BiggerPockets Real Estate Podcast - 595: How to “Layer” Legal Protection So Lawsuits Won’t Touch Your Wealth w/Brian T. Bradley, Esq.

Episode Date: April 12, 2022

Most investors assume LLCs for rental properties are the way to go in terms of asset protection. From a novice’s point of view, LLCs seem to provide everything you would need?—anonymity, simple tax filing statuses, and legal protection. But, an LLC in reality isn’t as airtight as most real estate investors think. And the worst time to learn about the limitations of an LLC is during a lawsuit, where your wealth (and sanity) is at risk. To stop you from guessing when it comes to asset protection, we’ve brought on our go-to expert and heavy hitter asset protection lawyer, Brian T. Bradley, Esq. Not only is Brian well versed in the realm of asset protection, but he’s also helped numerous clients protect their real estate wealth, making him the perfect person to ask about LLCs, limited partnerships, trusts, and more. Brian walks through the different types of legal “layering” that real estate investors can set up to protect themselves from lawsuits and angry creditors. He defines exactly how each type of real estate investor should set up their assets as their net worth expands, and what to do BEFORE you get served with a lawsuit. While Brian may not know your personal situation, he does speak with years of experience serving high-net-worth investor clients and can relay their mistakes (so you don’t make them too). In This Episode We Cover: What is asset protection and why is it crucial for real estate investors in particular The “layers” of legal protection that real estate investors must have What an LLC really protects you from and why it may be different than what you think “Piercing the veil” and why most investors need to go a step beyond LLCs Limited partnerships and trusts that give you the best asset protection Financing hiccups when keeping your rental properties in trusts And So Much More! Links from the Show BiggerPockets Forums BiggerPockets Youtube Channel On the Market Podcast Biggerpockets Blogs Biggerpockets Agent Finder Real Estate Rookie Podcast Rookie Podcast 106: Asset Protection for Rookies: 7 Wealth-Saving Answers from an Expert Tony Robbins Airbnb WhatsApp MySpace TikTok Cardano (ADA) Rob's TikTok Profile Rob's Instagram Rob's Youtube Channel David's Instagram David's Tiktok Profile Connect with Brian: Brian's Company Website Email Brian: [e-mail] Check the full show notes here: https://biggerpockets.com/blog/real-estate-595 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 595. And so as you go through and evaluate how good an asset protection plan is, just remember that acronym ECCC, effectiveness control costs. What's going on, everyone? It's David Green, your host of the Bigger Pockets Real Estate podcast, the show where we teach you how to build financial freedom through real estate. Look, if you want to grow your wealth, if you want to improve your life, if you want to get your time back, if you want to travel, world, if you want to spend more time with family, if you want to have a better overall life and you know that real estate is the way you want to do it, you my friend, are in the right place. Bigger Pockets is a community of over 2 million members, all strong, all walking the same journey

as you, and we at Bigger Pockets are committed and dedicated to helping you achieve that goal. We do it through providing a forum where you can ask questions, an agent finder service where you can find real estate agents to help you with your deal, blogs with articles written by people that have done well, and this podcast where we bring in experts in the field that are relevant to what you need like we have today. Today is a fantastic show that I can't believe we're actually going to be able to give you for free because it's awesome, where we dive deep into asset protection with our guest, Brian Bradley. Now, in our show today, we cover a lot of topics about how to keep yourself safe as a real estate

investor as well as how to grow to the point where this would become relevant. here joining me today is my awesome and fun co-host, Rob Abasolo, Rob, welcome to the show. Hey, man, I always like being described as fun. I also would have accepted funny, but that's, you know, that I can't demand that. It has to be earned. It's funny you say that because we were just talking about how you add why to the end of most words and create another word. Like, I think it was bridgey that you just described enough fun and funny. You just can't help yourself. It's the millennial way, man. It's a millennially way. Do you ever feel like you have it, like, something about, like, what you're learning or, like,

an aspect of your business where you're like, I have this down, I have figured it out, I am a pro at this, and then you talk to somebody so smart and well-versed in that specific area, and then you're like, oh, my goodness, I know nothing. That's kind of how today's talk went when it came to asset protection. You thought you had protected your assets, but you found out maybe you hadn't. Yes, yeah, yeah. Brian talks a lot about, you know, well, A, trust. and how no, you know, there's like, he relates it to Baskin Robbins. There's 29 flavors. There's a lot of

different types of trusts out there. Common misconceptions about LLCs. He talks about protecting yourself and your assets, how it's kind of like layering up with clothes and how each layer of clothing is a new layer of protection on your business. Yeah, I think we also got into some of the very common misconceptions when it comes to different corporations or levels of asset protection where people think they're safe where they're really not. So make sure that you pay attention to what the first word means in an LLC and how that describes what you can expect from that company. We talk about what piercing the corporate veil really means. We talk about the safest way to protect some of your assets and when that might be necessary. And then also, kind of like as a

bonus, we got into how some of these structures can protect you in one sense, but can also build your wealth in another. So like there's kind of a dual side to all of this. You've got the tax strategy side where you have to sort of claim your income within these structures and you can benefit or you can maximize your tax benefits and then you that's like the offensive side how you're going to make more money then you've got the defensive side which kind of focuses on how you prevent people from taking it away from you now this is probably the most commonly asked question in rob and eyes world as everyone will come to us and say should i buy in an LLC or should i buy in my own name so we wanted to bring you a show just like this with an actual attorney to go deep into

how to know how you should start and where to go. Anything else you think that they should keep an eye out for, Rob? No, man, this is, this is really great. I'm really excited to have this because people always ask me about legal questions and I'm always just sweating profusely because I'm like, I'm not an attorney. You can't sue me. So this episode, I'm going to be like, here you go. Just listen to this. This will answer most of your legal questions and it's free. So here's a good question. What type of thing should people reach out to you to ask about? If they want to invest or if they want to learn how to start an Airbnb or if they have questions about running an Airbnb business, anything in that capacity. But when it comes to taxes and legal liability, no thank you.

That's not me. That's not my jam. That does make nervous. People should reach out to me if they want to know about financing real estate, having an agent to help them to get it if they're looking to invest their money with somebody. Or if they want to be connected to the people I have in my world that do provide these services. So here's just a good note. please don't ask us for legal advice, but you can ask us for the people that we use to get our legal advice. We would sweat a lot less if that was the case. And then I would be drinking less

water from doing less sweating. All right, before we move on to the show, let's get to today's quick tip. It's so nice that I don't have to do that high-pitch quick tip that Brandon was always trying to do. And it was so hard to get my quick tip. Oh, so you do that so well. You're just like Brandon. It is tax season. So I would like you to think about every single thing that you're dealing with right now that you wish you were not and put a plan in place so that next year you don't have to deal with it. The best way to do that is to get connected to a good CPA and actually plan throughout the year. So what I do is I meet with my CPA monthly. We go over my books. We go over the properties that I'm buying. We go over tax strategies where I might be

on the hook and what type of real estate I would need to buy or what I would need to do to reduce my tax tax liability. I highly recommend doing the same thing. Eat with your CPA semi-regular so that they're not super long meetings and they're not in the middle of nowhere where they're busy and you're like, hey, I've got to talk to you right now. Have it set up on a calendar so you can work around it. And if you don't have a CPA you like, I'm happy to share with you mine. Send me a message on Facebook Messenger, Instagram, Bigger Pockets, or if you have my email, send it there. And I'll make a connection for you. Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most of the cost against your

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and get a $100 Amazon gift card. That's bill.com slash bigger pockets. Okay, we're going to shift gears for a minute to cover something important, especially for new landlords. The shows often talk about getting stuck doing everything ourselves and the cost of sweat equity. The key question is simple. Is my time better spent elsewhere?

