dental istruments laying over article about assett protection for dentists. lake norman business card on topHow Dentists can avoid catastrophe by utilizing smart asset protection plans.

By: Adam G. Breeding, Esq., Lake Norman Law Firm


I often talk and write about the importance of smart asset protection plans for successful folks-

particularly those in high liability risk professions. Among those professionals are dentists – perhaps more so than any other profession since dentists tend to own and manage their own practice individually or with a small group of partners (unlike physicians who are generally employed by large health care providers). My wife works in the dental services industry and I have a lot of close friends who practice dentistry in the area, so making sure they understand the benefits of a thoughtful asset protection plan means more to me than simply earning a new client’s business.

A recent decision by the N.C. State Board of Dental Examiners to suspend the license of an allegedly negligent Cary dentist should amplify the importance of dental professionals ensuring that their practice, property holdings, corporate form, and personal assets are adequately shielded in the event of catastrophe. Dr. “M” – the Cary dentist – encountered such a catastrophe when a patient tragically died while under her care. As unfortunate is this situation is, it can serve as a case study for what will follow. Already, Dr. M, who had ran a successful practice for 27 years, has been forced to retire several years before so called retirement age. Of course, a malpractice lawsuit is sure to follow, and there are no statutory caps on damages in North Carolina when a patient dies. As such, a prospective settlement with the deceased patient’s estate will likely far exceed the malpractice coverage leaving Dr. M’s account receivables, equipment, and possibly even her personal assets susceptible to judgment. Speaking of malpractice insurance – we often counsel clients on the paradox of carrying too much, meaning the more you have the more attractive you are as a defendant. Plaintiff’s attorneys who work almost exclusively on contingency fees like to get paid, and having the comfort of a large malpractice or personal umbrella policy means they assuredly will. At Lake Norman Law Firm, we generally recommend blending an adequate amount of coverage with a rock hard asset protection plan to deter any lawsuit and / or force a reasonable settlement in the event of such a catastrophe.

While Dr. M’s situation can serve as an unfortunate example of catastrophe, frankly, malpractice suits are the least of a dentist’s worries. To be sure, they must be considered, but the larger concern is a personal lawsuit: a simple car or boating accident (see my article on AP for lakefront homeowners for an example), an employee related suit, an invitee being injured at your office or home, or a business venture gone wrong – the possibilities are countless in our litigious entitlement theory society. Thus, it is extremely important to ensure that the appropriate legal structure is in place for you and your partners (and that the corporate form is maintained). If dentists want to have a corporation, they need to run them like corporations and not a family business. Likewise it is essential that real property and equipment are segregated and held in different legal entities such as LLCs. Then once the dental practice is situated, each individual should consider whether they need to add personal protection by employing asset protection devices such as trusts, family partnerships, personal residence trusts or additional limited liability holding companies. The principles of asset protection are simple – divide business assets from business operations; keep personal life separate from professional life; structure yourself and your practice to deter a lawsuit and withstand litigation; and maintain corporate formalities along the way.

As strong wage earners and asset holders dentists are uniquely vulnerable to liability risk. 

Combine the prospect of malpractice or employee related suits, and dentists are at the top of the plaintiff’s lawyer food chain. Being such a professional without legal protection is akin to driving a car without seatbelts – you just shouldn’t do it. It’s not worth the risk. Protecting your stuff for retirement and future generations is too vitally important to today’s professionals to leave to chance. At Lake Norman Law Firm, we love helping dentists and other successful folks. We provide consults to review your current framework and provide you with a grade as to how adequately protected you and your practice are. Thereafter we can either give you the peace of mind that you are satisfactorily protected, or we can undertake implementing the proper corporate framework and protection tools catered to each unique situation.

If you are interested in estate planning and asset protection, or taking us up on our consultation and asset protection grade give us a call at 704-765-1617, or email us. And, Stay tuned for more insight into Dr. M’s situation and for my FAQ’s Regarding Asset Protection for Physicians and Dentists.