The Hidden Lawsuit: Real Asset Protection for Licensed Professionals

Transcript

SPEAKER_02: 0:01

Welcome back to Know Your Regulator, the podcast that inspires you to engage. I am your host, Cimone Murphree. Today we’re pulling back the curtain on something that most professionals never think about. What happens financially if you’re facing a board complaint or a lawsuit? We’re talking beyond that attorney retainer and those court costs. If you think the only issue is with your license, there could be so much more at stake. I’m joined today by Matthew Meredith, who is an attorney and wealth strategist. Matt founded Meridian Legal Advisors, which is a one-stop shop for asset protection, estate planning, and tax strategy. He’s known for creating estate plans that go beyond those cookie-cutter approaches. So he builds strategies that protect wealth from lawsuits, creditors, and unnecessary taxes. Before founding Meridian, Matt led his own law practice for four years and he held leadership roles at JP Morgan and Capital One. Today he combines law, tax, and investment strategy to help clients safeguard what they’ve built and ensure that it lasts for generations. Thanks so much for joining me, Matt.

SPEAKER_01: 1:06

Thank you, Simone. It’s a pleasure to be here.

SPEAKER_02: 1:09

Well, before we get too into things, Matt, can you tell us in plain terms, what does an asset protection attorney do? And why are these situations called hidden lawsuits? What are professionals overlooking when they’re focused solely just on the boards and their license?

SPEAKER_01: 1:26

That’s a great place to start. In terms of professionals, you know, doctors, lawyers, other type of people, the main goal for an asset protection attorney is to separate what you own from what you do. And there is risk associated with what we do as professionals. I’m an attorney, a doctor is a doctor. And so we don’t want it to spill over into our personal lives. And it it’s it’s a cliche to say it, but it really is own nothing, control everything. And I hate that saying because it’s so, like I said, cliche, but that is ultimately what asset protection is. And so when you get into something like what a hidden lawsuit is, it’s the risk that we don’t really anticipate. For a doctor, a perfect example would be a board complaint. You know, it’s just a board complaint. It’s not, you know, somebody died on the operating table. Right. Another one would be a billing audit, maybe a patient grievance. You know, outside of the professional setting, it could be like you and I had mentioned, a car accident. Something that, hey, you know, there’s these risks involved. We don’t think they’re going to turn into lawsuit, but all of a sudden it does. And for, you know, for doctors, that’s where asset protection really kind of comes in and bridges the gap by it creates boundaries before the risk ever reaches your personal assets. And a simple solution, just get it out of your name.

SPEAKER_02: 2:55

Yeah. So we’re talking about very unsuspecting situations where everything you’ve worked for is, you know, totally on the line. When a licensed professional faces a board complaint or, you know, like you mentioned, or a lawsuit, what kind of assets or income streams are at risk?

SPEAKER_01: 3:14

Well, well, you you put it perfectly in your statement before the question. It’s not just your license that at risk. It’s your livelihood. And so, for example, if you’re a sole proprietor, which most of the time doctors these days, they’re not, but if you are a sole proprietor, you are operating out of you, your name, you are the business. Every single thing in your name is at risk. And so that’s a major thing to happen. When you’re working, you know, maybe as not a sole proprietor, you still have things in your name. These are like savings accounts, rental properties, joint marital assets. They can come and get spousal income as well if you’re it’s not titled right. One of my favorites, because you know, my background is financial advising and custom management, is brokerage accounts. How many doctors have huge amounts of money in their brokerage accounts sitting in their name? I talk all the time to financial advisors, particularly for some of my clients, and it’s like, wait, whoa, whoa, you have that in their personal name? This is a high-risk professional. Get it out of their name. Another thing that people don’t think about is income. You know, they can garnish wages. So if you’re being paid directly from your company, if there’s a judgment against you, they can come after that income. Insurance for us, you know, for all of us professionals. I’ve got it for both of my companies. I’ve got it as expensive, but it’s great. It takes some of that worry off, but it doesn’t really cover everything. And if it spills over that, and you’ll see it a lot of times, you know, not in a professional world, a car accident, where it just doesn’t cover the whole thing. And then all of a sudden they’re coming after you personally. And so there can be gaps. And that’s why it comes to the situations where, hey, we’ve got to protect ourselves beyond spill over.

SPEAKER_02: 5:13

Yeah, absolutely. So say a complaint gets resolved. How can issues like malpractice claims, collections, judgments like you mentioned, affect someone’s finances even after that complaint is or the complaint process has been completed?

