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9 Millionaire Asset Protection Tips
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Date: April 26th, 2018 2:41 PM Author: bateful orange principal's office http://www.escapefromamerica.com/2010/07/9-millionaire-asset-protection-tips/
Asset Protection is not just for the super rich!
Many people view asset protection as the playground for the super rich. Some hear the words and cringe with fear. In reality, we should try to emulate the tools the super rich use to not only create wealth, but keep it as well. I mean honestly, do you want to continue to copy what your broke brother-in-law does, or would you rather learn the tips and tricks of the super wealthy? Thought so.
Asset Protection Tip #1
Start your own business. I know this seems easier said than done, but I am not talking about starting the next Microsoft. Employees are at a disadvantage when it comes to wealth creation and accumulation. They don’t enjoy the tax advantages that entrepreneurs have. The number of deductions available to small business owners is rather large. Things like home office deduction, health insurance, office supplies, cell phone, vehicle expense, etc. I am not here to tell you what kind of business to start, but the opportunities are tremendous right now. Make your path.
Asset Protection Tip #2
For US citizens and residents, structure your business as a US LLC. By saying this, I really mean you need to make sure it is properly structured in the right state with a good operating agreement. I have discussed these things in the past so I won’t rehash them here, but a properly structured LLC is critical. If not done right, you are wasting your time. A US LLC gives you protection from both inside and outside creditors unlike a corporation. This means you are protected from the activity of the business as well as the business being protected from your personal activity.
Asset Protection Tip #3
I will reiterate here the importance of properly structuring your LLC. If you have significant assets to hold within the LLC, this should not be a do-it-yourself project. You are putting your wealth at risk here. A properly structured LLC registered in the right state will give you charging order protection. For example, if a judgment is issued against you for $1M and the court finds your assets are held within an LLC, the only remedy for the creditors is a charging order. The charging order states that as your LLC pays distributions to the member attached in the judgment, it must pay the creditor to satisfy the judgment. The charging order cannot force the LLC manager to pay a distribution, liquidate assets, or take a membership interest to satisfy the judgment. It is essentially a lien. If the operating agreement is written well, the manager can withhold a distribution thus leaving the creditor with an uncollectable accounts receivable that he will have to pay taxes on.
Asset Protection Tip #4
Separate your business operations from your investments. For example, if you own several income producing rental properties, you should separate each piece of real estate into its own LLC and form another LLC as the commercial operation for property management. If you own a portfolio of liquid investments like stocks, bonds, options, commodities, etc. you should hold this asset in a completely separate LLC. By segregating your assets, you limit the risk to only that one LLC. If you have a tenant in one of your rental properties that is injured and you are liable for a $1M judgment, the assets held in that one LLC are the only thing at risk.
Asset Protection Tip #5
Don’t forget to properly insure yourself against loss. For example, if you have a net worth of $2M but carry the bare minimum coverage on your auto policy, you are putting yourself at risk. The US is the most litigious society in the world with nearly 1.2M practicing attorneys, many of them are the ambulance chaser variety. A $1-2M umbrella policy is cheap insurance and can cover you the next time you rear-end someone at a stop light. The same goes for your homeowner’s policy. This is cheap insurance in the event that someone leaves your home after the Superbowl party a little inebriated and causes an accident. The ambulance chaser will find out the alcohol was served at your house and you will be attached to the lawsuit.
Asset Protection Tip #6
Diversify, diversify, diversify. Any competent investment advisor will tell you not to hold your entire portfolio in one or two stocks, no matter how good they are. This goes for your asset protection plan as well. We call it ‘geo-arbitrage’, but basically this means to diversify your asset holdings by using offshore entities and offshore banking. If you don’t have an offshore bank account that allows you to hold multiple currencies, you are putting yourself at risk. The first thing I advise to nearly every client is to form an offshore entity like an LLC or IBC, then open a bank account in the LLC/IBC name. This gives you a place to hold cash and investments in multiple currencies should you need to move around funds. If you are ever involved in frivolous litigation in the US it would be nice to have a place outside of US court jurisdiction to place a portion of your assets in the event that you need it. But in addition to this benefit, there are many investment options not available in the US due to regulations that exist here. For example, one Scandinavian bank I am aware of allows you to invest in a fund (similar to a mutual fund) that guarantees your principle but still allows for unlimited upside potential. You won’t find that at Bank of America.