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Just sign in through your pro account to get started. Rent Ready helps ensure on-time rent with auto reminders, keeps communication professional, and lets you post listings to multiple sites. Check it out at rentready.com slash bigger pockets. That's rentr-re-d-i.com slash bigger pockets. Rob, anything that you'd like to leave our listeners with before we jump into this jam-packed show with Brian? No, I'm not a lawyer or a CPA, so I'm just going to let Brian do all the talking today. It wouldn't be fair if you were a lawyer or a CPA, Anne had a beautiful singing voice to match that face of yours.

God can't give you every gift. It wouldn't be fair to the rest of us. I'll take it. I'll take it. All right. Let's bring it in Brian. Brian Bradley, welcome to the Bigger Pockets Real Estate podcast. Thanks, David and Rob for having me on. And, you know, today's an important topic. And I'm going to try to keep it, you know, less dense and not legal boring. And I'm not anyone's attorney here. And I'm not, you know, a legal guru. We're just going to be talking in generalities. And we're going to be learning a lot. And I hope the concepts that we talk about help you and your listeners understand this area of asset protection, specifically.

we're going to spend a lot of time later on on asset protection trust just to understand this world a little bit better. You know, I would argue that this is not boring at all. I mean, for the people that are actually at home listening to this or watching this on YouTube, these are some of the most asked about topics on the Bigger Pocket's YouTube channel, on my YouTube channel, on our social media. So I'm actually genuinely excited to learn how to protect myself so that I don't get sued, Brian. Yeah, Brian, how would you sum up what asset protection is? Yeah, so what asset protection actually is, is just think of it as a legal barrier between your assets and your potential creditors before you need it. And that's kind of the key word before, you know, that's it. It's just like a safe for your gold or your guns or your valuables. Anything of value you want to put behind the legal barrier and out of your personal name so that it's not easily attached with the lien or reach, you know, you know, kind of mimic the rich.

I love the Tony Robbins saying that success leaves clues. And so the rich don't own things in their personal name. Their businesses do. Their asset protection trust do. They just get the beneficial use and enjoyment out of them while separating out the liability. And then as you grow, you just create different layers as you grow and kind of scale up your planning. And when you talk about layers in specific terms, what does that mean also in layman's terms? Yeah.

So in layman's terms, you know, let's just break it down as kind of. key concepts and tools that we use. And so I want you to think of each tool as a layer of clothing. And we add layers as you and your wealth grow. And so these tools generally are going to be LLC, so limited liability companies, limited partnerships, and then asset protection trust. And where you land in this scale depends on, you know, your risk profile, your profession, the asset classes that you own, for example, like single family, multifamily,

commercial, you know, where you own the. at, like the states you own them in Texas, Nevada, California. And then we look at your total unprotected net worth. And then we look at this holistically and then start creating plans based upon where you're currently at and then your growth in what you're investing in. And so I want you and your listeners to think about winter. And so when it comes to asset protection, you know, like I mentioned, we have different layers. That first entry layer is your base layer. It's the foundation and it sits on your skin. This is the LLC. And it's the LLC. And it's the LLC. insurance. This layer is generally when you're you're just starting out. You have no unit,

zero to three units or properties. Your net worth is generally going to be around below 250,000 nets. And then as you grow and you add more assets and you hit kind of that four unit spot, you know, you're investing in probably multiple states with different LLCs in different states. Your net worth has probably hit around 500,000 to 700,000 nets. You want a mid layer, which is usually going to be a little bit thicker. It's generally going to be made out of Moreno wool or for you ladies a carnigan. And this is your management company. And we personally use limited partnerships for this management company, that mid-layer. And I broke those two layers down to LLCs and the limited partnership on Bigger Pockets rookie in great detail. But that mid-layer limited partnership will be

owning all those LLCs. And so this way you only maintain one tax filing at the end of the year. and then when you hit around one million net worth, you want an outer shell layer. You know, this is your waterproof layer. This is like we're going out skiing. We're in Siberia or somewhere like really cold for some reason. This keeps you nice and dry and warm when the weather is really bad. This is your doomsday lawsuit protection layer. This is your asset protection trust.

And these, you know, we're going to be spending a lot of the time on later on talking about these today. But by layering, you're now more flexible. You can adjust and make yourself more comfortable. And now for all these layers to work, I want you to think about this acronym, ECCC. These are the four things that must be true. So one, your plan has to be considered effective. Two, you're going to want to control your plan and your assets. Three, you're going to want reasonable and sustainable cost.

And then four, you need to worry about compliance. It can't be too difficult for you and your IRS CPA to figure out how to, you know, make this compliant with the IRS. And so as you go through and evaluate how good an asset protection plan is, just remember that acronym ECCC, effectiveness, control, cost, and compliance. Okay, so let's unpack this a little bit because, you know, for me and for a lot of the people that we talk to that are just kind of getting started started out, a lot of people seem to get very wrapped up in an LLC and, you know, often associate LLCs with both legal protection and taxes. I get a lot of people that are like, oh, you know, do I need an LLC to file taxes as my business? So could you kind of share a little bit of the journey of kind of someone that's investing when they would start with an LLC?

And then, and I think you kind of briefly touched on this. But at what point, you know, one would then take the next step to get, I guess, into that next level, which I think you said, LLP. Yeah, the limited partnership or a management company. Yeah. Okay. Yeah. And so the LLC, the limited liability company, it's that first layer.

is basically asset protection 101 along with insurance. And so the entry level base layer that most of us are all going to be familiar with, and I think a lot of people spend a lot of time talking about, is this LLC that's going to be holding your real estate and your risky assets. Anything that has a key or needs insurance or it can go boom, you know, these all go into an LLC. And so we know about LLCs. People hear about the effect, you know, partly the effectiveness of them. But there's some things that we're just not told about them.

and I think it's really important to understand these three big misconceptions of the lack of effectiveness on LLCs to then understand the reason for the next layers as you grow. So once you move from zero to three units and you're getting into probably four units, about 500,000 of unprotected net assets or more, you're going to start accumulating a lot of LLC. So we need to start cleaning these things up for your accounting system. And so you're not, you know, being nickel and dined on all these K1 filings. but also one of the big issues with LLCs is that the courts now have a tendency to disregard single-member LLCs. So when your corporate veil is pierced, it's not very effective.

And remember, that's one of the most important things. We're looking for an effective plan, meaning it needs to work when you're in courts. And CPAs tend to set up LLCs as disregard of entities for tax purposes. That's really great for taxes, but it's really bad for lawsuits. What being disregarded means is that the IRS, is not taxing your business separate from you. It passes through to you personally. And because of this, they're basically worthless for asset protection or lawsuit protection, you know, protection, because that liability also passes through to you. But don't get me wrong, like I still use

LLCs, but at that base layer entry protection. And then we add the next layers up as we need to as you and your assets and your wealth grow. So that would be that limited partnership. Eventually, you want those LLCs to be owned, not by you, but by that limited partnership. And then as those taxes pass through to that limited partnership because they're disregarded, you only have one tax filing. But now you're getting the protection from the limited partnership. The other two big misconceptions about the LLCs is just like, where do you even set these dang things up in?

