(Due to the fact that many physicians are too busy to read this entire book cover to cover, I have bolded the sections of the book that I believe are the most important to read first.) Forward... viii Acknowledgements... xiv Total Financial Independence (TFI)*... xv Chapter One Asset Protection Introduction... 23 Page Why a Physician Should Protect his/her Assets?... 23 What Assets Should a Physician Protect... 30 Asset Protection Planning... 30 Fraudulent Transfers... 35 Existing Laws Help Protect Your Assets... 39 Retirement Plans (ERISA Governed Plans)... 44 -Non-ERISA Plans and IRAs (the use of the MAXI-IRA)... 45 Typical Asset Protection Solutions (that do not always work)... 48 -Types of Co-Ownership... 48 i
Corporate Entities... 55 -Sole Proprietorships and Partnerships... 55 -Corporations (C and S)... 57 -Types of Creditors (inside and outside creditors)... 61 -Director and Officer Liability... 62 -Trustee/Fiduciary Duties... 62 -Limited Liability Companies (LLCs); Family Limited Liability Companies (FLLCs); and Family Limited Partnerships (FLPs)... 64 -The Charging Order... 66 -Where to Incorporate... 71 Trusts as Asset Protection Tools... 72 Section 9 Offshore Asset Protection Strategies... 74 -Offshore Limited Liability Companies (LLCs)... 77 -Offshore Trusts... 77 -Contempt of Court... 79 -Closely Held Insurance Companies (CICs)... 81 0 Protecting the Personal/Marital Residence... 83 -Qualified Personal Residence Trust (QPRT)... 85 -LLCs or FLPs... 87 -Equity Stripping... 89 1 Accounts Receivable (Asset Protection)*... 91 Conclusion/Summary on Asset Protection... 103 Chapter Two Estate Planning Introduction... 105 Wills... 107 Durable Powers of Attorney... 108 ii
A&B, Marital, or Living Trusts... 112 Life Insurance (different types and the ones that are right for you)... 116 -Term Life Insurance... 117 -Return of Premium Term Life Insurance*... 118 -Whole Life Insurance... 120 -Variable Life Insurance... 122 -Universal Life... 124 -Life Insurance Policy Loans (also known as Tax-Free Income)... 125 -Variable Loans... 127 - Equity Indexed Universal Life Insurance Policy (EIUL)... 130 Irrevocable Life Insurance Trusts (ILIT)... 134 Leveraged Life... 137 Life Settlements... 140 Disability Insurance (What You Need to Know Before You Buy)... 144 How to Purchase More than $15,000 a Month in Coverage*... 148 Section 9 Divorce Protection... 150 0 Generation Skipping Tax... 152 1 Charitable Planning... 154 - Charitable Gift Annuities*... 154 2 Long Term Care Insurance (LTCI)... 160 3 Family Limited Liability Companies to Lower Estate Taxes... 162 iii
4 Other Estate Planning Tools... 166 -Grantor Retained Annuity Trust (GRAT)... 166 -Intentionally Defective Grantor Trust (IDGT)... 167 -Qualified Personal Residence Trusts (QPRT)... 167 5 Mitigating the 70-80% Tax Trap... 167 Chapter Three Income Tax Reduction Introduction and Traditional Solutions... 176-401(k) Plan... 176 -Profit Sharing Plan... 176 -Money Purchase Plan... 177 -New Comparability Plan... 177 -Defined Benefit Plan... 177 -IRA... 178 -Simplified Employee Pension (SEP-IRA)... 178 -Savings Incentive Match Plan for Employees IRA (SIMPLE-IRA)... 178 -Solo 401(k)... 178 -Next Level Profit Sharing Plan... 179 - DASH 401(k)... 181 -The New Roth 401(k) Plan... 182 Accounts Receivable (A/R) Leveraging... 187 Defined Benefit Plans... 187-412(e)3-The Perfect Retirement Plan... 187 -Legally Discriminate with Carve Out Planning... 192 -Cash Balance Plans... 196-401(h) Plans (tax-deductible, tax-free growth, tax-free withdrawals). 200 Funding Qualified Retirement Plans vs. Cash Value Life Insurance... 203 9 Plan... 212 Closely Held Insurance Companies (CIC)... 217 iv
Long Term Care Insurance (LTCI)... 222 - Free LTCI... 224 Welfare Benefit Plans (419A(f)6 and 419E Plans); Voluntary Employee Benefit Plans (VEBAs) (Post 2007 IRS Notices)... 224 Summary and Thoughts on Income Tax Reduction... 229 Chapter Four Personal Finances (Understanding Your Investments and if there are Better Options Available) Introduction... 230 29 Plans... 230 Life Insurance... 232 Annuities... 233 -Fixed Annuity... 234 -Variable Annuity... 235 -Fixed Indexed Annuities (FIAs)*... 238 -Guaranteed Income Benefits (GIB) Rider for FIAs... 244-7% GIB rider, added bonus, 10+ year roll up FIA... 247 Tactically Managed Investment Strategies... 250 Equity Harvesting (One of the Most Powerful Ways to Build Wealth)... 256 Private Placement Life Insurance (PPLI)... 271 v
vi Chapter Five Medical Office Management (Ways to Run a More Efficient and Financially Sound Medical Practice) Introduction... 275 Choice of Entity (Should your office be a C or S Corp or LLC or P.C.?)... 275 The Perfect Medical Office Corporate Structure... 280 Health Insurance... 282 -Why Costs are Rising... 283 -COBRA... 284 -Health Insurance Strategies... 287 -Fully Insured Plans... 287 -Partially Self-Funded... 287-25 Plans... 288 -Health Savings Accounts (HSAs)... 290 Professional Employer Organizations (PEO)... 293 Malpractice Insurance -A Necessary Evil to Protect Your Assets... 295 -Avoid the Bull s Eye on your Back... 296 - Do you have the right type of malpractice insurance? (Occurrence Coverage vs. Claims Made Coverage)... 299 -Secondary Malpractice Insurance Market... 304 -Captive Insurance Company (CIC)... 305 Qualified Retirement Plans... 308 -Does your Office have the Right Pension Plan?... 308 -Defined Benefit Plan... 316 Pitfalls to Avoid When Funding Your 401(k) or Profit Sharing Plan... 317 412(e)3 Defined Benefit Plans... 318 Collections (with forms) How to collect more money quicker from your patients; how to protect yourself from non-payment after a letter of protection is signed by a patient being represented by a personal injury attorney... 318
Office Supply Purchasing (Save Money and Time by Outsourcing)... 327 Section 9 Employee Handbooks... 329 0 Does Your Office Need a Full-Time Office Manager?... 337 Chapter Six Reaching Total Financial Independence (TFI) Examples of what your asset protection, estate plan, and income tax reduction plan should look like if you are a: 1) Physician just leaving residency... 339 2) Physician who has been in practice for five years... 341 3) Physician who has been in practice for fifteen years... 343 4) Physician that is sixty years old... 347 Help from the Author Help from the Author... 352 Loss Test (how much you are losing in taxes by not planning correctly)... 353 Client Questionnaire... 354 vii