Asset Protection Tip #7
As John D. Rockefeller so famously stated, “Own nothing, but control everything.” This is the mantra of the super rich. They do this through domestic and offshore entities like LLC’s and IBC’s and through trusts. A trust is the ultimate asset protection tool if done properly. A trust can completely block any creditors from attaching your assets as well as allow your wealth to continue for generations and pass tax free to your heirs. There is a reason one of the largest foundations in the world today is the Rockefeller Foundation. They didn’t grow and maintain their wealth by paying estate tax each year.
Asset Protection Tip #8
Hire qualified advisors. No one achieves great wealth on their own. While you may be incredibly intelligent, chances are you have some knowledge deficiencies and you will not be able to effectively do everything. All the smart ones know what they don’t know and outsource their weaknesses. Accountants, asset protection advisors, attorneys, and investment advisors are a few that we recommend.
Asset Protection Tip #9
Act now! Don’t wait until you are already at risk before you begin the planning process. If you have been served with a lawsuit, it is likely already too late. I don’t imagine the Trumps and the Rockefellers of the world sat at home at night watching TV saying, “I will get to this later, tonight I am going to watch American Idol.” As the cliché goes, “those who fail to plan are planning to fail.” Act now. |
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Date: November 18th, 2018 9:51 PM Author: Deranged domesticated milk im making escapefromamerica.com my homepage. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37260596) |
Date: April 26th, 2018 2:48 PM Author: Trip balding liquid oxygen stead Asset Protection Tip #4
Separate your business operations from your investments. For example, if you own several income producing rental properties, you should separate each piece of real estate into its own LLC and form another LLC as the commercial operation for property management. If you own a portfolio of liquid investments like stocks, bonds, options, commodities, etc. you should hold this asset in a completely separate LLC. By segregating your assets, you limit the risk to only that one LLC. If you have a tenant in one of your rental properties that is injured and you are liable for a $1M judgment, the assets held in that one LLC are the only thing at risk.
LMAO signature block preparers HATE him |
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Date: April 26th, 2018 2:50 PM Author: primrose ratface But how do i start my own business? (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#35925682) |
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Date: April 26th, 2018 2:52 PM Author: razzle menage Where's the tip about not getting married (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#35925700) |
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Date: April 26th, 2018 2:55 PM Author: flesh hunting ground hominid How to protect assets from any future wives you may have? (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#35925730) |
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Date: April 26th, 2018 2:57 PM Author: Trip balding liquid oxygen stead Wilbur J. Mercer Wife Spite Holdings LLC (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#35925751) |
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Date: April 26th, 2018 3:02 PM Author: spectacular boiling water Just loled in public bathroom stall tyft (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#35925796) |
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Date: April 26th, 2018 3:00 PM Author: laughsome mint school pretty good tips, actually (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#35925779) |
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Date: April 26th, 2018 3:19 PM Author: fuchsia narrow-minded becky electric furnace Are there good tax advantages to being a solo attorney (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#35925931) |
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Date: April 26th, 2018 3:44 PM Author: Razzle-dazzle Patrolman Look at the sep ira/solo 401k contribution limits, they're quite high (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#35926086) |
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Date: November 18th, 2018 9:11 PM Author: Shimmering stag film If i'm saving for a house downpayment, should i avoid the SEP IRA / SOLO 401k contributions? (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37260195) |
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Date: November 20th, 2018 2:58 PM Author: Tan dilemma puppy there are no loans from SEPs/IRAs (only withdrawals). So talk to your plan administrator for rules on 401k loans (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271405) |
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Date: November 18th, 2018 9:05 PM Author: fuchsia narrow-minded becky electric furnace (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37260132) |
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Date: November 18th, 2018 9:43 PM Author: charcoal hyperventilating circlehead out of the people who actively try to get rich, how many get rich? you hear about the successful ones. Let's say "rich" is >$10M net worth. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37260508) |
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Date: November 20th, 2018 2:25 PM Author: fuchsia narrow-minded becky electric furnace (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271160) |
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Date: November 20th, 2018 2:28 PM Author: diverse wild pocket flask "A US LLC gives you protection from both inside and outside creditors unlike a corporation. This means you are protected from the activity of the business as well as the business being protected from your personal activity."
