MFM Live: Asset Protection Learn How To Protect Yourself

Growing in Real Estate? Care about your wealth? Learn how to PROTECT your wealth with Asset Protection and proper structuring of your wealth! Brian Bradley is a nationally recognized asset protection attorney, and will help teach you the ins and outs of how to protect yourself, as well as what pitfalls to avoid!

VIDEO TRANSCRIPTION

00:00
goes away an offshore trust is
00:02
definitely more expensive
00:04
to set up and to maintain you can figure
00:07
between five and ten thousand dollars a
00:09
year
00:09
just to maintain it um and upwards of 35
00:12
or 40 thousand dollars to set it up
00:15
and then compliance it’s a foreign trust
00:17
so the irs requires some foreign trust
00:19
compliance
00:20
it’s a pretty extensive form and it has
00:22
to be done every single year
00:24
your accountant is not going to be super
00:25
thrilled if you come to him with this
00:27
so the the bottom line with the
00:29
international trust is if we need to use
00:31
it that’s where we want to be because of
00:33
its effectiveness
00:34
but before we’re using it if we’re just
00:36
setting it up for
00:38
future possible potential use we’d
00:41
really rather not be foreign
00:43
so what about domestic well they’re
00:45
newer 1998
00:47
alaska passed the first statute believe
00:50
me wyoming and delaware
00:51
and nevada were right on their heels and
00:55
today we have
00:56
19 states that have some form of
00:58
domestic asset protection trust
01:01
it really is good because more than a
01:03
third of the states have really
01:04
recognized in a statute
01:07
that taking steps to protect your assets
01:09
is a legitimate
01:11
actually very uh valid thing for someone
01:14
to do
01:15
um way long ago when i first started
01:17
this people were saying oh well this is
01:19
you shouldn’t even be allowed to do it
01:20
well today it’s pretty clear that the
01:22
states feel like you should be allowed
01:23
to do it
01:24
so what are the advantages of domestic
01:27
well cost
01:28
it’s much less expensive um because you
01:30
have a lot more attorneys that are
01:32
familiar with domestic
01:33
rules and laws and are more comfortable
01:35
and because it’s not foreign
01:37
compliance there’s a no 3520 to fill out
01:42
so you don’t have any foreign trust
01:45
compliance
01:46
how about the disadvantages well
01:48
unfortunately effectiveness
01:50
and this is kind of the kiss of death
01:51
for the purely domestic asset protection
01:54
trust um it’s just not been effective we
01:56
have
01:57
case law now for the 15 or so years that
01:59
the domestic trust has been in existence
02:01
or the 22 years that it’s been in
02:03
existence and it’s all
02:05
very negative um the the the it has
02:08
failed numerous times
02:10
even between uh two domestic asset
02:13
protect trust jurisdictions like utah
02:15
nevada it still failed
02:16
so i don’t have a lot of confidence in
02:18
it and also control
02:20
if you really do want to try to set one
02:22
of these up one you better live in the
02:24
state that has the statute you shouldn’t
02:26
live in california and try to set up a
02:27
nevada
02:28
dapt that’s really not going to work and
02:31
then control you cannot have control
02:33
that trust you absolutely have to give
02:34
control away
02:36
so is there a better option this is what
02:39
i asked myself
02:40
over 20 years ago you know is there a
02:42
way that we can get that foreign
02:44
protection
02:45
but have the simplicity of a domestic
02:47
trust and that is the bridge trust
02:49
it’s drafted as a foreign asset
02:51
protection trust it’s
02:52
registered offshore but then for the
02:55
purposes of the irs
02:57
we bring it back we bridge it back into
02:59
the united states and we meet this
03:01
two-part test which is called the court
03:03
test and the control test
03:04
and all that means is that we make it
03:06
domestic for tax purposes
03:08
so we do not have to file the form 3520.
03:10
we don’t have any foreign trust
03:12
compliance
03:13
and we do not have to have an offshore
03:15
trustee in control of your assets
03:18
before there’s an event of duress
03:20
meaning a lawsuit
03:21
there’s no 3520 no 3520a
03:25
there is no factor disclosures foreign
03:27
account tax compliance
03:29
there’s no irs filings of any kind your
03:32
assets can remain in the united states
03:34
with your current bank
03:35
invested in your properties you do not
03:37
have to have an
03:38
active foreign trustee in fact you can
03:41
be the trustee of your own bridge trust
03:44
and it’s a tax neutral domestic grant or
03:46
trust it’s treated just like a revocable
03:48
living trust for tax purposes so it’s
03:50
very simple to maintain after there’s
03:53
duress in other words let’s say you call
03:55
brian and i and you say hey i’m getting
03:57
sued and it’s
03:58
bad something happened on one of my
04:00
properties and
04:02
it’s going to exceed the insurance it’s
04:04
it’s a catastrophic thing
04:05
at that point we have the power to
04:08
trigger the trust
04:09
and what that means is that the trust is
04:11
triggered offshore
04:13
the offshore trustee who’s in a standby
04:15
role becomes a
04:16
full trustee and you are removed as the
04:18
trustee of the trust
04:20
at that point we have all sorts of
04:21
options including moving the assets
04:23
offshore
04:24
um i’m going to put it together visually
04:27
just so you can see it and then
04:28
we’re going to stop and and and we’ll
04:30
ask the questions we’ll leave plenty of
04:32
time
04:33
so the bridge trust let’s run it against
04:35
our four-part test is it effective
04:37
yes because by the time we are using it
04:40
it’s just a foreign trust and we know
04:42
that foreign trusts are effective
04:44
control you can stay in control of this
04:47
trust
04:47
right up until the moment that we need
04:49
to use it cost is much more reasonable
04:51
to set up
04:52
and to maintain it’s very reasonable and
04:55
compliance there’s none at all it’s a
04:56
domestic grantor trust
04:58
so no 35 20 no foreign trust compliance
05:00
simple
05:02
so here’s how it looks you have the
05:03
asset management limited partnership
05:05
that’s your holding company
05:06
and then you have your llc’s you can put
05:08
property in them you can put a boat in
05:10
them
05:11
you can put an airplane in them anything
05:13
that you need to
05:14
separate out those assets it could be
05:17
multiple pieces of real estate obviously
05:20
those are going to be also connected to
05:22
the bridge trust
05:24
the bridge trust is going to own the
