fields. As you learned in Lesson #2, you have very different needs than Average Americans do. As a result, the right specialists for most people are not likely to be the right advisors to help you.
As you become more successful, you need advisors even more. Adding employees, making additional investments, purchasing equipment and real estate, and creating new businesses add complexity to your plan. This increased Leverage exponentially increases the complexity of your comprehensive financial plan. This complexity necessitates the need for a team of advisors. Without a very strong team, you will struggle to find the time to focus on the important things that make you money, let alone enjoy any free time. To illustrate the value of advisors, refer to the equation below:

  • Wealth can only be achieved through Leverage
  • Leverage can only be managed with a team of Advisors
  • Wealth can only be achieved with a team of advisors managing the Leverage

In this section, we will discuss the reason why Doctors need a team of knowledgeable advisors with diverse areas of expertise. Then we will discuss how to maximize the value of your advisors and suggest tips for working with your team.

Managing Complexity: The Need For Advisors
Most people realize that wealth creates complexity. What Doctors need to realize is that the management of complexity and Leverage is not the job of a traffic cop. As wealth grows, the number of complicated, technical risks that the Doctor faces also grows exponentially.

As an example, the transition from running a sole proprietorship to having a single employee may not seem to be major, but that couldn’t be further from the truth. The addition of just one employee creates a need for:
· Payroll creation, funding, and paymentsPen on Notebook
· Regular payroll tax payments (or you can go to jail)
· Withholding tax filings and payments
· Workers compensation insurance or fund payments
· Occupation Safety Hazard Association (OSHA) compliance
· Separate retirement plan (ERISA) regulations and contribution requirements
· A host of other state and federal reporting requirements.

In addition to all of the aforementioned specific issues, the Leverage of assets also increases the need for more general categories of planning, like asset protection, banking (private and commercial), business planning, financial planning, healthcare law, HIPAA, Medicare, income tax management, investing, life insurance analysis, disability insurance analysis, property and casualty insurance analysis, long-term care insurance analysis, educational funding, retirement planning, family law, gift and estate tax planning, charitable planning, Medicaid planning, and a host of other areas.
Each category of planning has its own technical areas that can be competently handled by an advisor who has expertise in that area. Although it is common to find an advisor who has expertise in several areas, there are categories in which the input of two advisors may be necessary. For example, tax issues are typically handled by a both a tax attorney and a CPA. As a result, there is no way that a small team of two or three advisors could possibly handle the needs of a Doctor. This means that a Doctor may need to Leverage the services of six or more advisors over their career.
While the concept of such a large team may seem overwhelming, consider your profession of medicine. Adult patients do not continue to see the obstetrician who delivered them or the pediatrician who treated them in childhood. Patients need to see a number of specialists as they mature and as their needs change, often consulting with a number of Doctors at once.
If you are like your patients, you may want to be able to keep the same financial “primary care” advisors for as long as possible. Having someone you know and trust as your primary contact is very comforting. This “primary advisor” can help explain situations to you, find the right specialists if a need for one arises, and help communicate with you as complicated procedures take place. Keep this in mind. In Lesson #10, there will be discussion of your team of advisors. One of your advisors on this team is going to be the primary contact to help you through it all.

Working With Your Team
Having the right team of advisors is another step in the right More

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The Best Asset Protection is NOT Asset Protection
Too many physicians over the last 20 years have sought cookie-cutter asset protection plans to give them some “peace of mind.” While we admire these Doctors’ commitment to proactively managing their risk, we have to remind the Doctors we speak with that all “asset protection plans” are not created equal. In fact, many of these “plans” will not work if they ever are tested. Why is this? Essentially, it is because of a basic tenet of asset protection: for any asset protection plan to truly stand up to a challenge, it must have economic substance.
Looking at it from a different viewpoint, superior asset protection planning would involve tools that are primarily used by people for non-asset protection purposes. In this way, the best asset protection plan involves tools typically not thought of as “asset protection tools”; instead, they are “business planning tools.” Stated another way, “the best asset protection is not asset protection.”

