Protecting a medical practice: The Nervous Neurosurgeon
The successful neurosurgeon owns a home, an apartment building that is a highly-appreciated investment, a large stock portfolio, and his medical practice. Because he was sued for malpractice in the past, he was concerned about his continued liability exposure.
The doctor and his wife of forty years reside in California, a community property state. One of the worst aspects of community property law is that a creditor of one of the spouses can collect against both halves of the community property.
We provided a fix to this dilemma with a transmutation agreement, an agreement between the doctor and his wife to convert their community property into separate properties. We made sure that the assets that a creditor might have an easier time getting at went to the wife, who is the spouse less likely to be sued. The doctor retained the assets a creditor would find useless, such as the assets in his medical practice.
We insulated the assets going to the wife even further. The apartment building was transferred to a limited liability company and the home was transferred to a residence trust.