SPEAKER_01: 5:33

So I I like to call them ripple effects. You know, you have the incident. The incident may not have been that much. Maybe, maybe it gets resolved, the board says, hey, no problem, keep your license. But the financial side is going to linger much, much longer than the legal side. And so let’s say that there wasn’t an issue. Let’s say you go in front of the board, there’s discovery done. You know, there may even be start of a trial. There’s discovery done. And what happens later on if somebody, for example, you know, you have a patient that had an issue and they sue, but there’s another patient or the daughter of another patient who turns around and says, huh, that’s funny. That was my mom’s doctor, and this wasn’t good. I’m gonna check into this. And so that becomes a serious issue where, you know, we had the main incidents and now it’s rippling up and it’s going further and further. And so when you talk about a judgment, a judgment against you, it’ll attach to real property. We already mentioned we can it can come after income, they can garnish wages. They can, I I told you about brokerage accounts, they’ll grab your brokerage account for you. Another big one that I don’t think many people think about is it can affect you personally in your career. Like all of a sudden, if you own your own building, or let’s say you’re you’re a doctor and you have your own buildings, well, now you might have problems with public records showing the creditor, like, no, you’re high risk. I’m not I’m not gonna give you a loan. And that becomes a huge problem when it comes to refinancing. You know, public records can restrict your employment. Like, sorry, we we know what happened. We’re not hiring you, you’re at risk for it. Um, another one that I see quite often is it will delay your credentialing. You may have an issue that, hey, the board resolve, but this other professional licensing says, Well, wait a minute, we need to check into this as well. And then you’re sitting there saying, Well, what am I supposed to do here? And so it it ripples out from the get-go, and people just don’t expect it. They think, hey, you know, it’s a one-time thing. I I beat it, I’m done. But that’s not always the case.

SPEAKER_02: 7:57

Yeah, no, it sounds like that there are so many different ways behind the scenes. You know, we talk about hidden lawsuit, so many ways behind the scenes that this can really affect you beyond your license. I mean, beyond your wages being garnished. I mean, yeah, it would definitely affect you personally, mentally, personally. What are the most common mistakes? You mentioned stuff that you see a lot. What are those common mistakes that you see professionals make that could put them in a more vulnerable position to be at risk for something like this?

SPEAKER_01: 8:30

I would have to say the biggest one comes down to assumptions. I have an LLC and I have insurance and umbrella policy. This is not just for professionals, it’s for everybody. I haven’t uh, you know, my business is over here. I’m living good, you know. I have an umbrella policy. So if I get into an accident or I I think I had mentioned to you before, what happens if you’re at a bar with your spouse and somebody is antagonizer and you you get into a fight, and then the next thing you know, they’re suing you. Will your umbrella policy protect you all the way? We hope so.

SPEAKER_02: 9:06

Yeah. You don’t want to, you don’t want to be caught on the end of not having that protection, you know?

SPEAKER_01: 9:12

Definitely. So insurance, it it pays for the defense, but it’s not really going to protect your assets or future income and damages exceed it. And that’s what we talk about in asset protection all the time. To people is, okay, well, what happens if the lawsuits more than what happens? What if you kill multiple people by accident? You’re on a boat, you’re having a good time, and several people die. You think your umbrella policy that you have is gonna cover all of that? And the look on the face is like, oh no, I probably not. And then it becomes, I’m just not gonna go on a boat anymore. Um, probably the biggest one in asset protection, maybe the second biggest one in asset protection, is when commingling happens. So you have your personal life, you have your business. Don’t mix them. Doctors in particular, we will see that, oh, we’re going to Hawaii, honey. The company’s paying for it. Oh, that’s not that’s commingling. And now you’ve done something which in all of law, I think, is one of my favorite words. You pierced the corporate veil. And so what that ultimately means is because you commingle, now we can pierce through this company and grab your assets personally. And so, you know, it becomes a huge issue. Here, here’s an example of co-mingling that most people don’t think about is I own my practice in an LLC, and then I own my building in my name. So there’s benefits going back and forth between each other that some attorneys are going to argue, hey, you’re you’re commingling. And they just don’t think about it. You have to separate all these assets from each other just so you don’t get that corporate veil pierced.

SPEAKER_02: 11:00

Yeah.

