Written by Michael G. Kirwan, ChFC, CLU
Published Summer 2004 appearing in the Bergen County Newsletter


Living in these most litigious of times, while ever vigilant of the economic, social and legal pressures and demands asserted daily upon the medical practitioner, is it any wonder why doctors today are so preoccupied with the preservation of their dwindling reserves?

What can you do to “Guard, Protect and even Eliminate” these pressures, while you attempt to continue with your many years of dedicated service to your patients, simultaneously dealing with Capitation, Outrageous Malpractice Premiums, Legal Battles, Escalating Health Care Issues and Personal Financial Survival?

  • Leveraging Accounts Receivables is a method utilized to insulate your receivables from creditors. Assign your collectible receivables to a financial institution in exchange for a “low cost” interest loan and then reinvest these monies in a properly created Trust or LLC, while endeavoring to earn a rate of return in excess of your tax–deductible loan (arbitrage).
  • Ownership of Business/Real Estate/Personal Assets should undergo careful scrutiny to determine if you or your practice, spouse, children or a Trust(s) would be a more appropriate owner/beneficiary to further insulate your hard earned assets from the ravages of potential litigation and/or achieving the elimination or substantial reduction of current and/or future taxation. Family Limited Partnership’s are an excellent consideration for appreciating assets.
  • Ownership of Life Insurance can be a recipe for unnecessary taxation ranging from 35% to 50% upon your death. By creating an Irrevocable Life Insurance Trust (ILIT), this unintentional invitation to have Uncle Sam become your beneficiary can be completely eliminated!
  • Spousal 401k will permit an additional Tax–Deductible Contribution of $12,000 to $14,000. When a spouse is employed by the practice they will be eligible to have 100% of their salary deposited into a completely sheltered account, insulated from creditors, where monies can accumulate Tax–Deferred & Contributions are Tax–Deductible!
  • Tax–Deductible Group Long Term Disability can supplement your current Disability Program (in addition to the value of any existing personal coverage), is often issued without any medical evidence of insurability, is “tax–deductible” to your practice and is substantially discounted when compared to Individual Plans.
  • HSA–Health Savings Accounts & Tax–Deductible HSA/IRA Accounts are an excellent vehicle for Health Protection, typically reducing your current premium by 50%. By Federal Law (1997), an MSA, now known as an HSA, is structured as a PPO Plan, with In and Out of Network Benefits. When coupled with the HSA/IRA, your practice can legally insulate an additional $5,150 per year, take a 100% Tax–Deduction and withdraw these funds “Income Tax–Free” for medical, dental, optical, orthodontia and a list in excess of 500 additional items to supplement your health needs. This is the only “Use It and Keep It Program in the country, as any remaining funds are your sheltered assets to keep.
  • *Tax–Deductible Long–Term Care Coverage can be crucial in preserving your capital by providing the equivalent of Disability Income when you are impaired or unable to physically or mentally be responsible for your own care. With daily costs in New Jersey generally exceeding $200 per day, nearly $75,000 per year, an extended need for service, either at home, or in a care facility, can both wipe out your savings and debilitate your family and personal relationships. Unlike Disability Insurance, your payments will be received Income Tax–Free!

* We are currently in the process of negotiating a Discount of up to 25% for Members