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Author Archives: LarsonFinancial

Sell or Rent? Making the Most of Your Prior Home

If you’ve made the call to move—whether you’re upgrading, downsizing or simply looking for a change—you need to do something with your previous home. But what do you do? Sell it? Rent it as an income property? Keep it as a second home? In this article, I’m going to try to give you answers to some common questions that may come up when it’s time to move.

  • I’m planning to move to a different area. Should I sell my home or rent it?
    • Generally speaking, I recommend you sell unless doing so would cause you to take a significant loss that could be mitigated by holding the property for a period of time or you want to be a landlord and own a home in an area where you do not live. Real estate is a great investment; however, there are other ways to own real estate that alleviate you of the responsibility of day-to-day management.
  • What are some unique challenges that can accompany renting vs. selling a property?
    • Being a landlord is not for everyone. There are various challenges, including advertising for tenants, handling leases and deposits (In some states interest must be paid on a rental deposit) and the big one, especially if you live far from the property; maintenance. It is advisable to hire a property management firm if the owner does not want to handle these responsibilities; however, it comes at a cost. Another potential negative to renting your property; the tenants are unlikely to treat your former home with the same care you would.
  • Why would renting be advantageous?
    • If you own a property in an area with significant appreciation, renting your property can generate a significant gain long-term. And even in areas where appreciation isn’t significant, if you can generate enough rental income to cover you costs, someone else is paying off your asset for you.

Finally, do not be afraid to take a loss on a property to get out from underneath a mortgage, especially if you do not want to be a landlord or if holding the property as a rental makes it difficult or impossible to obtain a mortgage on a property where you are living next.

The debt on the rental property impacts your debt-to-income ratio, a factor in obtaining a mortgage and banks in general do not consider the rental income in total or at all in their calculation of your ability to pay both mortgages.

It is important to remember that three months—or worse, a year—without a tenant can dramatically increase your monthly expenses and impact your own financial independence goals.

Any plans to move? Are you considering an income property? We can talk through it together and determine how best to put your previous home to use.

Advisory Services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, Member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.
Not all Related Services are offered directly from Larson Financial Group, LLC or Larson Financial Securities, LLC but may be available through the Doctors Only network of companies.

Strategies to Protect Your Assets Against a Lawsuit

Medical malpractice insurance is something you’ll need as a doctor, whether it comes from your employer or you buy a policy yourself. When it comes to the specifics of which approach to take, there are multiple factors to consider.

One such consideration is something called “damage caps.” There are a few select states that have place a cap on all forms of damages in medical malpractice cases, including compensation for the costs of long-term medical care and disability. So it would make sense to only cover yourself up to the cap amount with your policy, right?

Not necessarily. Most states that have caps in place only cap non-economic damages, such as pain and suffering. There is rarely a cap on economic damages, so you’ll still likely want to cover yourself for more than the cap amount.

In terms of policy, there are two main forms: Occurrence and Claims Made policies. Both have advantages in different situations.

Claims Made policies are terrific for situations where there is a lot of turnover, or uncertainty as to how long the policy will be needed. Occurrence policies can be beneficial with long-term employees.

You have a vested interest in your medical malpractice coverage and you should know the carrier and coverage limits that are in place, regardless of who pays the premiums for the policy (you or your employer). To figure out what levels of coverage you need, talk to your insurance broker to create a plan that fits your needs.

Lastly, there are ways to protect yourself outside of medical malpractice insurance. Continually work to improve your communication skills and bedside manner. A healthy relationship between providers and patients and managing expectations go a long way to reduce blame when something goes wrong.

Is your medical malpractice coverage in a good spot? We can talk through your strategy together.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
 
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
 
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.
 
Professional liability services offered through MedInsure Group, LLC, a Larson Financial Group affiliated company.

