PAYDAY LOAN AUSTRALIA

This white paper shares a detailed look at the complex issues related to financial planning before, during and after medical buyouts for physicians. Receiving (a) lump sum payment(s) often brings additional financial planning issues into the forefront for physicians, forcing a re-evaluation of the broad financial strategy. Managing this change in order to yield optimal results need to be in place prior to the physical receipt of equity payment(s).

Special issues relevant to physicians in the midst of a buy-out

o Avoiding “too good to be true” investments

o Tax treatment of equity and real estate transactions

o Protecting personal assets from liability

o Alternative Minimum Tax minimization and/or avoidance

o Evaluating new benefit offerings

Where We Stand

Many physicians have spent years becoming experts in their fields, but have not had the time or inclination to be financial experts as well. In fact, many physicians acknowledge that they wish that their formal education requirements included financial management training and/or courses. With significant earning capacity, debt management issues, and liability challenges, there is also opportunity (and even proclivity) to make mistakes that can have a dramatic impact on a physicians net worth over time. We believe that an integrated financial plan takes into account every aspect of a physician’s financial life - including cash flow, financial position/debt management, tax strategies, asset protection, preparing children for financial responsibility and estate planning.

Critical Strategies in Financial Planning for PhysiciansStrategy #1

Document your current financial situation and overall objectives

Engage a professional to help you identify and document both your short and long term goals. Create a cash flow and net worth statement.

Strategy #2

Be wary of “too good to be true” investments

Often, physicians are seen as good “targets” for private investment “opportunities” from friends and family. Too often, these “opportunities” often lead to disappointment. A second opinion from experienced business advisors should always be taken into account before attempting any investment on your own.

Strategy #3

Be patient

There is no need to jump into a new “opportunity.” The months preceding a significant transaction are an excellent time to develop a strategy for your investments. Of course, don’t procrastinate either. Time, research and professional consultation will yield an effective outcome.

Strategy #4

Prepare for the tax liability

Many buy-out agreements will treat the gain realized on the stock purchase as a long-term capital gain. The impact will often be a significant increase in your total income for the year. Special attention should be paid to the alternative minimum tax (AMT) as this larger income can reduce the AMT standard deduction and yield larger liability. Shifting property taxes and/or state income tax payments can reduce total liability over several years. Effective tax loss selling on other investments can also help to offset total taxes due. This may be the year to ditch your worthless investments.

Strategy #5

Understand your new benefit package

Often times a buy-out will result in a totally new benefit package. This can include a shift in health insurance options, long-term disability insurance caps and terms, supplemental life insurance rates and options and new retirement plan offerings (e.g. a shift from a defined contribution 401(k) plan to a defined benefit program). Each should be evaluated as if you’re starting anew. Don’t make any assumptions. Seek help as much can be lost through poor selection.

Strategy #6

Update your estate strategy

A buy-out allows an accurate assessment of total net worth. Federal and state tax transfer tax laws have changed over the past few years. Failing to update your estate documents can lead to needless loss of family net worth. Well thought out gifting can increase responsibility in children, allow you to create a lasting legacy and retain assets.

Strategy #7

Don’t think it’s too late to begin

Transitions are an outstanding time to reconsider financial (and life) strategies. You may have few or many high earning years remaining in your career. Make the most of these years. Past mistakes are irrelevant (except for the learnings gained!)

Strategy #8

Get serious about planning

You are committed to your profession. It has yielded many benefits. Use the available tools and resources to put in place a plan that you are proud of and will give you the confidence you need about your financial future.

by Brion Collins

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