4. Incorrect Asset and Income Structures

There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire.


Over the next six weeks we are going to look deeper into each mistake. Last week we looked at 3. Unplanned Superannuation


This week: 4. Incorrect Asset and Income Structures


The fourth most common financial mistake doctors make is Incorrect Asset and Income Structures. This is a fairly obvious mistake but is an often overlooked one for our doctors. All professional doctors are exposed in some way to potential litigation, be it from a professional malpractice type issue or from a financial or business related issue and any assets that are usually the easiest one for a creditor to look to recover from would be cash shares and of course a family home.


As a result, appropriate structuring can put those type of assets in various legal and legitimate trust structures which does protect the financial assets. For example putting the permanent place of residence in a doctors partner’s name, or assets likewise being in the partner’s name.


In terms of the income structures there are many different alternatives in terms of where to place financial assets and in particular the benefits of a trust. Another option is when doctors get older and their children reach 18 years of age using income splitting. Income splitting, not only for doctors partners but for their children, can make a massive difference in their annual tax returns. A simple fact is that once a child reaches 18 years of age in Australia, there is no tax in the first $18,000 of income and up to $30,000 there is very minimal tax. So for example in the instance where a doctor has 3 children and is able to split $90,000 of their income evenly between them, that can result in a very, very substantial reduction in income tax, to the tune of half that would normally be paid out if the doctor earns over $180,000.


If you would like to learn more about Asset and Income Structuring and see if there is a better way you can structure yours then contact MedCapital today HERE and start getting your wealth organised.

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