Speaker 1: Yeah, I think it's all the above, and it goes
into layers. Right at the end of the day, if
you're just starting out your greenhort investing or you don't
have much, that's where LLC's and insurance come into play.
You know, there's no point in building a taj mahal
before you're ready for a taj mahal. But we can
layer this stuff up so risky assets like you know,
easy one to think about is investment properties, right, real estate,
go directly into LLC, get some insurance on it. You're
gonna start growing, You're gonna start scaling.
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Speaker 3: Ever, and welcome you are listening to and watching the
financial survival networks.
Speaker 1: Carrie Lutz.
Speaker 3: Hey, you know, in this day and age, if you
have any assets, any wealth whatsoever, there are probably ten
people you don't even know about who are out to
try to grab them from you, grab your assets, take
your wealth and doing it fully legally through the legal system.
And Brian Bradley here, asset protection attorney, best selling author,
renowned educator in the legal and financial spheres. And well, Brian,
it's great to have you on here. So tell us
how big is the threat from all of these predators
out to take your money?
Speaker 1: Yeah? Absolutely, and thanks Carrie for having me on. And
there's going to be a lot of fun and we
have a lot of important things to go over. And
I think like myth busting a lot of misconceptions, you know,
breaking down the different rules of trust and how these
can protect you or not. And you know my book
that you mentioned Bulber exposed, I wrotic because there never
was kind of that horn book on what is the
world of ask protection and the different layers and how
do we go about creating it? So I decided, you
know what, I might just ride it myself and you know,
use it as more than an educational method for individuals
to go through like what's a bunch of bs? What's not?
How to start small, how to grow and scale into it?
And kind of like what you were talking about, it
was like if we if we set the scene one
acid protection right has to be done before you're getting sued,
right Like, It's not like something we can just jump into, like,
oh my god, my house burned down. How do I
get insurance from my house? And now to cover it?
The world of ascid protection is exactly the same. You know,
if you're already getting sued, you're too far down the
rabbit hole. These are things that you have to think
about to set up beforehand for them to work. Otherwise
we're going to fall down the rabbit hole of fraud
and fraudulent transfer. And to answer your question, right know,
like what happened is we live in this Tooe happy
Nevada nirvana. And to put some context to it, you know,
the legal systems drastically changed over the past forty years.
It's no longer about justice, but it's about creating divide
and redistributing your wealth from the haves, which is you know,
you and your listeners or the have nots. You know,
it's basically I think the term is Robinhood economics. And
in my book I go over in depth the historical
big changes that led us to this. But to quickly
summarize the problem, over the past forty years, things that
just didn't happen in the past, or that weren't allowed
to happen in the past, like contingency fee lawyers or
law from advertising their commonplace. And this created a cultural
shift of a predatory legal system that is no longer
about justice, but it's now about profits. And our legal
system is now run by trial lawyers and special interest
groups who don't want to discourage lawsuits but rather increase
the size of a victim class. And then this is
just creating a society of victims. We basically legislated out
accountability and responsibility for our own actions, and this makes
loss suit it's an easy get rich scheme, you know,
for those who want to try to play what my
colleague used to call the lawsuit lottery. And it's a
sad truth. But while attorneys right may stoke that fire
that drives the American litigation engine, without the public's endless
appetite for suing each other, there really wouldn't be a
litigation crisis. And when we take a macro economic global
look at everything, the big picture really is that on
top of our destroyed legal import system, we have a
global financial system that is structurally deep rooted issues we
have you know, government backed fiat currencies that are in question,
and this includes the US dollar and a monetary policy
that's really plain and simple, right, it's in our face
inflate or die. And then we got governments looking at
deep and accessible pools of money and financing meaning you know,
your money, your assets, along with financial repression, monetary economic manipulation.
And so this is the world where we're living in
and we're investing in, and so it makes it really
hard to what do we do to actually protect and
keep our assets. And that's where modern day as to
protection comes into play, and you know, utilizing asset protection trust.
