Asset Protection Essentials for Physicians

Attorney Bo Loeffler returns to the podcast to revisit with David the foundational principles of asset protection—what it is, why physicians need it, and how proper timing and structure make all the difference. The conversation begins with an overview of risk for physicians, from malpractice and employee claims to real estate liability and auto accidents and stresses the importance of addressing these risks before they arise. Bo and David emphasize the crucial concept that asset protection is only effective when implemented ahead of any foreseeable claim.

The discussion then shifts to the three legs of the asset protection stool: proper insurance coverage, state-specific exempt assets, and legal tools such as LLCs and irrevocable trusts. Bo highlights how differences between state laws—especially Ohio’s robust statutes—can dramatically impact the success of an asset protection plan. They also explain how tools such as LLCs and Domestic Asset Protection Trusts can be structured to protect against creditors through features like charging orders, sole-remedy statutes, and sate-specific limitations on creditor remedies.

Finally, the episode examines real legal cases—including one in Colorado involving LLC misuse and one in Delaware validating long-standing asset protection trust structures—to illustrate what works and what fails in the real world. David concludes by drawing a parallel to medicine: asset protection requires both “surgery” (establishing tools) and “rehab” (proper, ongoing maintenance). With Bo’s deep experience drafting state statutes and litigating these issues, the episode provides a practical, high-level roadmap for physicians looking to protect their personal and professional assets.

Key Takeaways:

1. Asset protection only works when implemented before any reasonably foreseeable claim; timing determines legality and effectiveness.
2. The strongest plans combine insurance, exempt assets, and properly structured legal tools such as LLCs and DAPTs.
3. Courts continue to uphold well-designed asset protection structures—especially when formalities and maintenance are respected.

Insights:

• Physicians face both clinical and non-clinical liability risks, making early planning essential.
• Fraudulent transfer laws prohibit creating asset protection plans after a problem becomes reasonably foreseeable.
• Insurance remains the first line of defense and must be properly structured (umbrella, EPLI, cyber, etc.).
• Exempt assets vary widely by state— as one example, Florida and Texas offer unlimited homestead protection, most other states offer much less.
• LLCs can restrict creditors through charging orders, depending heavily on state statutes.
• Ohio’s sole-remedy charging-order protection is among the strongest in the country.
• Operating agreements can add powerful internal protections if drafted correctly.
• Domestic Asset Protection Trusts (DAPTs) provide strong long-term protection when funded early and properly structured in the states that authorize them.
• Misusing an LLC—comingling, undercapitalizing, or treating it like a personal account—can lead to veil piercing.
• Courts have recently reaffirmed the validity of long-established DAPTs when rules and timing are respected.

Links & Bios:

• Guest, Bo Loeffler| Website
• Legal Case Cite: Boxer F2, L.P. v. Bronchick, 2024 WL 1141483 (D.Colo., March 15, 2024).
• Host, David B. Mandell | Bio