SPEAKER_01: 11:01

Another one that I like to really talk about is failing to update your structure. So I do probate as as well as part of my practice. And one of the things we’ll see from time to time is you have an old operating agreement that was filed with the bank. And so the bank has people on the accounts that you never updated. How many, how many doctors do you know that have been in practice for a long time? They built out uh LLC, a score, any type of thing like this. And it’s been 20 years since they they’ve done it, done anything about it, updated it. I met a guy who still in his operating agreement had his two dead partners. Oh no, man. Yes. It’s like, look, man, this is a nightmare. These people are no longer there to sign anything and say, oh no, I’m no longer in this company. I fought with several banks over and over again about look, this guy hasn’t been part of this company in years. But they still said, well, you know, we’re gonna need all these different corporate resolutions, we’re gonna need all this stuff built. And so it’s not, you know, the end of the world, but for the the person, the executor, the people paying the attorney, now I have to go and solve this problem with the bank. So you have problems with these old legal structures. There’s a saying in law that law protects what’s maintained, not what is intended. And so you may be like, oh, I planned to file my franchise taxes, but you never did. Well, guess what? Your company is no longer a company and more in the state of Texas because you’re now default. So that protection you thought you got is no longer there. And that becomes really kind of the problem. Um, and then kind of my last one, which is my favorite, is waiting until it’s too late. Like, I I have a claim against me, I need your help, and you know, I’ve got this money. I need to what should I do with it? Don’t come to me and ask me that. I’ll tell you, well, here’s the Department of Treasury’s address. Just write it out to them and send it because I can’t help you at this point. It’s too late. And that’s the problem. We all think we’re nine feet tall and bulletproof, as my dad used to tell me, until all of a sudden we get knocked down. And so don’t wait until it’s too late because then I can’t help you. And it’s more you guys are helping at that point.

SPEAKER_02: 13:28

Right. And those top two are so easy. They’re so easy. You just have to make sure that you you carve out some space in your professional life to make sure that those things are taken care of.

SPEAKER_01: 13:40

Exactly. And, you know, as part of Meridian, that’s what we do for you. Because we’ve learned that if I expect you to do it, it’s probably not gonna happen. But uh also a lot of things in asset protection, there’s anonymity involved. So you can’t always do it yourself. You have to have a somebody else doing it. Typically, you know, it’ll be the law firm or or affiliation, and you have them do it, but you’re still responsible to make sure it’s being done. Because if it’s not being done, it doesn’t matter who didn’t do it. You’re at risk.

SPEAKER_02: 14:14

Right. Yeah. You’re the responsible party. It falls back on you.

SPEAKER_01: 14:18

Yeah, every single time.

SPEAKER_02: 14:19

So let’s talk strategy. What are the first steps that a professional should take to protect themselves now before any legal issues can arise?

SPEAKER_01: 14:30

So here’s the thing that I find the biggest with asset protection. There’s this horrible misconception that it’s about hiding. It’s not about hiding, it’s about protecting. And ultimately, it’s not for the ultra-wealthy. Everybody who has something to protect needs to protect it. And people, we talk about brokerage accounts, near and dear to me. You have to protect that. If you don’t want that at risk, then do something about it. Another thing that’s very important, or really the first thing that’s on our list is separate your assets. If you have an entity, let’s say an LLC, that is your practice, don’t put your building in the same LLC. Separate them because everything in that LLC suddenly becomes attached to that judgment. And so we tell people all the time look, you have a holding company and you have an operating company. Don’t ever mix the two because that’s where you’re going to run into the problems. Next, I would say it’s really important to review what’s in your name personally. We we said it in the very beginning, my cliche word, own nothing, control everything.

SPEAKER_00: 15:40

Right.