Similar To Tax Planning
While few physicians realize this crucial fact of asset protection planning, leading attorneys in the field know it quite well. In fact, we are not alone, as tax attorneys and CPAs know this adage is just as true when it comes to tax planning.
Simply put, when determining whether or not a particular transaction with significant tax benefits was an illegitimate tax shelter or not, the IRS or tax court typically uses a simple test: “Would a taxpayer have done this deal if not for the tax benefit?” In other words, they are asking whether or not this transaction was simply done to save taxes or if it had another economic purpose. If there was such a purpose, the transaction stands. If the transaction was only tax-motivated, it fails.
This same test applies when evaluating whether or not a credit protection tactic will be upheld if ever challenged down the road. Here, the question is “did this transaction have an economic purpose, or was it simply done for asset protection purposes?” If you are using tools that millions of Americans use on a daily basis for non-asset protection purposes, you can convincingly answer yes.

Young couple on waterWhy This Is So Important
Over the last decade, many courts throughout the U.S. have become increasingly frustrated with “asset protection planning.” Reading judges’ decisions in this area, it is obvious what has created their frustration—the prevalence of firms marketing themselves as “asset protection” experts, promoting the idea that the judgments of U.S. courts can be frustrated by their planning. Is this surprising? No. Of course judges are not going to be happy about an area of planning that is designed to circumvent the execution of a judgment that their court rendered, and prevent a successful plaintiff from getting paid on a judgment.
The courts’ frustration is most severe when the defendant has made transfers or engaged in transactions that seem “fishy,” even if the transaction at issue was made well before the beginning of the lawsuit process. If the transaction comes too late, the judges can resort to remedies to undue “fraudulent transfers.” However, even in cases where the transaction came well before any plaintiff’s action, we have seen judges strain to circumvent the asset protection planning.
In fact, there are certain cases where courts have given more leeway to a claim of fraudulent transfer based on a “foreseeability” argument. On the logic of one particularly noteworthy case, a medical malpractice case could always be seen as “foreseeable.” Taken to its logical conclusion, this position could support the argument that a Doctor who does procedures daily is aware of the possibility of mistakes. If this were true, a plaintiff suing a Doctor could attack asset protection transfers made years prior to the case.
By using “non asset protection” asset protection, you are not as vulnerable to this emerging trend in the law. The techniques explained in this chapter do not involve “transfers” at all. Given this, and “non asset protection” techniques with tangible and concrete economic substance, these tools and tactics are certainly among the strongest protection you can implement for the long term.

Asset Protection That Isn’t
The best asset protection tools were not created as asset protection tools. They are tools that have other primary benefits and offer outstanding creditor protection as a secondary benefit. Which asset protection tools are not asset protection tools? Let’s examine a few of them briefly here. They will all be developed further in other parts of the book.

Qualified Retirement Plans
The term “qualified” retirement plan means that the retirement plan complies with certain Department of Labor and Internal Revenue Service rules. You might know such plans by their specific type, including pension plans, profit sharing plans, money purchase plans, 401(k)s or 403(b)s. Properly structured plans offer a variety of real economic benefits: you can fully deduct contributions to these plans, and funds within them grow tax-deferred. In fact, this is likely why most medical practices sponsor such a plan. Keep in mind that distributions may be subject to tax and a 10% penalty if withdrawn prior to age 59.
What you may not know is that under federal bankruptcy law and nearly every state law, these plans are protected against lawsuits and creditor claims—enjoying (+5) protection status. Yet the overwhelming majority of millions of Americans who use qualified plans are not using them for asset protection purposes. This, then, is a great example of an attractive economic tool that just so happens to have tremendous asset protection benefits as well.

Non-Qualified Retirement Plans
Non-Qualified plans are relatively unknown to physicians, even though most Fortune 1000 companies make Non-Qualified plans available to their executives. These types of plans should be very attractive to physicians, as employees are not required to participate and allowable contributions can be much higher than with qualified plans, although not deductible. Once again, Non-Qualified plans are generally not used for asset protection purposes, but they may have such benefits. Read more about them in Chapter 5-4.

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