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.