Speaker 3: Well, like you said to Brian, the key is to
set up your financial fortress before you need it rather
than yeah yeah.
Speaker 1: And there's a beautiful case on that point. Actually it's
a twenty ten case. It's called sec versolo. And here's
a situation because I get this call all the time,
you know, and even though I talk about this and
say if you're already in a lawsuit, please it's too late, right,
but people need to understand. So this case really breaks
down the importance of this of this point. So the
court here found that the husband, mister Solo, made a
fraudulent transfer after the sec judgment was entered against him.
So what he did was he assigned assets over to
his wife's trust to protect them after the judgment. Right,
So this is just no weal, this is just straight
up fraud. Yeah, how mister Solo was held in contempt
of court? You know, but there's a big butt here.
One hundred percent of his assets were actually able to
be protected. And I always use this case to demonstrate
two things. Was the power of really strong trust, which
we'll get into, you know, probably a little bit. But
what was horrible here is that he was held in
content of court. But why what did he do wrong?
The second point of this case goes to the timing
of setting up an asset protection plan. Right, He transferred
the assets too late. He was late to the game.
He did this after the fact, after the lawsuit, after
the judgment, and that was fraudulent, and that allowed the
court to open up the door to hold him in
civil content of court. So his assets were protected, but
he opened up the door to be held in content
of court face potentially face imprisonment depending upon the state. Right, correct, Yeah,
so the big takeaway you know from that is just this,
all this stuff has to be set up beforehand, not
after the fact. Like just like even you know, like
we're talking about a little bit like medicaid planning, you
know for elders, is we got to do things before
that five years look back period. And so like whenever
we're trying to set up and preserve wealth or protect
ourselves from lawsuits, can't do it after the fact. It
always has to be set up early in beforehand.
Speaker 3: Okay, so family limited partnerships trusts LLCs. What is the
best vehicle to accomplish all this or is it all
the above?
Speaker 4: Yeah?
Speaker 1: I think it's all the above, And it goes into layers.
Right at the end of the day, if you're just
starting out your greenhort investing or you don't have much,
that's where LLCs and insurance come into play. You know,
there's no point in building at taj mahal before you're
ready for a taj mahal. But we can layer this
stuff up so risky assets, like you know, easy one
to think about is investment properties, right, real estate, go
directly into an LLC, get some insurance on it. You're
gonna start growing you're gonna start scaling. That's where management
companies come into play. We utilize limited partnerships because there's
just more that we can do with them, and limited
partnerships separate out managers from owners, so it's a higher
level of protection than just another LLC. And then as
you get to like that million dollar mark is generally
when we're going to talk about the world of trust.
And not all trusts are the same. And I think
that people get really confused on well, have my revocable
living trust my estate plan, I'm good to go and
protect it. And it's like, oh, sorry, you know, that's
the wrong type of trust. That's not going to protect you.
You need the revocable living trust for medical directors, financial directors,
beneficiaries of avoiding probate, but they're not going to protect
you from you know, creditors and lawsuits. They don't have
the teeth. And then that's where acid protection trusts come
into play.
Speaker 3: Okay, And how good are these asset protection trusts assuming
you set it up before and not after the fact.
Speaker 1: Yeah, So it really just comes down to one what
state are you in, because not all states recognize and
have some sort of like self settled spend thrift legislation,
like all acid protection trust are self settled. So if
you live an example, a state like California, well, California
does not recognize self settled spendthrift trust. They don't have
the le legislation. And then there's a case Kilker versus
Steelman came down in twenty twelve that said, we're tired
of all you California residents running off to another state
like Nevada and creating a Nevada ascid Protection Trust. You're
not a resident of that state. We're not going to
recognize it, and it doesn't work. And so you can't
just go and jump around jurisdictional shop and say, well,
I'm a resident of the state that doesn't have this,
but this state does, so I'm going to go use
that and bring this state laws to my state that
I'm a resident of. So we got to look at
what state that you're at. If you're a resident of
like Nevada, yeah, we can utilize the Nevada ascid Protection trusts.