05:25
majority interest of the holding company
05:28
you’re still going to have an estate
05:29
plan which is could be a revocable trust
05:32
or could be a will
05:34
and the llc’s are going to be single
05:36
member as brian said
05:37
held by the holding company this is
05:39
great because it keeps the tax returns
05:41
down it keeps your accountant happy it’s
05:44
also going to hold cash securities
05:47
stocks
05:48
bonds cryptocurrency whatever it is that
05:50
you want that’s already in some type of
05:52
securitized form
05:54
and control you’re going to be the
05:57
general partner
05:58
of the asset management limited
06:00
partnership which puts you in control
06:02
of the assets ownership is going to be
06:05
with the bridge trust so that we have
06:07
protection
06:08
and at this point basically one or two
06:11
things is going to happen
06:12
you’re either just going to die and pass
06:14
your state
06:15
through your state plan and it’s going
06:17
to distribute your assets it’s going to
06:19
maximize your state tax exemptions it’s
06:22
going to avoid probate
06:24
smoothly pass your assets to your heirs
06:26
or
06:27
we reset the structure and we’re going
06:30
to have a lawsuit
06:31
some type of event of duress in that
06:33
case the assets
06:35
can move directly from the holding
06:37
company to the bridge trust
06:39
and if necessary can be sent
06:42
completely offshore so it’s an
06:45
incredibly
06:46
flexible structure it’s an incredibly
06:49
effective structure
06:51
and you can start at any level for some
06:54
clients listening to this for some
06:55
people listening to this
06:56
one llc or two llc’s one for your first
06:59
piece of real estate and one for your
07:00
operating company is the way we’re going
07:02
to start
07:02
for others of you you probably need the
07:04
entire structure right now
07:06
because you have significant assets um
07:08
so
07:09
uh ferris we’ll just stop there and and
07:11
and open it up to questions
07:14
yeah great now i definitely appreciate
07:15
that guys it was uh
07:17
super informative super crystal clear up
07:19
until the very end and then
07:20
you know that’s where i got it yeah yeah
07:22
i have more questions so maybe i’ll
07:23
i’m gonna kick it off questions that i
07:24
was writing okay so i’m just gonna maybe
07:27
rapid fire a few of these right in the
07:29
letter like i know people probably have
07:30
a million questions so if you have
07:31
questions
07:32
please feel free to uh write them into
07:33
the chat my first question i think this
07:36
is for you brian whenever you talked
07:37
about the k1s trickling in
07:38
right all the llc’s trickle into the
07:41
amlp
07:42
but that’s no different than they
07:44
trickle into a person directly right
07:45
today it’s still the same
07:47
the same number of k-1s quote-unquote
07:49
right or that i missed something there
07:51
well still gonna you’re still gonna
07:52
they’re just gonna when you’re following
07:54
your taxes you’re not filing
07:55
15 different tax returns on each
07:57
individual llc
07:58
so it cleans it up because they’re going
08:00
to pass a pass-through entity so then
08:02
they’re going to pass through into that
08:03
management that amlp
08:05
correct so you’re just going to be
08:05
filing one tax return and then it’s
08:08
one one added page on that that you’re
08:10
going get it but the 15
08:12
are still having to be filed with the
08:13
amlp then the mlp is issuing out one
08:15
k1 i’m guessing well let me i think i
08:17
see the misunderstanding
08:19
if you’re investing in somebody else’s
08:20
llc and it’s a multi-member llc
08:23
then you’ve got to wait for that k1 for
08:25
sure but if you have your own llc and
08:28
it’s wholly owned and
08:29
and your holding company is the only
08:30
member then that llc does not have its
08:33
own tax return and is not going to need
08:35
a k1
08:37
correct so so in that case in brian’s
08:39
example
08:40
if you had 15 piece projects and 15
08:42
llc’s but they were all single members
08:47
okay then then one tax return got it
08:50
okay perfect that makes sense
08:51
then the next question i had was i think
08:53
this is kind of brian’s
08:54
part of the presentation but about you
08:56
know explain the difference to people
08:58
i i’ve learned this from previous kind
09:01
of
09:01
things i’ve learned but explain to them
09:03
really the difference between ownership
09:04
versus control right i think that’s
09:06
probably something important for people
09:07
to understand
09:08
what it means to not have control but
09:10
have ownership or vice versa right yeah
09:12
it’s you want the beneficial use and
09:14
enjoyment of your assets i want to be
09:16
able to use my boat i want to be able to
09:17
use my
09:18
car i want to be able to go and use my
09:20
rental like rent out my properties or
09:22
use my vacation properties
09:23
i just don’t want to own them in my own
09:25
personal name i want to
09:27
own them in an llc i want to have my
09:30
trust on them so that you want to
09:32
separate out the personal liability from
09:34
yourself and then put those assets into
09:37
another ownership
09:38
that’s not just you you know ferris it’s
09:41
not me brian it’s not doug
09:42
so you want the ownership of it to be in
09:44
a business entity structure
09:46
wrapped around a nice trust bubble but
09:49
you still want to benefit and get the
09:50
use and enjoyment out of them
09:53
and then what about the control piece
09:54
then you’re still controlling your
09:57
assets
09:57
you still get to invest how you want to
10:00
invest because you’re managing those
10:01
llc’s
10:03
yeah okay um and then let me ask you
10:06
this question
10:07
how do you guys suggest this working in
10:09
the case where you do have a partner you
10:11
know imagine you have an entity and it
10:13
owns multiple other entities you have a
10:14
partner at this level right
10:15
so does each partner set up their own
10:17
amlp right they’re getting a k1 and it’s
10:20
really just protecting the partner at
10:21
that level
10:22
correct or is there a better structure
10:24
and then maybe in tandem to that it’s
10:26
kind of maybe a dual question
10:28
how do you mitigate risk of one llc
10:31
essentially breaking into another llc
10:33
from a risk perspective right
10:36
so you’re you’re saying in the sense on
10:38
if you’re investing
10:39
like if you own a joint llc like
10:42
you know like if you’re a partner is
10:44
that what you’re yeah let’s say you know
10:46
let’s say me and you have a law firm
10:48
together right and we also have
