Smart Doctors Don’t Want to “Fit In”

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We hope that you now understand that there are significant differences between Doctors and Average Americans—at least in terms of basic demographic data. This book will hopefully teach you how you should act when faced with financial and legal issues. These very different attitudes and methods of approaching wealth planning are integral to your success.
We also hope that you have gained some insight into why nearly every newspaper, financial website and financial magazine is forced to focus its content on a group of subscribers or readers that have a very different set of concerns than Doctors. These media outlets need to provide “common sense” advice to the general public (i.e. Average Americans) to fit their business model of attracting the most eyeballs. There are simply far more Average American “eyeballs” than there are wealthy, or more specifically Doctor, “eyeballs.”
It stands to reason that, if financial “common sense” has been developed for (and should generally be used by) Average Americans, then this common sense will not apply to physicians. In fact, the only way Doctors can achieve desired levels of wealth and have peace of mind is to follow advice that doesn’t make “common sense.”
Going against “common sense” is not easy. There are many deeply rooted psychological factors that push someone to go with the crowd, rather than against it. This is certainly true in the financial planning context. As an example, consider this proposition:

It is a bad financial idea for a Doctor to pay off a mortgage and own a home outright. For many of you reading this now, this may be difficult, if not impossible, to believe. It is exactly the opposite of what your parents told you (and they are the smart people who taught you so many life lessons). It is the polar opposite of what Suze Orman and hundreds of websites, magazine articles, and television programs suggest. Further, it just may not “feel” right, because it goes against what all of your friends are doing. Keep those feelings and thoughts in mind when you read the other Lessons in the book.

Why Ignoring “Common Sense” Is So Difficult
Most children and adolescents try desperately to “fit in.” As we get older, we try to find the right groups in college. In our first jobs, we want to toe the company line. All states have laws that govern our behavior. Most religions have commandments, rules, or other codices of condoned and forbidden activities.
Most people avoid actions they fear their friends and relatives would criticize—or at the very least, they refrain from sharing details of their potentially critical activities with their family and friends. We are not implying that Americans are sheep. Rather, we are saying that society typically rewards those who are similar and creates more challenges for those who are not.
This is not a particularly astute observation. It is merely support for the significance of the #1 challenge that must be overcome if you are to truly work less and build more. To do so, you not only have to admit to being different from Average Americans, but you also have to EMBRACE the fact that you are different.

Embrace Affluence And Your Differences: A Key Lesson
If you want to successfully achieve or maintain wealth, you must be comfortable with your unique circumstances and be comfortable doing things differently than your friends. If your only comfort comes from doing something and knowing that “everyone else is doing it,” then you are destined to achieve and maintain mediocrity. Wealthy Americans became affluent by being different or by doing something different. If they did what everyone else did, they would be like 80% of Americans who earn less than $80,000 per year and they wouldn’t have achieved the wealth they now have.
Savvy physicians don’t want to “fit in.” They understand that Average Americans work very hard to pay their bills while scratching to save for retirement, occasional vacations, and precious luxury items. Savvy Doctors understand that the two groups have very different financial challenges that require different types of advisors and strategies. These physicians don’t need the financial and legal advisors and firms that cater to 150,000,000 Average Americans. Doctors don’t need techniques, strategies, or products that are adequate for the needs of the many. Doctors don’t need free checking, higher money market rates, lower online trading costs, do-it-yourself legal documents, or the advisor with the lowest hourly rate. Doctors don’t need advisors to tell them how nice their shoes are or how wonder-fully decorated their home or office is. They know these things are nice—they bought them. Doctors don’t need to be surrounded with “yes” men or women who agree with all of their suggestions. They need advisors to question them, challenge them, and help them consider all alternatives before taking action. Smart physicians shouldn’t put much stock in advisors who send calendars, fruit baskets, or sports tickets, or seek out advisors who will take them golfing or out to dinner. You can pay for all of those things yourself.

