Physicians and other licensed health care providers labor many years to build their practices. However, unlike many other businesses, a health care practice cannot be passed by will or otherwise to the provider's spouse or children, unless they too maintain the same license. Even if an heir is also a licensed physician, the State may not approve the transfer of a medical practice to a licensed family member if they do not have adequate credentials to engage in the same specialty. How then is a health care provider to protect their assets and secure a legacy for their heirs?
For licensed health care providers, planning and protection of assets should begin from the time a practice is first established. Nothing prevents a practitioner from establishing a practice as a sole proprietorship, but doing so can make the practitioner's assets (including assets unrelated to the practice, i.e. a primary residence, securities or other valuables) vulnerable to judgment creditors of the practice. Creating a professional corporation, limited liability company or limited liability partnership can shield such personal assets from certain creditors of the practitioner's health care business. No corporate entity will shield the provider from liability arising under professional malpractice, personal guaranties, criminal activity, and/or certain tax related matters, but the corporate structure can certainly help in protecting the provider's personal assets from certain creditors.
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