10:50
you know so and so company a subsidiary
10:52
subsidiary b subsidiary
10:54
c right and so in that world the two
10:57
questions are how should
10:58
we set up our asset protection and the
11:01
other part of that too is how do i
11:02
ensure subsidiary a
11:04
is protected from you know something
11:06
happening there and coming in
11:07
and impacting subsidiary b right if our
11:10
because if you really think about it
11:12
the the barriers we’re setting up are
11:14
are way up here right
11:15
with kind of the amlp as well as the the
11:18
trust that we talked about at the end
11:20
but how are you protecting it at a lower
11:21
level gotcha
11:24
so i would say like one when you’re
11:25
going into joint ventures we’re
11:27
protecting your interests
11:28
you know then we can also protect your
11:30
partner’s interests individually
11:32
but you don’t want your partner’s life
11:35
mess-ups to bleed into your ownership
11:37
interest or vice versa
11:39
so we’re protecting your individual
11:41
interests and whatever
11:42
partnership that you’re doing if we own
11:44
the law firm jointly or if you own a
11:46
piece of real estate
11:47
jointly if you’re syndicating we would
11:49
take you you know on the passive side of
11:51
it we would take your ownership shares
11:52
of your syndication
11:54
put them into the you know asset
11:55
management partnership side of it
11:57
because it’s a passive ownership
11:58
and i would add another layer and so
12:00
what we’re doing is protecting
12:01
your individual ownership system you
12:04
know
12:05
shares yeah the other thing i would add
12:06
a parasite it’s a great question because
12:08
i think there’s two questions
12:10
there you know one is is do we set up
12:12
two separate plans for you and your
12:14
partner the answer is absolutely
12:15
you should have your own asset
12:16
protection plan your partner should have
12:18
your their own asset protection plan
12:19
including and include up to and
12:21
including the bridge trust if your
12:23
assets
12:24
deem it worthwhile from the lower level
12:27
where you’re doing a bunch of projects
12:28
together
12:29
and you don’t want one project to infect
12:31
another project
12:32
that’s where we want to make sure we do
12:34
use separate llc’s
12:36
underneath so they are disregarded for
12:39
tax purposes
12:40
and and um they can be disregarded for
12:44
asset protection purposes but they are
12:45
not automatically disregarded by any
12:47
stretch
12:48
for asset protection purposes it’s very
12:50
hard for a creditor to sue an llc
12:54
sue the holding company the llc and then
12:56
go back down
12:57
to another llc at another level so as
12:59
long as you have your systems
13:01
set up and you respect those separate
13:03
llcs
13:04
that’s usually enough however there are
13:07
some ventures that are simply too risky
13:09
um you know it’s risky you’re doing
13:10
something that is is just
13:12
you know has its own set of risks that
13:15
we might want to peel off and do in a
13:17
completely separate even holding company
13:19
with a separate llc and i do that all
13:22
the time especially with the real estate
13:23
people
13:24
sometimes we have multiple structures
13:26
multiple holding companies to represent
13:27
either different partnerships with
13:29
different investment groups
13:30
or different partners or just different
13:33
risk categories
13:34
you know we have some low risk things
13:35
that will put in one holding company
13:36
with multiple llc’s
13:38
and then higher risk things that will
13:40
put in a separate holding company with
13:42
separate llcs so did that answer the
13:45
question was that what you were asking
13:46
absolutely i think they definitely gave
13:47
me kind of the pieces that i was curious
13:49
about
13:49
okay and then there’s a good follow-up
13:51
question in the queue
13:52
that just came up based off of that um
13:55
off of okay the uh a large audience
13:57
group of this is mostly syndicators and
13:59
baes apartments
14:01
in a gplp structure so the typically
14:03
there’s going to be three
14:04
gps and 50 you know a lot of lps
14:08
so the apartment’s a high-risk asset
14:11
what’s the best way to set up the
14:13
structures that protects
14:15
one gp but not the partners simply
14:17
because the other partners won’t want to
14:19
use your service
14:21
yeah okay well so so uh you
14:24
it’s best if all the partners agree and
14:26
do it together and i’ll tell you why
14:28
because if one partner does it and
14:30
things go wrong it’s the other partners
14:32
that are going to be left holding the
14:33
bag and that usually does bad things for
14:35
everybody
14:36
however if you have partners that are
14:38
just not going to do it you can do it
14:39
yourself
14:40
first of all you should not be a direct
14:42
member of the general partnership you
14:43
should have a separate llc that
14:45
serves as your member of the gp share
14:48
that llc in turn will be held by your
14:50
holding company
14:50
and your bridge trust um your partner
14:52
should also do the same thing but if
14:54
they’re not gonna
14:55
you know you doesn’t mean you shouldn’t
14:57
go ahead and
14:58
um and protect your own assets and
15:00
protect yourself
15:02
and then i’ll jump in on another one
15:03
that just came up about
15:05
you know the number of doors per llc
15:07
with smaller assets and duplex is
15:09
i would generally say we don’t go by you
15:11
know really the number of doors
15:13
we go by what we’re trying to protect
15:16
you know like
15:16
what what’s the equity in it and so you
15:19
know
15:20
rule of thumb we don’t like to put more
15:22
than one million
15:23
you know worth of equity into one llc um
15:26
so we start splitting it up
15:27
there and you know especially because in
15:29
states like california it’s very very
15:30
hard to get you know one or two assets
15:32
under a million dollars
15:34
um but then you start going into other
15:35
states you know it it gets easier
15:37
um so we look at the equity that we’re
15:39
trying to protect and then the states so
15:41
we’re not going to be
15:42
you really shouldn’t be mixing assets in
15:44
different states so for example if you
15:45
have
15:46
you know a texas property and a florida
15:48
property and ohio property
15:49
those are all going to be different
15:50
jurisdictions where different lawsuits
15:52
come in so you don’t want to be missing
15:53
mixing assets into one llc there so you
15:56
would split up
15:57
those assets into separate llcs
16:01
god and then maybe a quick question of
16:03