You know, do you go to Wyoming, Delaware, Nevada, you know, Texas, you hear about all these states. And it's technically called like charging order chasing. So they're chasing, you know, different states' laws. The problem here is that this is not like creating a business like, you know, Dave and I or Rob and I go in and selling widgets. You know, we're holding real estate in LLC as a holding company. And so you can't really go and buy another state's beneficial laws and bring them to

another state that you have no jurisdictional connection to. So if I own, for example, real estate in California and Ohio and Washington and then I go stuff them all in a Wyoming LLC, I can't take Wyoming law with me to one of those other states because there's no jurisdictional connection there. No, the damage that you're going to be getting sued from is going to be from where the injury is at, where the lawsuit's coming from, where the property's at, where the person's at. So a lot of people have this misconception that I'm going to go buy another state's more beneficial law. So I'm just going to go use a Wyoming LLC without understanding. I can't just take these other state laws with me to where I'm actually

getting sued. You mentioned two things I want to point out. The first is that when it comes to these legal entities, at least the way I see it, is you've got protection in case you're sued or something like that, and then you've got tax purposes. So they sort of function in this dual role, and you sort of highlighted how that can become confusing. So I'm going to ask you in a second if you could like maybe give us a summary of how to understand them as they function of those two roles. Then the other one, as you mentioned that you can pierce the corporate veil and we just kind of kept going. Can you explain to people that this misguided understanding that, an LLC is a iron tight.

If you have it in LSC and you get sued, they can't get anything outside of it. It's actually not the way that it works in the legal system. Yeah, absolutely. Let's start with that one. Like, I think you just need to pay attention to the first word, first letter, limited.

I mean, they just tell you straight out in the name. This is limited protection. And what piercing the corporate veil means is there certain ways that we go through and say, okay, this LLC is not an actual business. It's an extension of you personally. And so because of that, that's where we're piercing,

that limited liability veil and now holding you personally liable. And a couple of the easiest ways to pierce this veil is one, just the nature of real estate. All right? We use LLCs and business entities as holding companies. We don't operate out of those LLC. You generally use an operating company. And so when I'm trying to pierce through that LLC, the number one argument that we use that would work nine times out of 10 is saying, well, Your Honor, this is just a holding company, this isn't actually a business. It does nothing but hold this company for David or for Rob. And so this is actually just an extension of themselves. That argument in itself will win nine times out of 10. And then the next ones we look at is funding issues. How is the-

Well, it's true, right? I mean, isn't that why most of us are using an LLC? Is I just want to stick a property in it and I don't really do anything else other than that? Absolutely. And that's the thing that you don't want to do is operate out of the holding company because now if you're going to be getting sued through your business operations. Now the whole point of separating out the asset from the operation defeats the whole purpose of what you just set up the LLC for. So that's why people need to realize the nature of real estate and investing in real estate is completely different than taking the same analogy of we're going to go create a business and sell widgets because our widget factory actually has a business to it. Our real estate LLC that's a holding company has no business

connected to it. It's just holding the real estate for us. And then we operate out of something else. And then it goes into funding issues. A lot of people don't realize that one of the biggest ways to pierce an LLC is just bad money management, funding the LLC incorrectly, bad accounting, commingling assets, which would be I got my, you know, paid from the renterer, it goes into my business account connected to my LLC. And then I go buy groceries out of that business account on the LLC versus paying yourself first. And so those three right there, beyond the list of a lot of other are why LLCs get pierced very easily.

The next question was kind of, you know, charging orders. What a charging order is, it's just saying we're trying to stop what damages can come to you and hold it just in the LLC itself. And so the charge that you're going to get from a court stops at the LLC and doesn't bleed into you the owner or manager of that LLC. Every state is going to be different on how strong those charging orders are going to be. Some suck. Some are horrible like California. Some are very strong like Wyoming or Arizona and Florida. And so at that base layer LLC, we're not chasing charging orders. What we're doing is creating LLCs at the state the asset is at. That second layer,

it comes to kind of becoming important of where we create that limited partnership at, which I've just generally use Arizona for the limited partnership just because they have a specific statute that we like to play off of. But other than that, I don't think chasing charging orders or chasing states with beneficial laws is that important at LLC level because you have no jurisdictional connection there. And then tax-wise, you know, the third part of your question, tax-wise, realize asset protection is not tax planning and tax mitigation. We're protecting your assets. So it's going to be tax-neutral. your tax, we need to talk to your CPA and coordinate with your CPA. Your CPA and wealth manager is going to be where your tax mitigation strategy comes through.

And so it's the three of us talking together, you know, the attorney, the CPA and the wealth manager of saying, well, first we need to protect the assets, right? Because if you get sued and lose your assets, your CPA and your wealth manager have nothing to, you know, do tax mitigation strategies on. So, you know, the first advice is protect the assets as strong as you can. Then the next part is talk to your CPA. and your wealth managers to then accelerate tax mitigation strategies as aggressively as you want. I think that this is probably the part of the show where everybody's hitting that share

button and sending it to their partner and they're like, oh my God, the LLC isn't enough. And they're all like, oh, we've been told wrong. So now that we know that LLCs aren't really quite bulletproof, I mean, you kind of mentioned also like pairing that with the good insurance, you know, to, I guess level out some of the, or to mitigate a bit. And then I think I'm still, you know, if you could unpack a little bit on the limited liability protection or the LLP. The limited partnership. Yeah. Mm-hmm.

Yeah. Kind of like what it is or. Yeah. Yeah. Like so, because you, I think you sort of mentioned here that, you know, the LLP could somewhat function as like a. Yeah. Like a management group for the LLC. That's exactly.

So really, you're using a family limited partnership at that second layer. When you use them for asset protection, they're just called an asset management. limited partnership. All right. So they're like LLCs and they also have some charging order protection. And I like them better at that second layer because limited partnership have a delineation between a managing partner called the GP, the general partner and the minority partner who does not.

And so think of it like a split personality. We like having both a general partner interest and a limited partner interest. And we use that limited partner as a starting point for our clients as that holding company. or that management company because it can hold all of those LLCs that you're creating. So all those K-1s will flow directly through that limited partnership. And then there's just a one-page attachment of a 1065 that your CPA will file. And now you only have one tax return versus some of my clients have like 30 LLCs with, you know, hundreds of properties, thousands of properties all over the place.

The great thing is we can segregate out those properties and then have all those K-1s flow under the management company. And so it's still very easy accounting, just one tax filing. And then the other benefit here is that people don't realize is one, limited partnerships are perpetual, whereas others, you know, states they have an annual report on filing LLC's. Privacy, though I'm not a big component of anonymity and privacy because once you get sued, privacy goes out the door. But partnerships statutorily are, you know, private to where you're not going to, the name party, the GP is not named, you know, by the same. state on there. So you have a statutorily privacy built in. And limited partnerships by themselves cannot be disregarded entities by nature. And so there's statutorily a lot of really strong

built in mechanisms and mechanics that are just stronger than an LLC. So some people do the wrong thing of saying, okay, I have my base layer LLCs at the bottom. They layer up by adding another LLC like Wyoming LLC. That's the wrong next layer. Really it should be a limited partnership because then we can come in and attach the asset protection trust to own that limited partnership, not you. Great. So, okay, so obviously there are a lot of moving parts with setting up, establishing, forming, evolving your business.

And so there are obviously going to be several different types of, again, a lawyer, attorney roles in this. So, you know, there's, I would imagine, you know, you're, you're an asset protection lawyer. And that would be, like, what you do would be a little different than what a business lawyer who's just setting up the business. does, or do you do it all as an asset protection attorney? They're like a difference between different people in this field, different, I guess, niches in this field. Yeah, that's a great question. I relate it to, I think, a good analogy is like look at it as like medical doctors.