what is this idiot talking about? how does a corporation not protect the shareholder from corporate debts (unless the veil is pierced) and protect the assets inside the corporation from the shareholder's debts unless the corp voluntarily guarantees the debt? |
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Date: November 20th, 2018 2:41 PM Author: Fantasy-prone charismatic step-uncle's house As a practical matter, this recommendation is worthless. Absolutely no one is extending meaningful amounts of credit to Joe Blow's LLC without a personal guarantee. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271286) |
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Date: November 20th, 2018 3:25 PM Author: diverse wild pocket flask of course not. there's still protection of assets from involuntary creditors, e.g., tort creditors. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271547) |
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Date: November 20th, 2018 3:32 PM Author: Fantasy-prone charismatic step-uncle's house In the context of this article, 99% of the time the individual forming the entity would have personal liabilty for any tort. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271584) |
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Date: November 20th, 2018 3:34 PM Author: diverse wild pocket flask agree but thats not why his point about LLCs vs. corporations is dumb. either is better than a sole proprietorship, but they're both equally not-that-useful. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271604) |
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Date: November 20th, 2018 2:48 PM Author: charcoal hyperventilating circlehead A corporation or LLC will protect you from things like premises liability. To get a loan the lender will need collateral or a personal guarantee. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271327) |
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Date: November 20th, 2018 2:54 PM Author: charcoal hyperventilating circlehead how come most small businesses are sole props? (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271382) |
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Date: November 20th, 2018 2:55 PM Author: Fantasy-prone charismatic step-uncle's house The protection afforded by a corporation or LLC for tort liability in the context of a single manager/stockhder that is actively involved in day-to-day operations is largely illusory. You can still be held liable for your individual actions and decisions. As such, you will likely be open to personal liability if you are the sole manager/worker of the entity. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271389) |
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Date: November 20th, 2018 3:27 PM Author: diverse wild pocket flask yes, sure, many claims in this situation would likely involve things like negligence by the individual and vicarious liability for the entity so both are screwed. but it doesn't explain why this guy thinks an LLC is better than a corporation -- both have that problem equally. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271560) |
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Date: November 20th, 2018 3:44 PM Author: Fantasy-prone charismatic step-uncle's house See my comment below. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271694) |
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Date: November 20th, 2018 3:26 PM Author: diverse wild pocket flask but he's saying that an LLC provides protection in both directions while a corporation does not. total nonsense. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271554) |
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Date: November 20th, 2018 3:44 PM Author: Fantasy-prone charismatic step-uncle's house Ahh, now I see what you are referring to. I skipped that part of the article the first time through.
I could see jurisdictions allowing for greater restraints on the transferability of membership interests in LLCs (which I suspect he was implicitly referring to with his comment about a proper agreement) compared to stock, but lol at anyone who finds this article the least bit informative ever getting to the point where that matters. |
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Date: November 20th, 2018 3:48 PM Author: diverse wild pocket flask he's also overblowing the importance of an operating agreement for what's presumably a single-member LLC. many state statutes explicitly say that a written operating agreement isn't required, and an agreement only signed by 1 member isn't binding on anybody else anyway.
someone like a bank will want to see a copy to open an account, etc., but it's a formality and not really an asset protection issue. |
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Date: November 24th, 2018 12:03 PM Author: Exciting Theater Stage Sweet Tailpipe Cooperate shares can generally be taken in judgment collection. LLC membership interests generally cannot. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37291856) |
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Date: November 20th, 2018 2:31 PM Author: Glassy piazza Get the LLC signature block notarized
make sure that the notary's jurisdiction is your specific county to ensure that the state and federal and UN governments have no JX |
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Date: November 20th, 2018 2:48 PM Author: azure insanely creepy casino Should we also ensure that the flag in the notary's office not have gold fringe? I always forget if the fringe stuff is good or not. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271331) |
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Date: November 20th, 2018 2:51 PM Author: Glassy piazza no gold fringe
gold fringe means that his (should be a he, depending how the state notary law is written) notary commission was issued as an armed forces naval agent
if he's a navy notary that brings you right back under federal jurisdiction |
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Date: November 20th, 2018 2:54 PM Author: azure insanely creepy casino Agent in the true sense of the word that he either has power of arrest OR investigation - Versus a special agent w/ both? (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271378) |
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Date: November 20th, 2018 2:45 PM Author: Marvelous internet-worthy library tip #11: CUT UP UR CREDIT CARDS!!!! (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271309) |
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Date: November 20th, 2018 3:15 PM Author: Lilac locus (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271499) |
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Date: November 20th, 2018 2:51 PM Author: azure insanely creepy casino Does throwing a rental property into an LLC really shield you from liability. I can see how the property ensures it's capitalized and easy to keep it from being co-mingled with personal assets. However, seems like it would be an obvious extension of someone's individual control? (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271348) |
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Date: November 20th, 2018 2:57 PM Author: Fantasy-prone charismatic step-uncle's house You are 100% correct. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271396) |
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Date: November 20th, 2018 3:00 PM Author: Tan dilemma puppy if you are talking rent houses, you are correct.