kind of the same thing though
16:04
what are your guys’s thoughts on hiding
16:07
the assets right
16:08
and is that ultimately what we’re trying
16:09
to accomplish with these structures or
16:10
is that a whole nother
16:12
thing up on itself yeah that so that i’m
16:16
really glad you asked that because
16:17
people really have some confusion over
16:19
secrecy
16:20
um and there’s a lot of people on the
16:21
internet talking about uh
16:23
all about secrecy you want to do all
16:26
these things in wyoming and make sure
16:27
nobody can
16:28
figure out where the assets are here’s
16:30
why that doesn’t work
16:32
when you get into a lawsuit at some
16:34
point they are going to have the right
16:36
to examine you um and ask you
16:39
questions about how you hold your assets
16:41
so if your plan is secrecy and you have
16:43
a bunch of wyoming llc set up and
16:45
you don’t want to tell anybody you own
16:46
them you’re one day could be under oath
16:49
sitting there having to lie in front of
16:51
a judge
16:53
about not owning these assets that’s the
16:55
quickest way to get yourself put into
16:57
jail any asset protection structure that
16:59
requires you to lie for it to work is a
17:01
very very bad plan
17:05
oh no sorry i didn’t mean to cut you off
17:06
well i was going to say i’m all for a
17:07
little bit of privacy so we can set it
17:09
up and we can use the wyoming llc as the
17:11
general partner of the asset management
17:13
limited partnership
17:14
we can have privacy but you’ve got to
17:17
know at the end of the day
17:18
privacy is not what protects assets
17:20
asset protection works because we have
17:22
the law on our side we have the legal
17:24
structure
17:25
set up and if we have to we have the
17:27
cook islands law on our side
17:29
which we know is going to come down in
17:30
our favor so
17:32
um uh privacy is okay secrecy or hiding
17:35
assets
17:36
at the end of the day doesn’t work yes
17:40
it is from you know the trial side of it
17:42
because that’s where i come in on it is
17:44
there’s the discovery process
17:46
and like doug was hitting on that is
17:48
just a requirement that you go through
17:49
of passing along information so
17:52
anonymity
17:53
works it’s nice but it’s just
17:54
theoretical until you’re actually in a
17:56
lawsuit at a certain point you’re going
17:57
to have to stop and say hi i’m brian
17:59
bradley i own that asset
18:00
and so your question is more about it
18:02
helps you avoid
18:03
getting into the courtroom but once
18:05
you’re in there it doesn’t do much right
18:07
that’s kind of that it
18:08
really doesn’t even avoid you getting an
18:09
anonymity into the courtroom because a
18:11
lawsuit is going to get filed and then
18:13
well it’s more so someone knowing that
18:15
you know if they don’t know what you own
18:16
they’re less likely to think that
18:18
they’re gonna
18:18
you know make a big payout off of it
18:20
right i think that was kind of
18:22
i mean i i don’t i don’t think that that
18:25
really works because if you’re
18:27
getting injured on a property i don’t
18:29
care who i can’t find out that owns it
18:31
i’m just going to
18:31
end up following the lawsuit against
18:33
whatever entity i find is owning it at
18:35
that moment
18:36
and then the process is just going to
18:37
work itself out through discovery so
18:39
eventually i don’t care like what the
18:40
anonymity llc wyoming anna mini llc
18:44
or land trust does eventually whoever
18:47
is on that piece of paper is going to
18:48
have to show up and defend themselves
18:51
okay great perfect um
19:01
uh this is robert um
19:05
so i have a question um
19:08
uh robert you want to go ahead and type
19:10
your question into the comments below
19:12
and then we’re gonna
19:12
we’re gonna answer them in order for you
19:14
okay no problem
19:16
awesome man all right let’s keep going
19:19
so uh the next question came up is uh in
19:21
a hybrid during a lawsuit
19:22
you send it offshore after the lawsuit
19:24
is over how do you regain control
19:26
yeah that’s a great question so um if we
19:29
have to go
19:30
to the offshore we have to cross the
19:31
bridge and go offshore during lawsuit
19:34
we can do that and we can do it legally
19:35
because we’ve set up the bridge trust
19:37
prior to the lawsuit
19:38
this is what brian was saying you really
19:40
want your asset protection done before
19:42
you have the problem
19:43
then after we have no problem using it
19:45
crossing the bridge and moving the
19:47
assets
19:48
once the lawsuit is over then you can
19:50
re-cross the bridge you can bring the
19:51
assets
19:52
back you can regain control of the trust
19:54
that’s all possible
19:55
it’s not a one-way street you don’t have
19:57
to go over there and then from that
19:58
point on uh you’re only offshore
20:01
you can always bring it back i can tell
20:03
you from experience that
20:04
about 60 percent of the people do want
20:06
to bring it back once they’ve had
20:07
it offshore um 40 of them really like it
20:10
offshore once they’ve
20:11
gotten used to it and they keep it
20:13
offshore but it just depends
20:15
the other thing to know is that going
20:16
offshore is a last resort
20:19
the structure in and of itself is
20:20
extremely strong so i have clients call
20:22
me all the time and they’ll say hey i
20:23
just got this lawsuit doug we need to
20:25
trigger the trust
20:26
well the answer is maybe we do but let’s
20:29
see
20:29
let’s look at it and often we’re waiting
20:31
well into the lawsuit well into probably
20:34
up you know when the trial is scheduled
20:36
before we’re actually going to trigger
20:37
the trust
20:38
because the reality is most the time
20:40
they get settled or they get dropped
20:42
so triggering the trust is the last
20:43
result and only done when it’s
20:45
absolutely necessary
20:46
and part of that is just because the
20:48
system itself is so strong that we’re
20:50
not really in the game of trying to hide
20:52
assets through animation pretend we
20:53
don’t own something we’re perfectly fine
20:56
you know once we get contacted that
20:58
you’re being sued and you have your
20:59
defense team coming in and saying hey
21:01
this is the assets we have we are not
21:03
hiding the ball we have the
21:04
you know migration clause we have the
21:06
bridge we can cross we will declare
21:08
uh you know status of duress even if you
21:10
did get that big judgment
21:12
sorry you’re not going to get anything
21:14
just go away or we’ll give you a penny
21:15
on the dollar to go away
21:17
and that’s where generally the suits