You know, they all go to medical school, but they all have different specialties. And so sometimes you're going to go to your general family doctor, but you wouldn't say like, okay, hey, you have a brain azurism, you know, like, you know, hey, doc, cut my brain open. You're going to go to, you know, brain surgeon. You know, you're going to go find a specialist in that. So your real estate attorney is going to be focusing on what, you know, like real estate deals, closing your deals and doing, you know, the paperwork for that. Your business attorney is going to be, you know, focusing on the business aspect of your, you know, internally, you know, of your business.

They're generally not going to know as the nuances of asset protection. And generally what you'll find is their knowledge stops at the LLC level of protection to where I'm not going to go in and do your real estate closing for you. That's not my job. I'm going to create the buckets that we're going to be transferring. title and holding all of those assets in. So I'm making sure that we set up the protection system fine. Your business attorneys should do their job, you know, helping you, advising you on the internal running of your business and contracts. Your real estate attorney should be focusing on what

their job is, the closing of the, you know, successfully closing the deals that you're getting. And then we just all communicate together depending on whatever the deal is. I was going to ask you, Brian, if you had to sum up how a newbie could understand when it comes to. comes to these legal entities, how they protect you in case of a lawsuit as well as how they save you money and taxes, can you just give us like a brief understanding of how they work in those two roles? Yeah, at the base layer, LLCs really work as smokescreen and as a financial deterrent. So they're good for little things. Like grandma slips and falls, breaks her hit.

You know, pizza guy, you know, slips on ice, breaks his arm. You hit somebody in your car. It used to be it can kind of help for that, but now you're seeing radically excess damage awards. know, even just in like fender banners and people getting, you know, I had one client call that said, like, oh, I got an offender bender. We were both taken away in an ambulance. I don't remember much. What can I do to protect my assets? I'm like, well, you kind of know you're getting going to be possibly getting sued now. So we have to walk a very fine line. But if you're being carried away in an ambulance, you know, even if it's a fender bender, expect, you know, this lawsuit is going to probably

run, you know, to be expensive in damages. And so the LLCs, like I said, they're good as deterrence. So if you think about like a leg, you know, what you're doing is. with an LLC, cutting off one leg of the plaintiff's attorney suing you because you're trying to make it harder for them and more expensive for them to collect damages on you because law firms are what? Businesses, businesses have profit lines. And so if I'm going to sue you for $100,000, I have to make sure that when I get the settlement from the case or a judgment, I didn't overspend and break even. Like we have to create a profit.

And so each layer adds more, you know, cuts off more legs. of the chair to where then the chair is unstable and it's either going to be too costly to push the case forward so they'll take the insurance coverage or a settlement or in certain big cases like i have you know like i was talking about off screen with you guys we have that california client who's a doctor who owns a jersey property um rented it out to a gang member didn't know you know didn't know as a gang member there was a fight that broke out guns were pulled someone was shot and killed who's getting sued Mr. Deep Pockets, you know, White Co. Investor here with the rental property for negligence and wrongful death. Would insurance and an LLC hold up and protects you in that case? No, because whoever's

suing you has a war chest and now they're going after, you know, millions of dollars for lost earnings and wrongful death. That's where stronger protection needs to come into play. And that's where very strong asset protection trust come in to protect you. Because in those type of cases where you have a doomsday lawsuit and you're going to potentially lose everything, we have to be a, able to what's called break a bridge and move your equity out of a U.S. jurisdiction to protect your assets. And that's where the different layers really come in depending on, you know, and strength comes in. It just depends on the type of lawsuit. So effectively, if I'm hearing this correctly, it's, you know, we're trying to bog people down in the actual legal flow. And so, you know,

LLCs, there's going to be a lot of paperwork that that you have to kind of mitigate through or, like, kind of go through as someone that's in this lawsuit. And so that can already be costly, but then to then start going into that next layer of like the LLP and having to go through all of that, it just takes more time and expense for the other party that's, you know, trying to take legal action. Is that about right? Yeah, that sums it up right. And then the final layer, the asset protection trust, if you're using, for example, like a bridge trust, a very strong asset protection trust, we can break domestic compliance, meaning move the equity to an offshore account to where no judge can actually reach that money legally.

And then that generally, once the party's suing, you sees that a foreign trust is in play at that point, they'll just go away because it's just too difficult. Like we can break through all of that when we talk about trust, you know, and why it's so strong. But the ultimate deter is saying, even if you win that $10 million judgment against me, I'm uncollectable. And really what we're trying to do is make sure, like, in a doomsday scenario, you're going to lose this lawsuit. You're going to lose bad, and you're going to probably lose most of your wealth.

We want to be able to make sure you're not collectible legally. Yeah, so let's dive into it a little bit because, you know, I want to know a little bit more about trust. I actually not too long ago set up a family trust. And I was under the impression, you know, hey, is that it? Am I good to go? Is that all I need to do here? But how many are there different types of trust, just like there are, you know, LLCs and LLP's and all that kind of stuff? Is there a whole branch of trusts out there that a lot of people don't know about?

That's a great question. And that's absolutely true. It's kind of like, you know, a lot of people have this misconception that trust or trust. Well, I have a trust, so I'm good to go. And it's not. It's like Baskin Robbins, 31 flavors. You know, like this is all ice cream, but there's different types of ice cream. And so asset protection trust are that final layer of your planning.

Like I said, like it's that full of bad weather, you know, outer shell layer. But it's the heart and soul of the system. And so trust have been. the longest lasting entity of all entities. And you can scope them to fit however you want them to fit and they can morph as you need them without dealing with funding issues that you see with LLCs and business entities that we talked about before that can generally get them pierced. And so I just love trust. And then having a trust at the very top of your planning is just very powerful. And so is picking the right place to actually set these things up in. And so like to keep with my Baskin-Robbins,

you know, theory, the standard 101 trust that everybody's familiar with, you know, Rob, that you mentioned that came from the 60s is the family revocable living trust. So trust don't die. So when you do and you actually funded your trust by transferring ownership entitled to it, you don't have to go through the courts and probate, you know, and that changed the landscape of a state planning, which is not asset protection planning. That's just a state planning to avoid courts and probate. And then you also have land trust, you know, which I'm sure like some of your listeners have heard other people talk about, you know, for real estate. They hold your real estate. And

the land and then you connect those to an LLC. But land trusts don't have any protection in and of themselves. They're only as strong as the LLC that they're connected to. And so land trusts are just a privacy mechanism. They're not a protection mechanism. And then from here, you have higher levels of trust that are called asset protection trust. And if you guys don't mind, this is where I think that we can really spend a lot of time breaking these three concepts down, like an offshore domestic and then a hybrid because then I think after this, you and your listeners will probably know like 99% more of all the attorneys out there just on asset protection trust. No, I don't mind at all. In fact, I would very much welcome it. What about you, Dave? Yeah, I don't think you can ever have too much of this information.

I mean, there is a stage in your career where you're listening to this and thinking, well, this doesn't apply to me. I'm trying to get my first property or my second property. But the thing with real estate is it doesn't grow in a linear way. It grows exponentially. You get a property, you get a second one, you start to think, holy cow, this happens all the time. One property made me more wealth in a year than all the money that I made at my full-time job after I was taxed. And this paradigm shift starts to happen where you realize gaining assets is how you grow wealth. And I've been banging this drum for a long time. I think people are finally starting to listen to me, which is nice. But there is a massive problem with inflation going on in our country. We are devaluing our currency.

and in that environment, you can feel like you are getting wealthy because you're saving money, but you're really not. Your money is losing massive amounts of value every year. It sits there. So you almost have to be investing just to break even, just to stay where you want to be. You have to be taking action. And I really believe more and more people are going to start to figure this out. And you bigger pockets fans, you heard it first, right?

