Protect Your Wealth

Physician's Money Digest, July31 2004, Volume 11, Issue 14

Lawsuits are wreaking havoc, not juston the legal system, but also on dailylife. In West Virginia, physicians threatenedto go on strike in response to theexcessive costs of doing business due tohigh malpractice claims. The state ofMississippi is having trouble attractingdoctors because of excessive malpracticejudgments for medical claims. And it'snot just physicians who are lawsuit targets;virtually everyone is at risk intoday's litigious society.

Considering Tort Reform

In Alabama, tort reform has reducedthe number of outrageous verdicts. Proponentsof tort reform suggest thereshould be laws passed limiting judgments,while opponents argue that victims' rightsshould be protected. Neither argument iscompletely right or wrong. There are obviouslycases where a legitimate claimcould run millions of dollars and warrantpunishment (ie, punitive damages) forextreme negligence. There are other caseswhere the awards are completely unjustified, based on the case facts. Ultimately,what we have is an imperfect judicial systemthat provides unjustified windfalls incertain cases while failing to provide adequatecompensation in others.

With an imperfect legal system and asociety that has grown to believe to"sue first; ask questions later," physiciansshould consider developing awealth protection plan. Analyze thesimple, initial steps appropriate for youto protect your assets from a lawsuit.

Lawsuit Defense Mindset

One of the best defenses against alawsuit is minimizing situations thatcould result in a suit. For example, avoiddrinking and driving. If you've beendrinking and are involved in an autoaccident, even one that isn't your fault,you could be held liable. If you have aswimming pool, be sure to fence in thepool area and have locked gates.

As our roadways get busier, roadrage is becoming a common problem. Ina recent case, a man used his car as aweapon to express his anger at a femaledriver. The confrontation ended withher death, and the lives of several familieswere changed forever. Not long ago,I witnessed a teenager driving recklesslyand endangering not only himself, butalso those around him. I took a goodlook at his truck and went to the troubleto get his license plate number and latercontacted his father, who was veryappreciative to receive my call.

What I'm suggesting is that youdevelop a lawsuit defense mindset.Think about your family's and your ownbehavior. Avoid situations that increasethe probability of a legal problem. Getyour family together and discuss thesubject (eg, what types of behaviorincrease the likelihood of a lawsuit andwhat each family member can do toreduce liability exposure). Awareness byall family members of the potentiallydevastating effect of a legal claim is thefirst step to prevention.

Stewart H. Welch III, CFP®,AEP, is the founder of TheWelch Group, LLC, whichspecializes in providing feeonlywealth management servicesto affluent retirees andhealth care professionalsthroughout the United States. Money, MutualFunds Magazine, and Worth have recognized Mr.Welch as one of the top financial advisors in thecountry. He is the coauthor of J.K. Lasser's NewRules for Estate and Tax Planning (John Wiley &Sons, Inc; 2001). He welcomes questions or commentsat 800-709-7100 or visit www.welchgroup.com. This article was reprinted with permissionfrom the Birmingham Post Herald.Consult with your financial advisor before actingon this financial advice.