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