Good Dr.'s Don't Want To Fit InDoctors need to understand that there are millions of attorneys, accountants, investment advisors, and financial planners who would all like their business. You should know that many of these advisors and their firms regularly give away “special perks” to try to convince people to become new clients or to guilt them into staying with the firm. You should understand that an advisor referred by a friend is a good start, but a referred advisor from a friend who is in a different financial situation is likely a waste of time. There is an entire section on how to build your advisory team in Lesson #3: Accept Referrals to Specialists. The third lesson is a must read for anyone who picks up this book. Doctors have family and friends just like Average Americans do. You want to spend your valuable and limited free time with your friends (and some of it with family—just like Average Americans). When you spend More

Asset Protection Myths

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Asset Protection For Doctors

Every day, we speak to Doctors about how they can achieve the protection they desire in order to maintain their wealth. In these conversations, we hear many common myths. Perhaps you too hold some of these false beliefs. Five common myths are:
· “My assets are owned jointly with my spouse, so I’m okay.”
· “My assets are owned by my spouse, so I’m okay.”
· “I am insured, so I’m covered.”
· “I can just give assets away if I get into trouble.”
· “My Living Trust (or Family Trust) provides asset protection.”
These myths are dangerous because they lull the individual or family into a false sense of financial security. This, in turn, may prevent the Doctor from taking necessary steps to truly protect the assets. Let’s examine each of these common myths and dispel them.

Myth #1: “My Assets Are Owned Jointly With My Spouse, So I’m Okay.”
Most Doctors hold their homes and other property in joint ownership. Unfortunately, this ownership structure provides little asset protection in both community and non-community property states.
In community property states, like California, community assets will be exposed to community debts regardless of title. Community debts include any debt that arises during marriage as the result of an act that helped the community. Certainly, any claims resulting from a medical practice, income-producing asset (rental real estate) or auto accident would be included.
Even in non-community property states, joint property is typically at least 50% vulnerable to the claims against either spouse. Therefore, in most states, at least 50% of such property will be vulnerable—and all of the other problems associated with joint property still exist in non-community property states.

Myth #2: “My Assets Are Owned By My Spouse, So I’m Okay.”
One of the most common misconceptions about asset protection is that assets in your spouse’s name cannot be touched. We cannot tell you how many Doctors have come to us with their assets in the name of one spouse and assumed that those assets were protected from claims against the other. This often happens when one spouse has significant exposure as a Doctor and one does not.
Unfortunately, simply transferring title of an asset to the non-vulnerable spouse does not protect the asset. The creditor is often able to seize assets owned by the spouse of the debtor by proving that the income or funds of the debtor were used to purchase the asset. To determine if the asset is reversible, three questions can be asked:
· Whose income was used to purchase the asset?
· Has the vulnerable spouse used the asset at any time?
· Does this spouse have any control over the asset?
If the answer is “yes” to any of these questions, then the creditor can be paid from these assets.
California allows a debt incurred during the marriage to be recovered from any community property. According to California Family Code §910(a), “the community estate is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt.”
Said another way, if assets constitute community property, it is irrelevant that community property assets are titled in the name of one spouse. The creditor can attach all of the community property, even if only one spouse is the debtor and even if the debt arose prior to marriage. Because each spouse has a coextensive ownership interest in community property, creditors of either spouse can reach all community property of the two spouses.

Myth #3: 1 Am Insured, So I’m Covered.”Gentleman Checking His Asset Protection
While we strongly advocate insurance as a first line of defense, an insurance policy is 50 pages long for a reason. Within those numerous pages there are a variety of exclusions and limitations that most people never take the time to read, let alone understand. Even if you do have insurance and the policy does cover the risk in question, there are still risks of underinsurance, strict liability, and bankruptcy of the insurance company. In any of these cases, you could be left with the sole financial responsibility for the loss. Lastly, with losses that fall within the plan’s coverage limits, you still may see your future premiums go up significantly.

Myth #4: 1 Can Just Give Assets Away If I Get Into Trouble.”
Another common misconception of asset protection is that you can simply give away or transfer your assets if you ever get sued. If this were the case, you could just hide your assets when necessary. You wouldn’t need an asset protection specialist. You would only need a shovel and some good map-making skills so you could find your buried treasure later.
In recognizing the potential for people to attempt to give away their assets if they get into trouble, there are laws prohibiting fraudulent transfers (or fraudulent conveyances). In a nutshell, if you make an asset transfer after an incident takes place (whether you knew about the pending lawsuit or not), the judge has the right to rule the transfer a fraudulent conveyance and order the asset to be returned to the transferor, thereby subjecting the assets to the claims of the creditor.
If you have been sued or suspect that you may be sued, there are other ways you can protect yourself. Typically, reactive last minute strategies are not very effective and may be much more expensive than the highly successful strategies that can be implemented when there are no creditors lurking.

Myth #5: “My Living Trust (Or Family Trust) Provides Asset Protection.”
There have been countless instances where clients have come to us with the impression that their revocable Living Trust provides asset protection. While you are alive, this is simply not true. Revocable Trust assets are fully attachable by any creditor as the trust is a grantor trust. Later in this Lesson you will read about Irrevocable More