21:19
just disappear
21:23
all right so next question um okay first
21:26
i want to i want to go back just real
21:27
quickly to
21:28
like an early question um like jim
21:31
workman put it in there it’s a
21:32
it’s kind of a one i think it’s like a
21:35
little
21:37
early but we want to we want to touch on
21:38
it just was can a husband and wife
21:40
create a multi-member llc
21:42
right can a husband and wife create a
21:44
multi-member llc and how does that
21:45
affect
21:46
uh what you were talking about before
21:48
being a disregarded entity
21:50
uh yeah a husband and wife can
21:51
absolutely be the two members of an
21:53
entity
21:53
um and it can it can and it can be
21:56
a multi-membranally or that can be a
21:59
disregarded entity because husband and
22:01
wife
22:01
can also be treated as one taxpayer so
22:03
often at the holding company level we
22:05
will use husband and wife as the two
22:07
members and then
22:08
the bridge trust as the third member
22:10
that creates that multi-member if we
22:12
have kids we’ll use them as well
22:14
if you want a multi-member husband and
22:16
wife or fine if you don’t want a
22:17
multi-member
22:18
husband wife are still fine you get to
22:20
elect at that point that’s a great
22:21
question
22:23
do you guys use llc’s for a majority of
22:26
your entity structures or is there any
22:29
advantage to llc over s corp over c corp
22:31
other than tax advantages and tax
22:33
implications is there any
22:35
any legality any anything that i would
22:38
that would make me sway one way or the
22:40
other for an llc or s corporate c
22:42
corp etc yeah that’s a good question so
22:44
you know
22:45
the llc came after the s corp because it
22:47
cleaned up some of the issues when it
22:48
came to litigation
22:50
um and damages because there’s no shares
22:53
so in s corp
22:54
you have shares that can be collected on
22:55
so when it comes to from an asset
22:57
protection standpoint
22:58
just like a corporation you know that’s
23:00
not good
23:01
um it’s good for taxes but when you’re
23:05
straddling that fence that’s why you
23:06
when you talk to your cpa they generally
23:07
say oh hey create an s corp because it’s
23:09
going to give you a tax benefit
23:10
but then when you come and talk to us
23:12
it’s like okay you know we’re going to
23:13
clean this up a little bit but
23:15
the llc is a is a better entity to hold
23:18
your real estate or your dangerous
23:20
assets in
23:21
because one there’s no shares to collect
23:22
on plus they have some charging order
23:24
protection
23:25
so you have a little bit at that base
23:26
level layer a stronger entity than just
23:28
having an s
23:29
corp alone and then if we ever did have
23:31
to pull the trigger and cross the bridge
23:33
we can still protect those shares of the
23:35
s corp it’s just a little bit harder
23:37
from the protection standpoint
23:39
yeah the way i would set it up are the
23:42
way i do set it up a lot of times
23:43
the assets are held by llcs held by the
23:46
holding company
23:47
and then we will still have an s corp as
23:49
a management company
23:50
and then that you can run all your tax
23:51
benefits through there and it can
23:53
but it doesn’t hold assets i would i
23:55
would not encourage you to hold assets
23:57
in an s corp
23:58
the other thing is there’s restrictions
23:59
on ownership of s corp shares
24:01
makes it a lot harder to protect because
24:03
you can’t put those s-corp shares in the
24:05
holding company they’re
24:07
they’re restricted they can’t go in
24:08
there um they can go in the bridge trust
24:11
but when i come when i get a client and
24:14
they’ve already got a bunch of assets in
24:15
s-corps
24:16
um it’s kind of a mess because you end
24:18
up with a lot of tax issues trying to
24:19
get them out
24:20
we have to deal with them if you’re
24:22
starting from scratch the rule should be
24:24
assets go into llcs that in turn are in
24:26
the holding company and an s corp should
24:28
be just one s corp
24:30
as your management company that’s it
24:32
this is a really good one
24:33
can an irrevocable trust serve the same
24:35
purpose as a bridge trust
24:38
no so when we’re breaking down you know
24:40
the difference of domestic asset
24:42
protection trust
24:43
um one the missing component of that is
24:45
you have no full offshore component to
24:47
it so you’re already now not going to be
24:49
able to do anything with the full faith
24:50
and credit clause of the constitution
24:52
um so you’re not going to be able to
24:53
have any really true judgment protection
24:56
and we’re already seeing tons of case
24:58
law coming through
25:00
that are starting to pierce you know the
25:02
domestic asset protection trust
25:04
um strength so even other large firms
25:07
that deal with
25:08
you know higher end asset protection are
25:09
still you know saying like if you really
25:11
want strong protection you have to add
25:13
something offshore
25:14
to protect those assets um and then the
25:16
other part of it is just
25:19
an irrevocable trust you know if it’s
25:20
not a grantor trust like
25:22
you know the bridge trust is a grantor
25:23
trust so it allows you to continue
25:25
investing how you’re investing
25:26
other irrevocable trusts like our
25:28
irrevocable living trust
25:30
isn’t really designed for asset
25:31
protection purposes but it then is going
25:33
to limit how you can invest and you know
25:35
what you can’t invest in
25:37
and other lenders you know might look
25:39
unfavorable upon that
25:41
um so there’s a big distinction between
25:43
a grantor trust
25:44
an irrevocable trust plus a bridge trust
25:47
that’s an irrevocable grantor trust so
25:49
not all trusts are the same but the
25:51
irrevocable trust
25:53
has been weakened and it does limit how
25:55
you invest
25:59
and there’s another question that came
26:01
in about recapping the layers
26:03
for everyone on this call it will be
26:04
recorded we will email it out we will
26:06
post it out so
26:08
i guess i’m going to skip over that
26:09
question since probably better to watch
26:11
that in depth versus kind of a rushed
26:12
re-explanation of that another question
26:15
is is there a limit
26:16
or recommendation on how many llc’s
26:18
should be under a holding company
26:20
uh that’s a great question yeah i mean
26:22
um yes theoretically
26:24
at some point you might be overloading a
26:26
single holding company if you just have
26:28
a ton of assets
26:29
um i mean you know it’s pretty high
26:31
limit
26:32
uh several million dollars still very