SPEAKER_01: 15:40

And it’s true. And I swear to God, I see on Facebook Reels, and it’s the guy, own nothing, control everything, but he’s right, but don’t be so cliche about it. Um third, I would say cash flow. Or you paying yourself directly from your company. Because if you are, that can be grabbed. And so you have to be very careful. So don’t pay yourself, pay your holding company. And so in the world of asset protection, you know, I we’re like ogres, no? We’re onions. You have layers. There’s layers, yeah. There’s layers to it. So you’ll have a holding company that will drop down. That holding company will own separate LLCs. You don’t own anything in the holding company because you don’t want the holding company to get attached to it. But let’s say, you know, you have an issue. Well, your LLC pays your holding company, and your holding company can pay you. That way there’s another onion layer in between you and the money. And so it’s really important to keep it all separate when it comes down to that. The fourth is my favorite. It’s coordinate advisors so everyone is on the same page. And we’ve yeah, we’ve talked a little bit about, you know, my purpose here with Meridian Legal Advisors, is my background was I was a financial advisor, I was working, and people needed a tax person, a CPA, or people needed a lawyer. I kept being told, you’re not a lawyer, don’t give advice, which is actual. Don’t do the unpractice, you know. So you would send them to the CPA, and then you’d send them to the lawyer. And you’re thinking, all right, everything’s good. I I did a great job. The client’s gonna love me. But no, the CPA gives bad advice that the lawyer doesn’t like. And then the CPA starts beating his chest, saying, I’m not gonna take this. And then all of a sudden the client’s going back and forth, paying all this money. And the client comes back to you like, thanks a lot. I’m moving over to a new company. And you’re sitting there like, I try to do what’s right. And so when I built Meridian out, it was enough of this. I want everybody in the company on the same page. It’s no longer a competition, it’s no longer I’m sending you away. No, I’m sending you to the guy that I just talked to on the phone and as we had coffee, and he knows exactly what’s going on. And then he’s gonna send you back to me because he’s gonna tell me how I’m supposed to structure this. And that’s the difference. And it’s something I feel in this country, it’s not done. For some reason, the industries have forced themselves into separation saying, if you can’t do this, you can’t do that. And nobody really comes together and says we’re all on the same team and we’re here for you.

SPEAKER_00: 18:27

Yeah.

SPEAKER_01: 18:27

I have I have met very few people in my life who have sat down with their CPA, their asset protection attorney, their estate planning attorney, and everybody looked at it. And when when you talk to them, they’re like, it was the most intense meeting I ever had. Like, oh my God. And it’s it’s a different approach. And that that’s the whole point of Meridian is let’s change the game so that we change the outcome.

SPEAKER_02: 18:54

Yeah, no, absolutely. It sounds like it the holistic approach is definitely making an impact. So let’s talk about some red flags. What are some red flags that someone’s current setup or they you know the plan they have in place could potentially be exposing them to risk?

SPEAKER_01: 19:13

So we we’ve talked about quite a few of them. I I think the first one is you personally own everything. If it’s all in your name, we’ve got a problem. I’ve met doctors who are very successful. I’ve met, you know, real estate investors who have 17 properties and it’s all in their name. And I just I’m like, oh, this is this is bad. But you can’t tell them that, of course. They’ll start to fanning. But it’s when you personally are owning it, it becomes a problem. Because if something attaches to you, it attaches to everything. Another one, which we, you know, kind of talked about a little bit is operating everything in one company. And you see it so often with professionals, you know, lawyers, doctors, they buy the building and the building’s in the company. And so when there’s a malpractice claim that can breach over, now your building’s at risk. Or they own the building in their own personal name, so it’s still the same type of risk that’s involved.

SPEAKER_02: 20:14

Yeah. Um all your eggs in one basket, you know, kind of really puts you at risk.

SPEAKER_01: 20:21

Oh, it does. I always joke, Mark Twain is who’s credited for saying that. And I believe that you can put your eggs in one basket, but you better guard that basket.

SPEAKER_00: 20:33

Yeah.

SPEAKER_01: 20:33

And people don’t properly guard it. You can’t walk away from it and say, oh, okay, everything’s great, because the next thing you know, your basket’s gone.

unknown: 20:41

Yeah.

SPEAKER_01: 20:42

And then you and then you’re not eating eggs that day.

SPEAKER_02: 20:44

There’s your, you know, hey, you have your license, but there goes your livelihood flowing down the river. Yeah.

SPEAKER_01: 20:50

Yeah. Well, you know, another one, of course, I I can think of, we talked about as well as operating agreements. Have you updated it? When you haven’t updated it and years have gone by, you may be a lot less protected than what you thought you were. And if that’s the case, you know, you’re in serious trouble. I really think that the biggest one I see though is the overconfidence. Like, I’m fine.

SPEAKER_02: 21:17

It won’t happen to me. How could that, you know.

SPEAKER_01: 21:21

And, you know, people, professionals, lawyers, doctors, they’re smart people. They they’re like, I’ve I’ve thought it through, I’ve anticipated the risk. I don’t want to spend the money to to get this type of setup. So I’m good. I’ll just buy more insurance and I’ll be fine. And that’s not the way to go. Believing you’re good but not checking is a really bad problem.