So you had an advantage. But you're going to see that we're not likely heading to a crash in the real estate market. It's just going to get hotter as wealthier people start putting their money there to protect it from inflation. And when that happens, there's always vultures that will circle because it's easier to go and take your money than it is to make their own. And I think what Brian's talking about, which is beautiful, is this is how you make it harder to take your money, right? When you were talking about how we set up these foreign tourists and different ways to make it difficult, it made me think about I believe it was World War I. Actually, I should know this. I'm sorry that I don't. But when

the Russians pulled the Germans into invading Russia and they just kept sucking them deeper and deeper and deeper into Russian territory and their supply lines got stretched out and then winter hit. It was very, very difficult to go after the Russians so they finally gave up and said, I don't want it. Well, you can think about your wealth in that same way that as people are coming after it, the more obstacles that you put in their way and the longer of a process you make them spend, the more money they have to spend on their lawyers to try to get to it, they're either not going to fight that war or they're going to quit once they start.

And so this is a very practical thing to be learning, especially if someone really likes real estate because it's going to become more and more. important in the future. Absolutely. And like to piggyback off of that, like I'll use my ex-brother-in-law as an example, a guy who couldn't rub two pennies together and then decided he was going to go do a, you know, flip and fix. And then that turned into like a short-term rental. That turned into a six-plex. That turned into him, you know, specking out a couple homes. In three years worth of time, he has over a million dollars worth of assets and unprotected network. Just by like listening, I have like, hey, go listen to bigger pockets. Go listen to these guys. Like start learning this stuff.

but execute it. Don't just read it and get stuck in analysis paralysis. He actually did. And the next thing you know, from not being able to rub two pennies together, it's amazing how fast real estate can accelerate wealth. And so the whole point of this is if you're just starting out, it's good to know like here's the foundation, but you need to know the direction that you're heading

because then you're going to set up like most of my clients come in like a complete mess. They're going to come in. I own 15 properties either all in my name in all these different states or I have you know, a Wyoming LLC or like one was, one was what four days ago, I have a Montana LLC. I don't know why Montana. I have 15 properties in all these different states in a Montana LLC that I don't live in. I have no connection to Montana whatsoever. And so what can you do for me? And I'm like, okay, well, now we're going to have to disassemble all of this craziness that you did. But let's like make this flow and let's put you in a stronger jurisdiction for, you know, this trust. But, you know, to get into, you know, like this. You know, strength of, you know, these three different trust. What going offshore, and particularly the Cook Islands does is they have this beautiful thing that's called statutory non-recognition. All right. And what this means is that if you have a judgment against you in the United States, you know, and you took it down to the Cook Islands, or you have judgment there is completely worthless. It literally has no

value whatsoever because it has seven very strong statutory standards. And so if somebody wants to sue your trust that you create in the Cook Islands, they'd have to start the case all over. from scratch there. The person suing you would have to prove their case beyond a reasonable doubt. So that's the murder standard, the 99% sure standard, not the, you know, U.S. civil case, 51% is called a preponderance of the evidence like, oh, maybe I don't know, you know, but sure, like let's give them their money. You're talking about the highest legal standard in the world. You can't get a contingency fee attorney to represent you there because they're not allowed down there. It's unethical like it used to be here in the U.S., but that got changed in the 60s because

lawyers now control our legal system and they want lawsuits to get started so they can get bigger paydays. The claim, meaning the lawsuit's not amendable. So once you file your complaint, that's it. Once you start sending out discovery and you start digging around and poking around, you can't just say like, okay, well, we're going to now change what we're suing you about and sue you for this, even though we didn't know we were suing you for that. So we're going to amend our complaint. You can't do that down there. The person's suing is going to have to front the entire court cost, plus flying a judge from New Zealand and you can't take your U.S. attorneys with you down there. And the kicker here with this is like if you lose, you pay. And so this is one of the single worst things that we don't have here in the United States, that the loser does not need to pay the legal fees of the winner.

So if you get sued by somebody for something completely bogus, I mean like a frivolous lawsuit and you spend $200,000 defending yourself on legal fees. And then the judge decides, hey, you know what? This is ridiculous. I'm throwing this case out. you're still out $200,000. They're not going to be getting the bill for it because that's discouraged in the U.S. because that will discourage people suing other people. And then there's only a one-year statute of limitations. And so while you have now the most effective, remember the four things I told you to think about, effectiveness, cost, control, compliance.

While you have the most effective trusts in the world by far, I mean, statutory non-recognition, right? It doesn't get stronger than that. Those other three factors, if you're going to go purely foreign, it falls short. Sure, because now costs are going to be very high, like $50,000 to $75,000 to set up a purely foreign trust. You're going to be out of control of your assets, and the IRS compliance is insane. You're talking about like full disclosures, fact of disclosures, you know, full trust disclosures. So for most people, that's a hard pill to swallow.

So that's why we rarely rarely ever see, you know, using going purely foreign. What most people then default to is going domestic. It's cheaper to start, start up. You're going to be in control of your assets. The problem is they suck on effectiveness and they're starting to get pierced because we have what's called a constitution. You know, Article 4, Section 1, Full Faith and Credit Clause, meaning if I own, you know, a California piece of property and I have a Nevada LLC, I can't take that judgment, go to

Nevada and Nevada say like, hey, sorry, we're not going to exercise that judgment. They legally have to, you know, adhere to that judgment and even litigate the case because you have to give the full fifth and credit to other states, you know, judgments and recognitions. And so, and then you have crazy judges nowadays that are just, you know, what is it, litigating from the bench. And so you have radical judges now, not following case law and statutes by and using their superpower called public authority, you know, public policy. And so the way you combat this is you want to take the best of both worlds. You create what's called a hybrid trust or a bridge trust. And you take an offshore Cook

Islands trust and you domesticate it through the IRS. And now, it's cheaper to start up, it's cheaper to maintain, you have no IRS disclosures whatsoever. While that trust is domestic, okay, the maintenance is going to be easier. But I have that strength in my back pocket. So if I ever do get sued, and for example, there's this Louisiana case that happened. Sometime in September, I think it was. There was a guy, Airbnb, his property, okay? The short-term renter, like a lot of people party, we know, in short-term rentals.

All right. A guy got plowed, decided to do a head dive off the back patio and landed in the shallow pond, broke his neck, became a quadriplegic, sued the landowner of the property and got an $11 million judgment out of him, okay, because he was a dumb drunk. And so what this means is if you're that landowner getting sued and you had a bridge trust, we can do what's called a demand on the assets. Break the IRS compliance. And now your trust is what it is.

It's purely foreign. Now we have that strength in our back pocket because we set it up beforehand. And so now even when you lose that $11 million lawsuit, I've moved your equity, I've moved your money, you're safe. Now we can either have them just completely walk away, which most people do, nine times out of 10, or the case is settled for a penny on the dollar. Once the case settles, you redomesticate that trust and it's back to being purely domestic again. So I actually have a question about this because, you know, a lot of interesting stuff here. So let's just say in the case where you have a trust, like let's say the hybrid trust, for example, and that holds all your real estate and you have an $11 million judgment.