26:34
comfortable in a single manage a single
26:36
holding company um
26:38
but yeah you can get to the point where
26:40
uh it just makes sense to have
26:42
yet another holding company um it would
26:44
be asset value but it’d also be risk
26:47
profile
26:47
that’s what we were talking about before
26:49
so you just say you have a project and
26:52
it’s just
26:52
it’s it’s just by the nature of the
26:54
project it’s extremely risky
26:56
that might be something you want to peel
26:58
off into not just its own llc but its
27:00
own holding company
27:01
um so the answer is yes there is a limit
27:04
um and it would just be individual
27:06
but it you won’t hit that right away and
27:08
you certainly want to start with one
27:10
holding company
27:11
got it so our next question i’m going to
27:14
maybe change the question itself is how
27:15
much
27:15
does it cost to set up a bridge trust um
27:18
but maybe i’m going to change the
27:19
question around
27:20
and hypothetically and if you guys i
27:22
don’t have to answer it but if you have
27:23
a person let’s just say that they have
27:25
five different gp interests right just
27:27
to throw a number out
27:29
and that’s it right how much does it
27:30
cost to take that person from having
27:32
individual policies that he has today to
27:35
kind of reconfiguring it
27:36
to follow the model with the almp with
27:39
the bridge trust
27:40
all all inclusive costs like what you
27:42
know and ballpark i don’t need specific
27:43
but i think that will help people here
27:45
just get a sense of hey is it something
27:46
that they can do now or not right
27:48
right so when we look at a client we we
27:51
look at the whole picture
27:52
and we’re gonna we’re gonna prescribe
27:54
what what they need at the moment
27:56
so llc and holding company that could be
27:59
very reasonable that could cost you
28:00
around 7 500 to get just
28:02
an llc and a holding company set up
28:06
once you add the asset protection trust
28:08
the bridge trust that’s
28:09
a higher level cost the package for the
28:12
bridge trust
28:13
the holding company and one limited
28:15
liability company is twenty nine
28:16
thousand dollars
28:17
um and there’s an annual fee of twenty
28:19
one hundred dollars with that
28:21
not everybody’s gonna need bridge trust
28:23
and then there’s another type of trust
28:25
that is
28:25
very similar to the bridge trust but
28:27
that we use for
28:28
clients that have less than a million
28:30
dollars so if you have less than a
28:32
million dollars of total invested assets
28:34
or protectable assets
28:36
um we’re going to use something called a
28:37
quantum living trust so it’s very
28:39
similar to a bridge trust it’s just not
28:41
individually registered offshore
28:43
it’s not quite as good but
28:46
to get started it’s the right tool and
28:48
then it can be upgraded to a bridge
28:50
trust
28:50
so that might cost has that half that
28:52
might cost around fourteen thousand
28:54
dollars
28:54
um so the answer to the question is it
28:56
just depends on what you have and what
28:58
you need
28:58
but that’s the range that’s the high and
29:00
the level you know the question i think
29:02
that gives people and really understand
29:04
you know kind of where there are what
29:05
fits them what not yeah
29:07
exactly and we’re going to fit it to
29:08
what you need i mean some people call
29:10
and they
29:10
really just need an llc to start and you
29:12
know we’ll do it i mean
29:14
you know just to get you going and get
29:16
you with the right uh
29:17
the right advice from the beginning
29:19
because we know you’re gonna grow
29:21
perfect speaking of that one llc to
29:23
start is there any legal protection from
29:26
a single member versus a multi-member
29:28
llc
29:30
yeah sure i mean we always want a
29:31
multi-member policy if you’re only going
29:33
to have one llc
29:34
you definitely would want a multi-member
29:36
llc because now we
29:37
have some charging order protection as
29:40
brian said we’re much less likely for
29:41
that llc to get disregarded by a judge
29:44
um of course it needs a tax return but
29:46
that’s fine there’s nothing wrong with
29:48
the tax return
29:49
25 tax returns there’s something wrong
29:51
with you you you’ve made your life
29:53
complicated but one tax return you want
29:55
actually
29:56
um so you know the answer is is yeah if
29:59
if you’re really just starting out
30:00
you’ve got sixty thousand dollars you’re
30:01
gonna go into your first
30:02
project uh maybe just one multi-member
30:05
llc is all you need to start
30:08
sure there was a good question i saw pop
30:10
up on insurance
30:12
yeah i was gonna ask that question so
30:13
i’ll read it so what role can
30:15
if it does insurance play a role in
30:17
asset protection more specifically
30:18
umbrella insurance policies and in-house
30:20
captive insurance
30:22
yeah and so i see a lot of clients that
30:23
have a false sense of security you know
30:25
whether like you know
30:26
umbrella policy or not regular insurance
30:28
or not thinking that they’re
30:30
you know if they’re going to get sued
30:31
they can just slowly rely on their
30:33
insurance to cover them and that’s just
30:34
it just isn’t the case you know like
30:36
it’s not how the insurance business has
30:38
a business makes money it’s not how
30:39
insurance law
30:40
works once you’re in a lawsuit and the
30:42
legal team takes over
30:43
um we do recommend like i do recommend
30:46
that every single person get insurance
30:48
and have as much as you can afford
30:50
but they also need to read the insurance
30:52
policy you know like know your fine
30:53
print
30:54
you know understand what’s not covered
30:56
in the you know what your actual claim
30:57
limit is
30:58
and so a good place to start is just to
31:00
actually first understand that you know
31:01
like real estate is going to be heavily
31:03
litigated area law
31:05
and then also just understand that
31:07
insurance companies don’t cover you for
31:09
fraud
31:09
punitive damages you know or intentional
31:12
wrongdoings they don’t pay claims that
31:14
are going to be
31:14
what’s called the direct result of
31:16
unlawful acts and when you’re going to
31:17
get sued and i’m going to sue you for
31:19
for example you know there’s going to be
31:21
one of those intentional wrongdoing
31:22
elements in there because i’m going to
31:24
punch through that insurance
31:25
you know i may want to you know like get
31:27
a settlement from the insurance but on
31:29
large claims
31:30
and i know you have a lot of assets i’m