SPEAKER_02: 21:44

What are some huge no-nos? Like, say I’m a professional and I’m looking to protect my assets. I’m being proactive, but maybe I’m not privy to the laws. What would be a huge do not do that in this type of situation?

SPEAKER_01: 22:04

So don’t move assets once a claim has happened. Once a claim has happened, it’s too late. And if you start moving things around, you’re gonna have problems. Another one that that I’ll see from time to time is okay, I’m gonna give my wife a gift of all my money. You think the court’s just gonna like, oh, don’t worry about it. It’s a 1041, no problem at all. Exactly. And so I I think another thing that that is so important when we’re talking about no-nos is first don’t panic. That’s the main thing. And you you get a complaint, you’re gonna want to respond to it. It’s natural. Like, oh, I’m innocent. Let me jump on here and respond to it. And I’ll talk to the to the opposing counsel, I’ll talk to the client. As as an opposing counsel party from time to time, that is the greatest gift in the world you can give me. In fact, I I’ll turn to my wife and say, honey, you go buy that new car because we’re gonna get a payday. And so that that becomes one of the main things. You know, another thing is you have to get outside counsel. You can’t do it alone. Go get somebody who can protect you, who can understand and speak for you. Don’t go speak to the board on your own. Bring your attorney. Never speak to anybody without your attorney there. But again, the biggest thing, and I’m gonna quote my um my movie here is don’t panic and bring a towel. I I like to think that real protection is maintained. It’s not bought and forgotten. And that’s what so many people do. Why? Because I don’t have the time to worry about this. I’m busy. I’ve got seven surgeries. I I don’t know how many surgeries they’d have in a day.

SPEAKER_02: 23:54

Hey, maybe. Depends, maybe a hand surgeon, quick, quick in and out.

SPEAKER_01: 23:59

Maybe so. And that’s the problem with it. And so here’s the thing: you don’t have to go this alone. That’s what people like me are for. At Meridian, we do biannual meetings. You just have to show up, jump on Zoom. If it’s in person, I even bring the Kalachis because we want you to be happy and you know, nobody likes going through their finances and making sure everything’s great. But it’s it’s not all up to you. That’s why you build a team of coordinated advisors.

SPEAKER_02: 24:31

Yeah. No. And like you said, that holistic approach is so much more impactful. And hey, a calachi can’t hurt too, right?

SPEAKER_01: 24:41

You know, I had I had a client bring me a calachi for our meeting, and he became my favorite client.

SPEAKER_02: 24:47

I bet that just made your day. That’s so awesome.

SPEAKER_01: 24:49

Yeah. And it’s like, I was gonna give you bad news. I can wait now.

SPEAKER_02: 24:54

Well, Matt, where can listeners go so they can learn more about Meridian Legal Advisors and the work that you guys do?

SPEAKER_01: 25:02

So, of course, our website, meridianlg.com, that that’s where we’re at. Um, we’re on LinkedIn, of course. You can find me and and the company. We’re slowly starting to get out more material, reels, podcasts, things like that. So we’re we’re around and you’re gonna start hopefully seeing a lot more of us in your feeds and everywhere else.

SPEAKER_02: 25:23

Awesome. Love it. Love to hear it. Well, Matt, thanks so much for joining me today in spotlighting where professionals may not realize that they have so, so much on the line. No one expects to face a complaint or a lawsuit, but we’ve definitely learned that the difference between surviving versus losing everything that you’ve worked for really starts with that preparation and that and that, like you said, holistic approach to protection.

SPEAKER_01: 25:51

Correct. Uh, you know, asset protection is legal when it’s proactive and transparent. It’s not legal when it’s reactive and deceptive. So I always tell people look, start now. You may not need it, and if you don’t need it, your attorney should tell you. But what if you do need it and you’re not protecting yourself? Give yourself a good night’s sleep while not worrying.

SPEAKER_02: 26:13

You don’t have to wait until a complaint or a lawsuit lands on your desk to ask if you’re protected. Take the time now to review how your assets and practice are structured. And if you need some guidance, check out the links below to learn more about Matt and Meridian Legal Advisors. Subscribe to Know Your Regulator for more episodes that help you protect your license and livelihood. And until next time, stay inspired and continue engaging with your regulatory agency.