So that judgment is against your trust, which is more protected because it's offshore. Do you personally, just as a person walking the streets in America, have any sort of liability at all or any kind of charging order or any money that you would be on hook for from that $11 million? So what would happen is at that point, we're moving the equity and removing you as the trustee. And so the likelihood of them following you, so we've had to break, you know,

like over 300 bridges, you know, and move a bunch of equity offshore. We've never had or seen over decades a client actually follow us down to the Cook Islands because it's just too daunting of a task. If you go through like those seven prongs that they'd have to do, the only people who ever go down there is the IRS, the government, the man who can print money and has infinite amount of resources, and all they do is lose down there. And so do you have liability walking around? Yes. Can you run from that? No. Do you have a judgment

against you, a valid judgment? Yes. But what we did is make it legally to where you're not collectible on that judgment because the offshore trustee is going to say, sorry, this is the Cook Islands. We don't recognize any country's court orders or judgments. You have to sue us here. And that's out of your control. And this is the U.S. versus grant case to where, a guy stiffed the IRS for $36 million, stuffed it in a Cook Islands lawsuit, had a heart attack, died. The IRS came after the wife for the back taxes and the money three times and three times lost and then tried to hold her in civil contempt of court and throw her in jail until the money came back. And the court said, listen, it's not her choice. Now, at this point, the offshore trustee is the one in control saying, no, sorry, you don't get access to this because it's under duress.

and she even tried to instruct the offshore trustee to give the money back, and they kept saying no, because it's under duress. And the court said three times of the prosecutors, we can't hold her in civil contempt of court because it's no longer in her control. So that's how effective and strong that becomes. So you're walking around with the liability, but it's the ultimate settlement, you know, big red button that works that you have in your toolbox. So generally, before you go down that route, you're going to be settling the case because the attorneys at that point realize a foreign trust is in. in play, it just is up to me the attorney to decide when I'm going to use that option or not, because it's the ultimate negotiating factor. So I have two questions about that.

The first would be, how quickly can you get this set up? Is this something where like, oh, boy, I'm in trouble. I can get it moved over before a judgment is issued. And number two, approximately how much somebody, how much money should someone plan to set aside to do this technique? That's a good question. So it generally takes about 30 days to set up and transfer all the assets over. That's fast.

And ideally you want to set this up. Yeah, it's pretty quick. And ideally you want to set this stuff up before you even have a whiff that you're going to get sued because realize states have look back periods. The most extreme is California, a 10-year look-back period. Other states have like two-year look-back periods, meaning you set this up and then if you get sued next year, someone's going to look and say, okay, well, this is a fraudulent transfer, unwind it because you had a reasonable expectation within this time frame that you could have been sued. anyways, that's irrelevant because you're not getting sued, but that's the argument that's going to be played. So you want to set these up like any defense system before a lawsuit happens. Once a lawsuit happens, you're starting to go too far down the rabbit hole, and you're really limiting the options that we have. And if you have a big lawsuit against you already and you come to me, I'm either going to have to exempt that lawsuit or just go purely foreign. And that's going to be very expensive. Purely foreign, like I said, you're generally talking like 45,000. to 75,000 to set up plus $10,000 to $15,000 a year to maintain.

That's why we don't use them very much because it's in the IRS compliances. It's just too much. That's why you go to the hybrid option to where generally with a bridge trust with a limited partnership, you're talking about $29,000 to set up plus around $2,600 to maintain a year. And all of this is asset protection. So it's a tax write off. The profile that generally fits a bridge trust set up.

is you have about one million, like I said, of unprotected net. You probably have, you know, four to six or more real estate properties in different states. Either you're a pure real estate and, you know, 100% into real estate investing at this time, or you have some other type of high risk career like you're a medical doctor investing in real estate or a lawyer, CPA, something that has more profile to where you have a besides just the real estate itself, because I think people don't realize how much bad things can happen in real estate, even if you're the most wonderful tenant, you know, landlord in the world. You know, you can't control mold issues. You can, there's a lot of things that are just, you know, renting out to the wrong person

to fight breaking out of someone dying. There's just so many things that go out of your realm of control that, you know, that's what these trusts are for. And I tell people think of it like a pie chart. You know, there's three quadrants. The things you know, the things you don't know, and the things you don't know that you don't know. Most bad things happen in the third quadrant. And that's where most people own their assets, the things that I don't know that I don't know. If I know something, I can, I already know the answer. If I don't know something, but I know Dave or Rob knows the answer, I'm going to be like, hey, Dave, hey, Rob, what's the answer to this? And you'll tell me. But if I don't know that I don't know something, I don't even

know how to ask the question. And so the idea is shrink that portion of the pie as much as possible, but create protection around yourself so that when something does blow up in that quadrant, we're safe. Okay. So I think for offshore, you mentioned that that is expensive, 45 to 55,000. And can you also break down that for, I think, for the domestic side. I don't know if I miss that that particular number. And that's one that you said, if I don't, if I remember correctly, offshore, highest level of protection, most expensive, domestic, more affordable, but not as much protection in hybrid. Basically, Mary is like the best, right?

So what would be the cost on those side of things? Yeah. So the domestic side, the purely domestic side, on average, you see a domestic trust fall in the realms of like, I would say, 9,000 to 12,000 to set up and probably around $1,000 a year to maintain. Again, the weakness with that is purely U.S. domestic. So there's no escape option. So just realize that's the weakness of it. And we're having a lot of case law come down of judges, even in states that have asset

protection statutes and self-settled spendthrift statutes, just completely ignoring those statutes now. Or you have states like California that don't have self-send, settled spendthrift legislation and people running off to like Nevada, for example, to create an out-of-state asset protection trust? Well, the courts in California came down in Kilker Stealman in 2012 and said, uh-uh, not anymore. We're not going to allow you to do this anymore. We're not recognizing out-of-state asset protection trust or people run off to like create Delaware statutory trust. Well, California doesn't recognize them anymore. And so you have very thin lines

of what states recognize them and what states don't. And so when you combine where your assets are, where you're resident of where the potential lawsuits come in, that really weakens the effectiveness of anything purely domestic. So yeah, I can spend $12,000 on a domestic trust, but I feel like we're buying false sense of security at that point. And then that's where the domestic comes in, kind of in between. But what you're doing, like you mentioned, Rob, is taking the best of both, the pure strength of the foreign, the ease and simplicity from tax purposes of the domestic, combining them together and then that falls within kind of by, you know, half price range around $29,000. So, okay.