31:31
going to try to get to you
31:33
and so what the listeners need to
31:34
understand is that you know the basic
31:36
concept of insurance defense you know
31:37
like
31:38
you can be sued and from the very first
31:40
statement or a communication that you
31:42
make an email that you send out
31:44
that’s going to be put into you know the
31:46
lawsuit and then a judge is going to
31:48
look at that email and say well that’s a
31:49
statement statements are intentional
31:51
acts
31:51
this is now going to be considered by
31:54
your insurance company
31:55
intentional acts and so they’re going to
31:56
sit there and say well we’re not going
31:58
to cover you in a case that’s
32:00
potentially where you did some
32:01
intentional wrongdoing if you don’t like
32:02
it go ahead and sue us anyways
32:04
and so that’s how this game is played
32:06
out in court
32:09
yeah buy insurance don’t don’t don’t
32:11
count on it 100
32:13
it’s not it’s not going to work always
32:14
the way advertised
32:17
all right so i i want to respect all of
32:19
y’all’s times we’ll probably do four
32:20
more questions and then we’ll wrap up
32:22
about 8 40
32:23
central and then for those and i would
32:25
love for you guys to stay on i don’t
32:26
know what your schedule is like we
32:27
typically do breakouts
32:28
where we will randomly distribute the
32:30
group into kind of small groups of seven
32:32
eight people
32:33
and people gonna have more of one-on-one
32:34
so you know we will do that we always do
32:36
that and so left you guys stick around
32:37
but otherwise
32:38
i’m gonna ask these next four questions
32:39
and then we can call out a wrap on that
32:42
um so first question is uh i invest out
32:45
of state and the properties are held in
32:46
jointly owned llc’s
32:48
properties are held by wyoming llc is
32:50
this adequate
32:54
um how many are the pro i would i would
32:56
say it’s limited
32:58
right now like you at least need to i
32:59
would recommend having i don’t know what
33:01
the equity is
33:02
so like if you have you know four
33:04
properties and each one’s worth a
33:05
million dollars like or an apartment
33:06
complex i’d have you know like okay we
33:08
have to figure out what the equity part
33:09
of it is
33:10
but i would at least think that you
33:11
should add a second layer like either
33:12
get a second llc to operate out of
33:14
or add a management company you know
33:18
from there yeah and it’s the question
33:20
that that it’s wyoming and you’re using
33:23
um it in for assets that are not in
33:25
wyoming it’s okay
33:26
you haven’t done anything wrong you’re
33:28
just you’re not really getting any
33:29
benefits for
33:30
the llc being in wyoming because when
33:32
they sue you they’re going to sue in the
33:33
state that the property’s in
33:34
so it’s okay that you use the ym llc but
33:38
you didn’t buy yourself anything
33:40
all right and i think we answered the
33:42
question about irrevocable trust serve
33:44
the same purpose as a bridge trust
33:45
so yeah that one and so the next
33:48
question is
33:49
in terms of what you mentioned regarding
33:50
rockable trust is that equally
33:52
applicable to dsts
33:53
same drawbacks so the delaware statutory
33:56
trust is really a california thing
33:59
that we use for people who hear about
34:01
series llc’s
34:03
and they like the child on you know
34:05
series that break down each acid in the
34:06
little child series
34:08
underneath the you know the big parent
34:09
company um but they’re
34:11
you’re not getting any extra protection
34:12
out of it you’re what you’re doing is
34:14
just
34:15
doing a tax planning because you don’t
34:18
want to pay the 700
34:19
annual tax fee per llc so you’re not
34:21
getting any extra protection plus you
34:23
get a guy to get a side operating
34:24
company
34:25
because you can’t operate out of a dst
34:27
to hold real estate
34:28
otherwise you’re going to lose the irs
34:31
tax definition of being a business trust
34:33
and then you’re completely opening up
34:34
the door for a lot for liability
34:40
all right next question can you give me
34:42
an example of what you might consider
34:43
a risky asset anything with a door a
34:47
lock a key
34:48
an engine a propeller uh anything that
34:51
can hurt
34:51
anybody definitely every piece of real
34:53
estate that you own and every every
34:54
vehicle is something that needs
34:55
insurance yeah if you need insurance on
34:57
it
34:58
yeah yeah if they even sell insurance
35:00
for it it’s a risky asset
35:03
you know a business the businesses are
35:05
risky assets
35:07
all of those things the only thing that
35:08
that we wouldn’t consider a risky asset
35:10
is is an investment
35:12
apple stock is not a risky asset
35:14
nobody’s going to slip on your statement
35:16
and sue the owner of the
35:17
of the account so um but anything
35:20
physical is a risky asset it’s a great
35:21
really good question
35:25
all righty and then last but not least
35:27
uh
35:28
can you use a series llc’s for holding
35:30
property is that a good lc structure to
35:32
use
35:32
not sure if it’s available nationwide or
35:34
not i know you guys kind of touched on
35:35
it but maybe if you want to
35:37
yeah we touched on it and i’ll just
35:38
break it down so i’m reading the
35:40
question right now not sure if it’s
35:40
available nationwide no it’s not not
35:42
very many states have
35:44
series llc structures so if you don’t
35:46
live in a series
35:47
serious series llc friendly state
35:50
and the asset that you’re owning is not
35:52
in a series llc friendly state
35:55
i wouldn’t recommend using them because
35:57
then what happens when you get sued
35:58
they’re not going to be recognized so it
36:01
just depends on where the asset lies and
36:03
where your residency is
36:04
and then we just look at it from there
36:06
and i’ll give you just a quickest story
36:08
i had a california guy calling me he had
36:09
a series llc he didn’t in another state
36:12
he put it in california bought three
36:14
separate
36:15
million dollar properties ended up with
36:17
a mold claim that was going to be five
36:18
million went to his attorney and said
36:20
hey i have serious llc’s
36:21
his attorney said yeah those don’t work
36:23
here irrelevant
36:24
and all his llc’s were considered one
36:26
llc so all three million
36:28
in property value was was subject to
36:30
that lawsuit so
36:31
the answer is don’t use them unless
36:32
you’re in the state and the properties
36:34
in the state like brian said
36:36
all right and before we wrap i’m gonna
36:38