The Importance of a Sound Asset Protection Strategy

Let’s say you’ve got your retirement strategy down. You have an idea of how much you’re saving, the ideal age you’re retiring, everything is planned out. Suddenly, you are involved in a fender-bender and suddenly you’re looking at a lawsuit. Are your assets protected, or is there a gap in your insurance coverage?

Accidents can start as small as swerving to avoid a squirrel crossing the road and quickly build to a lot of damage if other cars or pedestrians are involved. In these cases, insurance companies and attorneys could target you, as doctors typically have a variety of assets, whether it’s a savings account, equity in your home or future earning ability.

Regardless of whether you’re covered or not, don’t fall victim to a common mistake: letting your coverage lapse or not updating your plan. As you go through changes in income growth as you progress in your career, make sure you make it a priority to re-evaluate your coverage as you go.

Another good idea is to talk to an agent to discuss total coverage, rather than shopping for coverage at a policy level. Consolidating your coverage with one company can help keep your support consistent and could even save you money.

If you’re worried about your coverage, or need a place to start, consider having a chat with your insurance agent. Talking through your lifestyle and assets can help your agent find the right coverage for you to keep you protected from a broader range of threats. You can also talk to your agent to easily change or update your policies, should your needs change.

Are there gaps in your insurance coverage?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.

Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.

Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.

Professional liability services offered through MedInsure Group, LLC, a Larson Financial Group affiliated company.

Are You Properly Managing Your Debt?

Doctors can end up in unique situations regarding their professional lives. They often enter their high-earning years later in their career than other professions and can have much higher student loan debts. Plus, the cost of opening a practice, along with other expenses like homes or vehicles, can really add up to an intimidating amount of debt. The key to debt management is being proactive.

Planning for the debt that you know is incoming, like student loans, can help you get a start on your savings. Something to consider, though, is exactly how concerned are you with debt?

If debt is causing you a lot of stress or keeping you up at night, you may want to pay it down as quickly as possible. If you’re a little more comfortable with the debt you have, you can work with a financial professional to determine the strategy that works best for you.

A common answer to managing debt is to keep a budget. Budgets can be a great way to track your spending and make sure you have enough set aside to pay your bills and cover other necessary expenses each month. However, budgets may not work for everyone and if you have a busy schedule, setting aside time to balance and monitor your budget may be more difficult than creating the budget itself.

For a doctor in that position, a “pay yourself first” approach may be a better alternative. With this method, you set aside an amount of your income—either a percent or flat dollar amount—to save or invest each month. That leaves you free to spend the remainder guilt-free, as you’ve already put money aside to cover yourself.

Another unique angle doctors have is taking advantage of Public Service Loan Forgiveness (PSLF), which is a strategy whereby your student loan debt could be forgiven a period of working for a government or not-for-profit organization.

There are some caveats to this system. There have been efforts to defund or eliminate it completely, though they’ve been unsuccessful so far. If you’re a doctor pursuing PSLF, it could benefit you to begin or continue saving like the program may not exist in the future. Saving as though you’ll have to pay will help you avoid being blindsided, should something happen to the program.

Whether you’re a debt-managing wizard, you need some help or you’re unsure of the resources available to you, we can talk through your financial plan and make sure you’re on track.

Do you want a second opinion on your debt management strategy?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.

Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.

Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.

Do You Have Enough Liability Insurance to Protect Your Assets?

In today’s increasingly litigious society, asset protection is an area of wealth management that affluent physicians cannot afford to ignore. Inadequate liability insurance is perhaps the most common oversight that could cause a doctor’s assets to be vulnerable in the face of legal action. The most common example is a simple car accident; if you are found to be at-fault in a liability lawsuit, and the jury award exceeds your policy limits, you could be required to pay for the damages out of your current assets, or even future income. A carefully drafted risk management plan for your personal and professional life will help protect your investments and future earnings. Asset Protection for Physicians In the insurance world, a line is drawn between your professional, and personal pursuits/assets and this article addresses protecting your ‘personal’ assets through high levels of liability coverage. You can purchase higher liability coverage in two ways, either by raising the limits on each of your individual policies, or, by purchasing a separate policy called an “umbrella” or “excess liability” policy that will top off all of the underlying policies at one time. An umbrella or excess liability policy is the most cost-effective method for protecting current assets, as well as future earning potential. There is a difference between an ‘umbrella’ and an ‘excess liability’ policy, so be sure to talk through this with your insurance consultant.