Yeah. I mean, it's still up there. But, I mean, I think now hearing the benefits of it, I mean, it starts to make a lot of sense, especially when you do have like a very, you know, a very quickly growing portfolio. I also wanted to get some clarity on something you said about the, I guess, like, if you solely do real estate, then the trust is going to help you. And then if you're kind of in another high-risk, you know, job like a doctor, a CPA, a podcaster, a YouTuber, in those instances as well, if you got sued personally out in the streets here, whatever, for something you said or something you did, you would still have protection on all of your assets, even if what you're getting sued for isn't necessarily real estate related. Does that make sense? Correct. Yeah, absolutely. Because your assets are out of your personal names, are owned in.

the proper buckets, you know, the real estate's and the LLCs. You have the management company as a second layer. Your trust really owns everything. And so since everything's out of your name, there's nothing, you're going to get sued personally, but they're going to have to break into the system. And let's say they do pierce fails and they do get into that system. Everything's unwinding. You know, like you're in your doomsday health situation right now. You had a glass of wine, you know, at date night with your spouse and you hit somebody with your car. And then they died. You know, like that's just a general, on you personally, they're coming into your trust to try to get it. That's where those layers come into play and then that trust disconnects, does a unilateral with demand on the assets, and it's gone. And so even though you have a judgment against you personally, your asset protection trust is what's going to be owning everything. And then that offshore trustee eventually is what's going to be, you know, like the ultimate door in that judgment's face. It's just a matter of having the layers set up, again, keyword beforehand. So that's where when we create the trust and everything before you're getting sued,

now I have that option to break the bridge, you know, or that compliance because it's in my toolbox already, just like you're hiring a contractor to build your house. I want to make sure the contractor has all the tools and knows how to use them and not saying like, oh, I'm going to go put the roof on, you know, and I need to get a crane, but I don't know how to use a crane, you know, so you need the pieces and the tools in place beforehand. Okay. That all, okay, that, see, this is like truly, this is all mind-blowing stuff for me. So the only other real question around the trusts, well, no, actually, I have a thousand more questions, but the one big one that I think a lot of people are probably wondering at home is once you start getting into, like, let's say you put your property in an LLC or you did like a quick claim into an LLC or you did anything in that world. Refinancing and doing like a cash out refi and, you know, moving those deeds over, that can already start getting tricky at that level. So my question is, once you completely move your properties into your trusts, how does that affect doing any kind of financing in the states? Does that get murky

at all? Or is it the same straightforward process? That's a great question. And I would say it depends on the type of trust that you use. We specifically use a grantor's trust, so there's no murkiness. And banks and lenders prefer to see a grantor's trust because you're the one that's maintaining the control of, you know, the management of your assets. There's other types of trust that you create that, you know, you hear some people saying, like, well, I have an asset protection trust in Nevada, and it's so difficult to get lending through or, you know, using it for the bankers. Well, that's because it's not a grant trust.

And so it just depends on the type of trust that you're using at the end of the day. So if it's owned in a foreign, I guess, I guess it's hybrid, but if it's owned kind of in this hybrid thing, it doesn't necessarily. have, you know, like really bad ramifications on going to a bank and saying, hey, okay. Not at all because all it is, it would just be a foreign grantor's trust. The hybrid trust is a grant trust and all that the banks will see is a domesticated U.S. grantor's trust. And that's all that they're going to see. And it's just like everything else. Like another form of a grantor's trust is your revocable living trust. You know, that's another self-settled

created for you by you. So they're familiar with that. You know, if you start going away from grantors trust, then you're going to start seeing banks or lenders saying, like, oh, I really don't understand what this is. So like the basic kiss principle, right? Keep it simple, stupid. It's the same thing that you want to apply when you start creating asset protection plans. Some attorneys that don't do this, you know, at higher levels create very convoluted messes for clients who just becomes a nightmare for what you're saying, lending purposes or even tax accounting purposes. And then they just stop using it and unwinding what they did. And they just completely wasted a bunch of money because the system, was so convoluted and so difficult to use and maintain, that is completely contrary to what you want to do.

So again, remember the acronym ECC, you know, C, you want to make sure you can maintain your compliance and the costs are going to be, you know, easy to maintain. So that acronym, just everything that you do realize if it looks convoluted, it's going to probably be convoluted to you. So you want to really simplify what you create. Just make sure it's strong and has different multiple layers. The rise of the tech savvy investors here. You don't need a huge team.

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Head to costsegregation.com before April 15th. Okay, and I kind of, I want to pivot a little bit here. Not super left field, but a question here, because obviously like in today, in 2020, today's world, cryptocurrency and in digital real estate, right? NFTs and other things. That's obviously a really growing industry at the moment. And so I'm kind of curious, when you start factoring in technologies like crypto and blockchain, are there any, is there anything you can speak to with protecting that through any kind of trust as well? Yeah, absolutely. I almost feel like that's a whole other episode in and of itself. but just remember that the IRS defines cryptocurrencies as a property.

Okay, it's very, very important for your listeners to understand this. And what this means is that it can be targeted with legal action and you are legally required to disclose that you own it and how much of it you own and where. And so people have this misunderstanding that because you purchase, you know, you purchase this cryptocurrency and that is private, that they think that it can't be traced or that is inherently protection in and of itself. meaning that simply owning your cryptocurrency is asset protection in and of itself and that you're hiding wealth. And this is the farthest thing from the truth. You know, if you ever are subjected to a money

judgment and you're brought into debtors court, because the U.S. classifies your crypto as a property, you're legally required to disclose it. And like any property, it can be frozen and ceased. You know, and so if you don't disclose it, you're lying to the court. You just commit to perjury. and perjury means people go to jail. And so what we need to do is assign your exchanges and your wallets out of your name and into your asset protection plan to protect those assets. And now this is where, you know, blockchain technology and the law is really getting fun.

So there are things called blockchain trusts that are starting like we're developing right now ourselves using the same concepts as the blockchain, you know, that's powering crypto, that then can be used to create these unique trust. and the chain you can make changes and amendments to these trusts that they're going to be recorded in the blockchain and then it's going to be forever verifiable and what you know we also are building we can build our pre-built in triggers into a blockchain trust that allow the trust to alter its structure based on certain events that are happening for example like a trust can convert into an irrevocable asset protection trust if you're ever in a lawsuit or it can become an irrevocable income-only trust, you know, before a beneficiary ever needs to apply for Medicaid. And so the blockchain trust, based off of all this new technology, is really starting to accelerate, you know, what we can, you know, the trust that we're using, you know, for the future. But this is all kind of in beta development now, but I expect to see, like, big changes, you know, starting to happen there.

Awesome, man. Well, we'll bring you on for a whole note, a whole other deep dive on that. And I guess a general, a general disclaimer for everybody out there. David, And I will never ask you to send us crypto. We'll never ask you to contact us on WhatsApp. So if you're on the Bigger Pockets YouTube channel, you're going to see a lot of bigger pockets, branded accounts that are scanners that are saying, hit me up on WhatsApp, send me Forex trading.

I don't really know what it is these days. It's not true. We're never going to ask for that. That is a good point. I've got, every month I get a new fake account where they will have some variation of my screen name. Do we call them screen names? Did I just go back to like AOL days right now on the podcast?

It's a handle now. The cool kids say handle. Your handle. All right. So they'll copy some variation of my handle. They'll leave off the green at the end of green or they'll turn the E into a C so it doesn't look like. They'll copy all my pictures and then they'll say, hey, send me your bank account information. I want to give you some money.

And I get so many people that say, hey, I thought I was sending you my bank account. I sent it to a scammer. It's like, why would you send it to me? That's a terrible idea. But yeah, please be very careful with these DMs. Brian, I think now would be a good time to transition over to the fire round section of the show. Did you have anything that you wanted to say before we move on? No, I'm ready for the fire round.