How strong are they? Surprisingly, the purely domestic ones, they're
not very strong. There's a lot of case law that's
been coming around since the early two thousands. We got
like Baitlevers, Mortisin and Rehover del burs Dale, and what
all these cases are of domestic like US based asset
protection trust. Then I've just been completely getting pierced and
those are on good facts. So then what do people do? Well?
We got another option, right, going purely offshore, the famous
Cook Islands Trust the most the strongest trust in the
world by far, the gold standard of any type of
acid protection trust. But they're expensive as heck, and it
takes all ay and you got to do like foreign
disclosures back to disclosures ten thirty five ten thirty five days,
very expensive to maintain most people ninety nine percent of society.
That's just way overkill. It's not worth it. So how
do you kind of bridge this gap?
Speaker 3: Right?
Speaker 1: That's where the best form of trust that I find
is was called a hybrid trust. We call it a
bridge trust. What you're doing is taking that foreign trust
for that strength and then domesticating it through the IRS
for the domestic simplicity of tax purposes. And so we
have the strength in the back pockets. Domestic simplicity was
max it cheaper to set up, easier to maintain, and
then it's like a Swiss army knife. What we need
when we need that strength, we have it. When we
don't need it is in our back pocket and we
can utilize it at that point in time. So really,
the gold standard nowadays for the last thirty years that
most people haven't heard about are these hybrid acid Protection
trust And that would be kind of the route where
most people would go once you hit that million dollar
exposed networthmark. I want to have someone calling in and saying, Hey,
I'm just setting starting out in real estate or investing.
Can I get a strong hybrid trust. No, that's way
overkill for you. Start at the base layer up and
then let the system grow and scale as you do.
Speaker 3: All right, Hey, what about moving to Florida, Texas, getting
out of places like California where you're a virtual target
from every direction. Do you ever have clients do that?
Speaker 4: No?
Speaker 1: I do, I do. I don't think you're ever gonna
be able to fully run from any type of judgment
because even in Florida and Texas, you still have out
of control judges who anytime you go into a trial,
you don't know what's going to happen. It's not worth
the risk. I think Florida and Texas have great benefits
for like homestead exemptions and certain things like that. Like
an exemption is the strongest thing you can have in
the world, right, it's an exempt asset.
Speaker 3: You know.
Speaker 1: A great way to think about it was the famous
football player O. J. Simpson, right who got you know,
found out guilty from murdering his wife, lost a civil trial,
but then they never were able to collect on him
because his Florida mansion was homestead exempted and then his
NFL pension is a RESA exempted protected so they never
He's never able to be collected on all his assets
for safe. So that just goes the power of an exemption.
But if you're in Florida and you're investing in other states,
right like California real estate or other states, you can't say, well,
your honor, I'm a Florida resident, like this is you know,
apply Florida law when the injury is happening in California
or in New York or some other state.
Speaker 3: What about the limitations on the effectiveness of allc's and
the partnerships living.
Speaker 5: Yeah, so there's a lot of misconceptions on LLC's, Like
I like el c's but we need to remember, like
they're just the base layer, right, Like that's acid protection
one oh one.
Speaker 1: And for some reason, I think that a lot of
people think that all of a sudden, well, I created
this LLC and this is my draculas layer. I'm good
to go, and they don't realize, like the veils can
be easily pierced. And then there's a lot of confusion
on where do we even set these things up in?
Right do we go to Delaware, Wyoming, Texas, Nevada? And
what we're really talking about, what I've been hinting on,
and some of this is just charging order protection and
corporate veil piercing, which is really big legal, fancy words.
And what we have to remember is that one LLC's
began in the seventies with the goal of blending the
elements of corporations and partnerships without the downside of double taxation,
right like acid protection was never the actual end goals
of LLC's, So by nature, they just aren't the strongest strategy.
And then they offer a limited veil of protection. And
that veil is good, right, It's better than nothing, It's
better than just having everything in your own personal name.
But it's fragile and it.