How Does it Work?

A personal umbrella/excess liability policy coordinates with your homeowner/renter and auto policies to provide liability protection above (excess liability) and sometimes beyond (umbrella) the coverage offered by your other policies. For example, the $250,000 of per person bodily injury liability coverage on an auto insurance policy is probably not enough coverage if you or one of your vehicles causes an accident that seriously injures another person. Therefore, you would be personally liable for damages that exceed these policy limits.1 Auto accidents aren’t the only mishaps that would fall under the protection of a personal umbrella policy. Your property’s “personal liability” coverage comes into play for incidents that occur not only on your property, but throughout your personal life such as on the golf course or accidentally bumping into a fragile senior citizen at the grocery store. Lately, there has been an increase in claims due to kids posting on social media and pets that believe they are defending their home.2 When purchasing umbrella insurance, you’ll often be required to have certain minimum liability limits on both home and auto insurance and it is recommended to have as many policies as possible with the same carrier in order to coordinate claims coverage. It’s extremely important to understand the limits of what your umbrella actually covers and for how much so you can take proactive measures to organize your assets so that any exposure is limited to the scope of the policy. These limits will be very clearly defined by the insurance company.3

Why is it Necessary?

Even if you have a pristine driving record, accidents can and probably will happen at some point no matter how cautious you are. In fact, approximately 15,000 traffic accidents occur each and every day.4 Seven-figure lawsuits stemming from auto accidents are not uncommon as even one day in an ICU can reach up to $100,000 in extreme cases. Such a verdict could severely hamper your long-term financial planning. Umbrella and Excess Liability policies can help pay court costs and awards, up to the limit stated in your policy documents and you often purchase these policies in increments of one million. When you consider an additional $1 million of liability coverage can cost less than $20 a month, purchasing an umbrella policy is an economically-responsible decision especially for families with significant assets or future earning potential.5 You’ve invested far too much time and resources in your career in medicine only to see it jeopardized due to an unfortunate tragedy involving you or your family. Implementing an asset protection plan that legally separates your personal and professional assets will ensure that everything is not fair game in the event of a liability. But this must be done on a proactive basis with the assistance of qualified legal counsel, as asset protection laws and case history vary widely from state to state. References:
  1. Bruce Sackrison, “Do You or Your Business Need an Umbrella (Policy)?” Napa Valley Register (May 2017). http://napavalleyregister.com/business/do-you-or-your-business-need-an-umbrella-policy/article_d25bdb2d-3de5-5a1e-839b-5a7ca79637a1.html
  2. Gina Roberts-Grey, “How an Umbrella Policy Could Save You From Financial Ruin” Realtor.com (May 2016). http://www.realtor.com/advice/buy/umbrella-insurance/
  3. Ike Devji, JD, “Liability Insurance Umbrella Policies Vital for Physicians” Physicians Practice (October 2013). http://www.physicianspractice.com/blog/liability-insurance-umbrella-policies-vital-physicians
  4. Andy Glasgow, “Kelly Insurance Emphasizes the Value of Umbrella Insurance” Digital Journal (August 2017). http://www.digitaljournal.com/pr/3439905
  5. Becky Rapse, “For Added Protection, Buy an Umbrella (Policy, that is)” Cleveland Jewish News (July 2017). http://www.clevelandjewishnews.com/features/business/for-added-protection-buy-an-umbrella-policy-that-is/article_e613b30c-7141-11e7-9159-d78527f83e77.html
Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC. Insurance services offered through Larson Financial Group, LLC, an insurance agency.