Managing Risks as [Doctor] Parent

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Kids Create Substantial Risks for 

[Physician] Parents!

IKE

A Special ME-P Report

[By Ike Devji JD]

The number of ways that children are creating substantial risks for their [physician] parents is at an all-time high as many parents are unfortunately aware; as we begin 2016. Increased defensive planning or education by most parents despite increasingly common litigation for this vicarious liability has not increased commensurately with this risk.

Some of you believe that your kids are better behaved, smarter, and more sensible than those we hear about in the news. Such exposures are unpredictable and often arise from mundane activities you never imagined could be so serious.

Part of the discussion we encourage [physicain] parents to have with their children includes a detailed explanation of the fact that you as a parents are personally financially and legally responsible (up to the level of criminal liability) for any harm, damage, or loss cause by their minor children.

Example:

In one example; a successful physician left town for the weekend with his wife, and his 17-year-old daughter threw a party at their home in a pattern repeated in nearly city in the country every weekend. Tragically, a teenager whom she had never met before crashed the party and died after he overdosed on drugs he brought with him resulting is a lawsuit against the young lady’s parents that sought damages in excess of three million dollars. Neither the young lady, nor her parents, nor anyone else in the tony private-school community of gated homes imagined that something like could happen in their nice neighborhood and the resulting claim was in excess of the limits of the homeowner’s liability policy the family had in place. Dozens of other parentally liability exposures seen over the years have come from much more mundane issues.

Negligent Supervision and Negligent Entrustment

Two ways liability is linked back to parents include negligent entrustment (providing the means or access to things or situations where some reasonably anticipatable harm occurs) and negligent supervision (basically infers that the harm would not have occurred if the minor had been properly supervised). This liability extends to others that have custody or are entrusted with supervision, so any guardian is at risk if the harm would have been prevented absent the access to the thing that created the harm and/or inadequate supervision. It also creates potential liability for you for the children of others you have custody of, even overnight for a slumber party.

Some Specific Recurring High Risk Issues:

  1. Automobiles: Minor children must be specifically named and insured on any vehicle they drive. Parents are generally liable for what minors do behind the wheel, permitted or not. If they are irresponsible drivers or if they take the car without permission you must take control of the car and treat it like a loaded weapon that’s pointed at everything you own and possibly their very own survival. Your high school senior cutting class with her friends and piling them into your car to go to Starbucks for “ditch day” is remarkably less charming when, for instance, she loses control of the vehicle on the way back to school and two of her passengers are critically injured as happened in one recent case. Thanks to commonly available and inexpensive software and tracking devices, not to mention the tracking software on your kid’s iPhones you can know where they and your vehicle are at all times.

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Waxed Jaguar

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  1. Access to Firearms and Other Dangerous Items: If you have guns in your home (or bows and arrows, ATVs, jet skis, a swimming pool, prescription drugs, or anything else that can be misused) you are legally and financially responsible for not only personal injury and property damage but in some states and fact patterns even criminal liability for the actions of your child and his friends. The cost of defense counsel alone could be financially fatal considering the possibility of someone getting injured or killed and the resulting liability and consequences.

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glock-23-3rd-gen-guns-14515485-2175-1425

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Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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One Response

  1. Putting Your Kids on the Payroll
    [To reduce risk!]

    If you could use a little help for your business this summer, there are some good reasons to recruit your own offspring.

    First and foremost, it’s a good opportunity for teens and college students to earn money for their own expenses while gaining valuable work experience for the future.

    Involving children in the operation of a family business might also inspire and help prepare one or more members of the next generation to take over when their parents are ready to retire. Last but not least, parents who employ their children enjoy access to several lucrative tax benefits.

    Taxes, Taxes, Taxes

    When a child under age 18 is employed by a parent who owns an unincorporated business, the child’s wages are not subject to Social Security and Medicare taxes (FICA), which add up to 15.3% (for employee and employer) in 2016. If the child is under age 21, there is an exclusion from the federal unemployment tax (FUTA). Of course, children’s wages are still subject to income tax withholding.

    Even if your children are too old to qualify for these favorable payroll or unemployment tax breaks, you can deduct the wages you pay them as a business expense. This shifts income from your tax bracket to their lower one, and no income tax will be owed on the first $6,300 they make because of the standard deduction. Wages are earned income, so the “kiddie tax” does not apply. Children subject to the kiddie tax are generally taxed at their parents’ tax rate on any unearned income over a certain amount.

    Your child’s earnings are deductible only if he or she performs real work (not household chores) in connection with your trade or business, payments are actually made, and the wages are reasonable for the services rendered.

    The Roth Opportunity

    A child with earned income can also contribute to a Roth IRA ($5,500 limit for 2016). A Roth IRA can be a flexible way to save for college, retirement, and other needs.

    Because contributions to a Roth IRA are made on an after-tax basis, they can be withdrawn without penalty at any time, for any reason. Normally, there is a 10% penalty for early withdrawals of earnings before age 59½, but there are a couple of handy exceptions. For example, a penalty-free distribution can be used to pay qualified higher-education expenses or to purchase a first home ($10,000 lifetime maximum).

    Qualified withdrawals of earnings from a Roth IRA are tax-free, regardless of how much the account grows over time. A qualified withdrawal is one that meets the five-year holding requirement and takes place after age 59½, or that results from the owner’s death or disability.

    Dan Timotic CFA
    [Managing Principal]

    Like

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