Speaker 3: Can be pierced.
Speaker 1: Just think of it like that thin, flimsy piece of
fabric that covers the face of a bride on her
wedding day. And so what people need to realize is
there's this case in twenty twenty three, so just last
year that as a Supreme Court case is called Mallory
versus NORTHFWLK, and the Supreme Court upheld a Pennsylvania statue
that forces companies to face litigation within the borders that
is registered to do business And I want to repeat
that because it's actually really important. It forces companies to
face litigation within the borders that is registered to do
business in. So state courts are permitted to exercise now
jurisdictions over registered foreign corporations that, let's say are holding
your real estate, you know, just as if there are
domestic corporations of that state. So running off to another
state like Delaware or Wyoming or Nevada and you're not
a resident of those states, the court are saying, sorry,
now the states can come in and get jurisdiction over that.
So we need to realize you're not going to get
any beneficial use out of the LLC if you're not
a resident of that state where it's holding the assets,
because those states can just take take the jurisdictional control, gotcha.
Speaker 3: So any place where you are, they can get you
cor right, all right, So the gold standard of.
Speaker 4: It all, the gold standard, I would say, layer this
up over time, pick the proper jurisdiction that assets go,
you know in the in an LLC in the state
that they're in, Layer up with a management company.
Speaker 1: We prefer limited partnerships. And then once you hit that
you know high that one million net worthmark, hop it
off with a really strong hybrid trust and that way
we have the back pocket strength if we need it
with the simplicity of the domestic So the gold standard
is that hybrid trust. It's just a matter of wed
in time, right, you get to that level.
Speaker 3: Right, Okay, So family limited partnership so still pretty tight.
Speaker 1: Yeah, the family limited partnership, right, I can still be pierced,
don't get me wrong. You know it's what the benefit
of a limited partnership, the family limited partnership over another
LLC is that we can put more aid that's in it.
For one, like we can stuff cash, stocks, bonds, all
that non risky stuff directly in there, but there's a
built in delineation or separation between managers and owners by statute.
This is the only way that you can create a
limited partnership is saying the GPS the managing member, the
LPs the owner of this, and you just cannot do
that with an LLC because they're not created that way.
And so what some firms try to do is get
really created with operating agreements. The problem when you do
that with LLC's is you have to submit those operating
agreements for a judicial review. So when a judge's looking
at your operating agreement of your LLC and saying, I'm sorry,
this is not how LLCs are structured and set up.
I don't agree with your operating agreement. Your veil's now
pierced and it's not operating how it was intended. So
the better thing is just use the proper entity how
it was structured and created from the beginning, which would
be a limited partnership, because then we can separate out
the next layer, which would be the trust. How the
trust on the limited partnership, you would be the managing member,
and now everything by statute is properly legally structured.
Speaker 3: All right, well, I think you're giving us really good exposure.
Next time you come on, we'll talk about those Medicaid
Medicare trusts to avoid having all your assets taken if
you fall ill and your insurance runs out or your
Medicare runs out. You know, these are real life problems here.
If people want to find about out more about you, Brian,
connect with you on the web. How do you do that?
Speaker 1: Yeah, they can jump on my website www dot bTB
legal dot com. I use my website as an educational
resource and there's a lot of frequently asked questions and
a lot of educational videos on there. Feel free to
reach out to me Brian ba and at bTB legal
dot com. I do free consultations for people who listen
on the shows, So I'd rather have you get some
good advice and then take it from there to where
you need.
Speaker 3: Hey, that's excellent. We appreciate that. Hey, got a question
from Brian or myself? Just shoot me email kl at
Carrie LUTs dot com. Hey, you will find his link
in the show notes to this interview on Financial Survival
Network dot com. Go there, subscribe for your free newsletter.
Ryan appreciate you coming on sharing your wisdom. We'll talk
to you again soon. Absolutely, thank you so much.
Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your
solution to today's trying times. For the latest, go to
Financial Survivalnetwork dot com. Financial Survival Network now more than ever,