if you are talking industrial, acreage, etc where agents, employees, contractors do your shit, then the LLC actually matters (in very rare circumstances) |
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Date: November 20th, 2018 3:03 PM Author: Fantasy-prone charismatic step-uncle's house Still the same situation. If you hire other people to exercise discretion, you are liable if your retention of the third-party if you acted negligently in retaining the party (assuming no employer-employee relationship). Otherwise, no liability. The existence of a business entity is of no consequence. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271426) |
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Date: November 20th, 2018 3:06 PM Author: Tan dilemma puppy i dont hire shit. the LLC hires them.
edit: i guess you are saying i'm still hiring a RE agent to market the property who redlined some negros?
that shit doesn't fly in my JX |
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Date: November 20th, 2018 3:29 PM Author: Fantasy-prone charismatic step-uncle's house I would love to see case law finding a corporate entity shielded an individual from liability on a negligent retention/hiring claim premised solely on the actions of that individual. Seriously, I had this issue come up a couple years ago, and while I didn't do an exhaustive 50 state survey, I couldn't find any cases in the 5 states I checked out supporting this proposition. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271564) |
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Date: November 20th, 2018 3:31 PM Author: diverse wild pocket flask i think it's more about segregating the assets of sister companies so that a problem with one doesn't ruin everything the investor group owns
also i think it's realistically helpful for business tax liabilities in a BK, legacy enviro problems, etc. |
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Date: November 20th, 2018 3:36 PM Author: Fantasy-prone charismatic step-uncle's house An environmental issue, mentioned elsewhere, is a good example where it could make a difference. This is not what the article had in mind with this recommendation. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271621) |
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Date: November 20th, 2018 3:01 PM Author: overrated glittery box office reading party Well it segregates it from your other assets, yes. Also, multi member LLC -> decent operating agreement -> charging order defense. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271421) |
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Date: November 20th, 2018 3:30 PM Author: diverse wild pocket flask it certainly helps. RE lenders will make you set-up the SPVs in a very specific way that maximizes the chance of keeping each piece of property bankruptcy remote from the others. imagine a real estate investor that runs multiple properties, and one turns out to have an environmental spill. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271570) |
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Date: November 20th, 2018 2:52 PM Author: Useless travel guidebook OP is peterman, researching how to preserve the generational wealth he accumulated through crypto (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271364) |
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Date: November 20th, 2018 3:09 PM Author: apoplectic range immigrant Putting your personal residence (only property you own) and your brokerage account into LLCs seems like more work than it's worth and ultimately futile if anyone ever actually comes after you.
at what worth/value point is this a worthwhile exercise? |
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Date: November 20th, 2018 3:33 PM Author: diverse wild pocket flask i'm not aware of any benefit to putting your personal home into an entity. don't think that's common, and obvs. no mortgage lender is going to underwrite it unless it's guaranteed anyway. i think there are asset protection strategies using trusts and planning around your state's homestead exemption. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271597) |
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Date: November 20th, 2018 3:47 PM Author: Fantasy-prone charismatic step-uncle's house Depending on your jurisdiction, transferring your personal residence into an LLC could be a monumentally stupid move, since I imagine this would jeopardize your homestead exemption and other possible defenses against creditors' claims. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271718) |
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Date: November 20th, 2018 4:09 PM Author: Olive Lodge Stock Car Cr any competent chad attorney could pierce the corporate hymen (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37271871) |
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Date: November 24th, 2018 11:45 AM Author: charcoal hyperventilating circlehead To my knowledge the advantage of an LLC over a corporation is that it requires less paperwork/formalities. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37291789) |
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Date: November 24th, 2018 11:51 AM Author: overrated glittery box office reading party Not substantially. Tax burden used to be worse (total) in a c Corp but with the changes and flat 21% that's not the case in a lot of situations now. We are looking at breaking some s elections to go c, or reorg LLC into c Corp. It's also possible to build up some limited untaxed profit inside a c Corp because it's not a pass through. This is on the edge of the work I do, so I'm not an mfe, but I think corps, in particular c corps, are looking better than ever before. (http://www.autoadmit.com/thread.php?thread_id=3960634&forum_id=2#37291817) |