Other Valuable Tools

Physician's Money Digest, December15 2003, Volume 10, Issue 23

There are many additional ways tomaximize your wealth preservationefforts. For starters, youshould fully fund an Employee RetirementIncome Security Act (ERISA) plan(eg, a 401(k) or profit sharing plan) thatprovides significant liability protection.This is not necessarily the case under 1-person, individual, 401(k) plans, butmany multiple employee groups are coveredby ERISA. Also, many charities haveworked out a way for individuals to giftmoney out of qualified plans. "This is agood way to avoid that double taxationand still give money away," Borden says.

Another consideration is to transferassets to your spouse. Creditors generallycan't reach assets held by your spouse.However, you need to make certain thatif your spouse were to die first, theirassets would go to the survivor in aspendthrift trust that would protect theassets from your creditors.

As a variation, Malovany suggestsholding assets as tenants by the entireties.That means that either spouse isconsidered to own a particular asset,such as property. "If one spouse is sued,the assets are considered to belong asmuch to the other spouse, and thereforethey can't be touched until the death ofthe second spouse."

Don't overlook the usefulness of 529college savings plans. According toBofford, they shouldn't necessarily beused as a retirement tool to accumulatemoney. But for an older physician whomight be trying to reduce the size oftheir estate, up to $110,000 can be setaside for each child or grandchild. Andif it happens that none of the childrenor grandchildren attends college, themoney can continue to grow as a greatmultigenerational tax shelter.

When it comes to wealth preservationstrategies, there are many optionsand tools to choose from. Perhaps mostimportant, Malovany says, is to reviewyour wealth preservation plans on a regularbasis. "You can almost guaranteeyour life circumstances will change overthe next 5 to 10 years."