ask you guys one question that wasn’t
36:39
asked but
36:40
you should maybe think of it most
36:41
interesting story you guys have to share
36:43
let’s put it that way oh geez
36:46
you guys are probably seen some
36:47
interesting things done some interesting
36:49
things
36:49
well okay so i’m going to be going this
36:51
way the the thing that you’re thinking
36:53
about that’s going to cause
36:55
the liability 80 of the time is not
36:58
going to be the thing that you
37:00
call us about that did cause the
37:02
liability
37:03
um because the the thing that um is
37:05
going to happen
37:06
is just not on your radar right now it’s
37:08
not happening and so when you said
37:10
interesting story i’m thinking about
37:11
all sorts of crazy stories that i hear
37:13
all the time relating to
37:15
um things that are um i mean i don’t
37:18
even really want to repeat
37:20
some of them because they’re they’re
37:21
they’re crazy things that you think
37:23
wow um that’s just beyond the pale
37:26
but i can tell you the biggest issues
37:28
are are interpersonal issues
37:29
partnership issues um things that
37:33
that really it’s not what you think is
37:35
going to happen it’s not just your
37:36
tenant that
37:37
is going to have a problem it’s a
37:39
partner that you dealt with or it’s
37:41
somebody that you um that you work
37:43
closely with or
37:44
it’s it’s it’s it’s your personal
37:46
relationships
37:47
um so i’ll just kind of leave it at that
37:50
yeah and that’s kind of you know a good
37:52
one there’s a lot of crazy lawsuits but
37:54
um it’s always the ones that white
37:56
people out where you don’t know what you
37:58
don’t know
37:59
you know you didn’t know what you didn’t
38:00
know and so you can’t protect yourself
38:02
from that
38:02
you know if you don’t plan ahead and so
38:04
i think that’s what this is really about
38:06
it’s just getting the system
38:07
no matter what life hiccups come your
38:09
way but you know like there’s doctors
38:10
who
38:11
you know make you you’re a surgeon you
38:13
make good money you’re also investing
38:15
and the next thing you know you make an
38:16
artery or something and then you got a
38:18
five million dollar
38:19
claim and you only have a million dollar
38:20
you know coverage which most doctors
38:22
carry
38:23
um now what you know and so without the
38:26
system you’re going to get wiped out and
38:27
lose your practice where people don’t
38:28
realize you own your own practice
38:30
maybe your male practice is uh you know
38:33
not that big of an issue but
38:35
your business is and so you got to
38:37
realize where your liability comes from
38:38
it may not just be what you’re doing at
38:40
the moment in a business but it could be
38:41
other areas or it could be not at the
38:43
investing part of it but your business
38:45
structure that you have
38:46
um so that’s where you need to really
38:48
you know talk to the professionals and
38:50
say like all right
38:50
let us look down and see where all your
38:52
risk and liability really is
38:54
um and let’s start talking through what
38:55
you don’t know that you don’t know
38:59
awesome guys well brian doug thank you
39:01
very much
39:02
definitely enjoyed it i know super
39:03
valuable information for me i’m sure
39:05
other people
39:06
it sounds like from the comments
39:07
definitely people got a lot of value
39:08
from it we will absolutely share out the
39:10
recording we’ll definitely share
39:11
doug and brian’s contact information as
39:13
well please reach out
39:14
if you guys have any questions what was
39:16
that one second yeah one second uh
39:18
do you guys happen to have a copy of
39:21
this presentation we hit the record
39:22
button about 15 minutes into it and yeah
39:25
absolutely this was phenomenal this was
39:26
absolutely awesome like we’re going to
39:28
get so many requests for this
39:29
yeah yeah we’ll send you a full copy of
39:31
the presentation and
39:32
and you can integrate into the recording
39:35
absolutely thank you so much for
39:36
showing up man this is great i did see a
39:38
question are you
39:39
are you in california um brian and i we
39:42
work in all 50 states
39:43
um most of what we do is is not
39:45
necessarily state specific
39:47
um and and then i have affiliate
39:49
attorneys in all all 50 states if we
39:51
ever do need local councils so
39:52
question is yes we can work with you and
39:54
if you’re yeah i was just writing that
39:56
into the chat because i wasn’t quite
39:58
someone wants to take you guys out to
39:59
coffee where would you where where is
40:01
home
40:01
oh i’m home in portland but i
40:04
practice a lot in california because i’m
40:06
i’m licensed all over this
40:08
country i represent clients a lot of
40:10
places but
40:11
um out in uh simi valley area is where i
40:15
go and visit my family
40:16
a lot so hey bro your contact
40:19
information up one more time
40:22
oh yeah sure
40:26
okay is it up and doug where are you
40:27
located so if you want to have coffee
40:29
with me in the summer you’re going to
40:30
have to come to the mountains of
40:31
colorado
40:32
because that’s where i spend the hot
40:34
summers and in the winter you can meet
40:36
me in scottsdale uh arizona
40:38
all right good to know i’ll definitely
40:41
look forward to hopefully meeting one of
40:42
you guys here soon so
40:43
yeah you guys ever make it down to texas
40:44
would love to see you guys definitely
40:46
come down to houston it’s the best part
40:47
of texas the restaurant oh good
40:49
i do come to houston i stopped for fuel
40:51
in uh in houston all the time when i fly
40:53
so
40:54
no please definitely would love to meet
40:56
you guys so thank you guys very much
40:58
awesome information i know people loved
41:00
it and with that said
41:01
pal you want to take us away and kind of
41:03
break it out to break out so as we like
41:04
to tell people
41:06
your network is your net worth and real
41:07
estate it’s really about who you know
41:09
who your team is from you know your
41:11
attorneys for help with asset protection
41:12
to your cpa
41:13
to everything in between so networking
41:15
is a critical part of this business and
41:17
you know something with you know you
41:18
never know who you’re going to meet
41:19
right
41:20
i met my partner at a networking event
41:21
and so it’s definitely a good way and
41:24
you like the breakouts because you kind
41:25
of get in a smaller environment you get
41:26
to know the other people in your group
41:27
so
41:28
stick around and we’ll go ahead and get
41:29
the breakouts going