Asset Management for Physicians by Midwest Legacy Group


For more information reach out today:  P. 630.541.5958 or E. info@midwestlegacyllc.com

You must protect what you work for, period. If you build it, ‘they’ will come. So, what does that look like for your financial future? Asset management is the management of a select client’s portfolio of assets. The goal is to increase the assets’ value. High-net-worth individuals are the norm that seek this service. Seeking out a financial services company may be an efficient way to manage one’s portfolio.

The protection of the assets is a very important aspect of an asset management system.

Asset protection intends to apply various financial, technical, and legal means to protect your assets. And let’s face it, physicians need both management and protection.

Meet Midwest Legacy Group

You may know these 5  Asset Protection Strategies:

1. Use LLC’s (Limited Liability Corporations)

2. Asset Protection Trusts– (powerful in protecting money from lawsuits)

3. Own Nothing Personally

4. Use Separate Legal Tools

5. Don’t Flaunt Your Wealth

“Do you buy assets or liabilities?” ~Christopher Gandy, LACP, Founder

Here’s what else you need to know: Asset Protection, sometimes called the debtor-creditor law, is a set of legal techniques and a body of statutory and common law dealing with and protecting assets of individuals and businesses from civil money judgements. At Midwest Legacy Group, our number one goal when it comes to your assets is protection planning to insulate from any claims of creditors (without perjury or tax evasion).  In addition, we understand the pain points physicians face and the fact that partnerships may come and go. We possess nearly twenty years in a niche market working directly with the financial interests of medical doctors.

Why Midwest Legacy Group? –We Understand Pain Points Physicians Face Financially

The medical landscape is shifting. Depending on where you live, physicians from coast-to-coast are feeling the effects and referrals too are taking a turn. With ‘the patient’ having more power than ever at their fingertips, physicians are being left no choice than to adapt to life’s one constant and that is change.

Furthermore, the majority of patient care physicians worked outside of physician-owned medical practices in 2020, according to a newly released biennial analysis of physician practice arrangements by the American Medical Association (AMA). This is the first time the share of physicians in private practices has dropped below 50% since the AMA analysis began in 2012.

Although data collected by the AMA from 3,500 U.S. physicians through the 2020 Physician Practice Benchmark Survey show the continuation of shifts toward larger medical practices and away from physician-owned practices, the magnitude of change since 2018 suggest these trends have accelerated. The survey was conducted from September to October 2020, roughly six months into the COVID-19 pandemic, and therefore may not reflect the full impact the pandemic will have on physician practice arrangements,” according to the AMA.

Physicians, today, more than ever– are becoming increasingly entrepreneurial.

For more information reach out today:  P. 630.541.5958 or E. info@midwestlegacyllc.com

Key Issues in Physicians Partnerships

  • Division of Assets

How the value of the practice will be divided if a partner leaves for any reason is at the top. A host of circumstances can disrupt a partnership, including death, retirement, business disputes, disability, and divorce. Each one of these can certainly have a powerful financial impact on the business and the partnerships. It also leaves room for a lot of questions. How do we split the business up and/or issue any type of payout in these instances? You must plan, in writing and a detailed Buy-Sell Agreement is also necessary. This addresses each possible scenario to avoid costly litigation and financial loss in the future.

  • Events Triggering Buy-Out

Step one is to consider what events should be covered by the terms of the Buy-Sell Agreement. When should a partner, have the right to be bought out? Certainly, death and long-term disability would be included, as well as planned retirement. Is equity in the practice a big part of your savings? Would you or your family need it in times like these? All, important questions to address. What will you do if your partner quits or is fired? What if a partner ends up wanting to sell his or her interest to a third party? Are there rules in place to govern each of these instances?  Did you know that often we consider whether the buy-out amount can be reduced in these situations? Although everyone may agree that it’s fair to pay a “full” share on death, disability or retirement, a partner who leaves voluntarily might face some type of penalty, such as valuing his share less generously, if the withdrawal creates a financial burden on the remaining partners.

  • Valuing a Partner’s Share

Specific events are covered under the Buy-Sell Agreement. It also provides a method for valuing each share in the practice. It looks at how much each will get paid under each specific circumstance. Sometimes valuation is straightforward, sometimes it is not. In a lot of medical practices, the equipment as well as accounts receivable represent a large portion of the assets. These things are easily determined. Practices run into more difficulty when substantial goodwill is at play. This is an earning power apart from the services offered by a select physician. This is what we consider an intangible asset. It’s difficult to value and there are a plethora of techniques and formulas that can be applied here.

  • Payment Terms

Now that the buyout amount has been determined the next step is to figure out how the amount should be paid. Are we looking at a cash buyout or to set up a time in which payments can be made? A partnership’s cash flow matters. How can this event be funded? If death is the reason for the buyout often insurance money is a feasible approach for a cash option. A partner’s voluntary withdrawal may not yield the funds for a cash option unless the partnership has accumulated a reserve for the payment. It’s quite normal for a payout schedule over time to be tied to accounts receivable. It minimizes the impact on cashflow. If there is a goodwill situation and this is considered in the buyout–the payment may be deferred for several years. This happens unless a suitable insurance policy has been included or a reserve fund has been maintained.

  • Conclusion

Buy-Sell Agreements are a vital ‘legal’ component of every medical partnership. Understanding your rights and subsequent obligations allows you to properly plan for your financial future. Identifying all potential key issues, is imperative and these items need to be discussed and properly documented with your attorney. Clearly identifying and funding each possible buyout situation making sure partnership liabilities are properly accounted for is essential in determining each partner’s probable share.

Asset management has a double-barreled goal: increasing value while mitigating risk. That’s where we come in. At Midwest Legacy Group, we have nearly twenty years working specifically with physicians and are proficient in understanding the ins-and-outs related to the medical industry and the financial culture in which we see physicians thriving.

For more information reach out today:  P. 630.541.5958 or E. info@midwestlegacyllc.com

“Do you buy assets or liabilities?” ~Christopher Gandy, LACP, Founder

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