It's time for the fire round. Awesome. Okay, this is a segment of the show where Rob and I will fire questions at you. And we will see how you would reply in your best response where you fire them back. So what is the biggest myth surrounding LLCs? Yeah, so the big myth right now is this wonderful word called anonymity. Like, let's go create an anonymous Wyoming LLC and just like we can completely ghost and disappear lawsuits. And that's not how the, that's not how the legal system works. But I get this

call probably three times a day. And it's a sorry, I'm like cracking up as I say it, but it amazes me that this is the general train of thought that, you know, we're creating this anonymous Wyoming or Delaware LLCs and now I don't have to show up in court and I can never be sued or discovered. It reminds me of the person who can like figure out somebody's MySpace password and then they think they're a hacker. They're like, oh, I'm in. Like they think that that's what computer hacking is, right? It's the same type of thing. Like if we just find an anonymous thing or there's this one move that they know about that nobody else knows that can win them the fight. It's the same type of an idea. But yeah, when you go to court, they unpack everything. There's no fight. finger death punch. I'm going to say you can definitely thank TikTok for that. I mean,

TikTok is 15 to 30 second viral videos that are like, this hack is going to save you millions of dollars in a lawsuit. Wyoming LLC. And then it's like, oh, gosh. And that's where this comes from because you have so many promoters, you know, and even attorneys and CPs have no idea about this because they just take a continuing legal education course and then just realize like, I can use this for everybody and cast a big net. And don't. And don't. realize well what really happens and plays out in court because i'm a trial lawyer by trade and it's like well you do get this thing called like you're getting a service so that personal agent of service that's legally required to be attached to that Wyoming or Delaware LLC there's so job is to be like hey rob

guess what man you just got served here's your lawsuit now go get a lawyer and show up in court well there's no more anonymity at that point so now you got to show up in court and the judge is going to say hey you know you're going to potentially have a judgment against you so here's this great thing called an asset declaration list, like write everything down that you own. And if you don't and you don't disclose everything, now you're going to commit perjury on the court and go to jail. And so once you get sued, like an amenity goes completely out the door. Now, if you want to hide your assets, you're the weak link on that because you're going to be the one going to jail. And so just realize an amenity is a privacy mechanism, not a lawsuit ghosting mechanism. All right. Awesome. Let's move on

to the next one here. How will investors use blockchain? in the near future. I think investors are going to be from the legal side or like, you know, contract side or? Yeah, yeah, like smart contracts, anything in that, in that side of things. Yeah. So I would go and look at, you know, like, what is a company? Like, I'm not pumping any one specific, like, currency or anything like that, but like at ADA, you know, they're really getting into, like, Cardano. Yeah, ADA's Cardano. They're really getting into like the smart contract play. And so I realize, you know, like the blockchain is really, it's about transferring a title. And so now it's going to be making, you're going to have these smart contracts and it's

going to be really easy, clear title. And so the importance of that, even the legal field is you can't go in and manipulate a piece of evidence and document because it's all going to be transparently there in the blockchain. And you can't just go in and start manipulating, you know, these agreements. All right. Next question has to do with building your team. So in the book that I, David, wrote Long Distance, Rilsen investing, I talked about the core for. You want a deal finder, a property manager, a contractor, and a lender. You have those four pieces you can invest anywhere. Outside of those pieces, Brian, who do you think investors need on their team?

Yeah, and that's a great book. I actually read your book. It's a really good book. So you're the one that read it. I've been looking for you. I am. It's me. It's me.

I should get a little courteous like King's like, Hey, man. But I bought all the covers. I just give them out as gifts. But anyway, no, like the key pieces beyond those, I would say become friends with your CPA. You know, like really, you know, like you should be talking quarterly to your CPA to take better advantage of your, you know, tax strategies. Your asset protection attorney, before you buy something, before you sell something, or if you have a sniff in the wind that you did something wrong and are about to get sued.

So we need to those two to talk and you need to talk, you know, we need to talk to each other and your wealth manager because we need to protect what you have. your CPA needs to be able to file the proper tax forms and your wealth manager needs to be able to do whatever tax mitigation strategies that you want in place. And so I think those are the three key pieces of your investment world that you need to be constantly talking to. And some people are afraid to talk to the lawyers. Some people don't realize like you should be talking to your CPA probably quarterly to create proper plans on how to write a lot of stuff off. And then your wealth managers take your CPA job to a whole other exercise. level. And so if you really want to accelerate wealth, get in with your wealth manager.

Tell them your strategies. Tell them how aggressive you want to be and let them do their magic. Totally agree, man. I mean, that's a whole other level on the, you know, on the Avengers, right? I call mine Airbnb Avengers. I think David calls his the dream team or his core four. This is now your financial, I don't know. We don't have to think of the name for them now. But yeah, I mean, teams in every aspect of your business, I guess there's no limit to the amount of teams that you can have when you're trying to scale and protect your asset. So thanks for answering that. So I'm going to be relishing to this podcast myself. Just I'm going to digest it and then come back and then relisten with the whole new. I mean, I feel like I've just evolved to the next

level of like what it takes to really know your business. So, you know, Brian, for you, are there any final takeaways or anything you want to leave the viewer or the viewers or the listeners with as we close out? Yeah, I just say like in the realm of, you know, what we've been talking about. It's too late after you're getting sued. So you've got to think about this stuff beforehand. And then just layer it up and structure it as you go. And the investment side of things, I would just say don't get stuck in analysis paralysis. Eventually, you've got to just jump in and kick your arms and feet around and realize, you know, let's float than swim.

Where can people find out more about you, Brian? Yeah, they can jump on my website, www.bb.com. I have it set up more as an educational resource with a bunch of case law, frequently asked questions, video content, because I'd rather have you be educated to ask better questions when you are shopping around versus just coming in at a blank slate. Or you can just email me, Brian, B-R-I-A-N at BTB-Legal.com. And, you know, I generally do a one-hour free consultation, whether, you know, were the right match or not.

I'd rather, again, just have you have, you know, a long, educated opinion and then take that and see what other people have to say. Announcing that, you're about to get all the hours on your calendar filled out for the next year, I think. I'll say, you know this really is. David, what about you, man? You know this really is a trial attorney because you're referring to case law. The second I hear that, I'm like, okay, that's actually a person who is going to end up being in court and knows this from a practical standpoint, not just a theoretical standpoint.

I always noticed that when I worked in law enforcement, those of us that were in court testifying had to pay a lot more attention to the case law involved than those that never did anything. And I would say that's a great thing to ask people when you're vetting your attorney is asking for some case law because most of them will. owned it. That's exactly right. That's so the the 15 second clip on TikTok person probably doesn't have case law. I think that's an awesome litmus test. All right. Well, thank you, Brian. I think that's, I think that's fair. But Brian, I think I'm about ended up create like a case law TikTok. Hey man, you could probably go viral with that, Brian. You want to hit up TikTok. I think that's also how you know someone's like, David, what can people find you? You could find me at David Green 24. Find me on Instagram. Find me on Facebook. Find me on Twitter and LinkedIn.

and I'm going to be making a TikTok for the David Green team. I'm just trying to figure out who the right person is to make that thing. Brandon Turner has warned me very, very carefully. Do not get sucked into TikTok. It's like putting on the ring in Lord of the Rings where it just can pull you right in. So I'm going to be making content for TikTok, but not ever actually watching it because I've been warned of the dangers of it. Oh, it's true. They know me well.

They know me well. You can find me on TikTok at Rob Bilto, Instagram, Rob Bilt. on YouTube at Raw Built as well. And remember everybody, it's David Green with an E 24. It's not, it's that David Cream 25. We will never ask you for a crypto. All right. Well, thank you very much, Brian.

This has been a fantastic show. Probably more practical knowledge and insight than almost anywhere else you could get. I mean, this is just like the consultation that you're going to give to somebody. Many people would pay money to get this information. So thank you very much for coming and bringing it to our audience. We appreciate you. And I think Rob and I will now be having another talk where we say, oh, my God, do we need to do anything differently?

What could happen here? Do we want to go to Monaco? Do we want to go to Switzerland? What's the key going to be? But we appreciate you, man. We'll be in touch. We'll be in touch. This is David Green for Rob Robo Abysolo.

Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify or any other podcast platform, our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your

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