Brian Bradley  0:00  

Piercing the corporate veil, just as a real estate investor is two easy arguments that work on nine times out of 10. An extension of yourself, you’re holding that real estate as a holding company, you know, the real estate and a holding company, it’s not doing business, it’s just a holding company. For an asset you own right there, that’s going to be a piercing the corporate veil argument that wins nine times out of 10. Then the next one is commingling of assets. Most people do very, very poor accounting. And so you’re bringing business money in to your operating company or that LLC. you’re transferring it incorrectly into your personal account your personal account into that account, you’re commingling money back and forth. You’re using that business as a personal extension of yourself. So just making those two arguments right there. I’m going to pierce that veil and most young attorneys can make those two arguments without even thinking about it. 

Announcer  0:49  

Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast.  Whether you’re an investor, broker, lender, property manager, attorney or accountant We’re here to learn from the experts. 

J Darrin Gross  1:08  

Welcome to Commercial Real Estate Pro Networks CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio. 

Today, my guest is Brian T. Bradley Esquire.  He is the leading educator and nationally recognized asset protection attorney for high risk professionals, entrepreneurs, real estate investors and ultra high net worth families. Brian’s goal is to give you peace of mind knowing your assets are protected. And in just a minute, we’re going to speak with Brian about asset protection, the risk real estate investors face and what you can do to protect yourself. 

But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple of things you can do. You can like, share and subscribe. And as always, we encourage you to leave a comment. We’d love to hear from our listeners. Also, if you want to see how handsome our guests are, be sure to check out our YouTube channel. And you can find this on YouTube at Commercial Real Estate Pro Network. While you’re there, please subscribe. With that I want to welcome my guest. Brian, welcome to CRE PN Radio.

Brian Bradley  2:40  

Thank you very much for having me on and putting the whole podcast and everything together and is a really important topic. And I hope that the concepts that we talk about help your listeners and you know, we’re definitely going to be blowing up the status quo. And you know, all the misconceptions out there.

J Darrin Gross  2:55  

Cool. Well, I’m looking forward to it. Before we jump in, if you could take a minute and share with the listeners a little bit about your background.

Brian Bradley  3:04  

Yeah, like you said, I’m an asset protection attorney and I got into asset protection from the litigation side of the law and having clients being sued and their live shows turned completely upside down with a false sense of security thinking, Well, I have insurance and I can just rely on that, you know, I don’t need anything else or, you know, sticking all their assets into a revocable living trust and thinking that that’s going to protect their assets from lawsuits and then finding out that that’s not going to do anything for them. 

And you know, by being in the legal system, the sad thing is, is that the legal system is broken. It’s not about justice any longer, you know, in the US for a Sue Happy Nirvana. We have more than 40 million lawsuits filed every year in the US and you know, litigations just become over $400 billion business with a B. And so what we do is provide peace of mind for clients. And we keep in mind, really, the overall goal of asset protection is lifestyle preservation.  When the client calls and says, Hey, Brian, you know, like, I want to talk to you about asset protection. What they’re really saying is, I just want some peace of mind, I want to get rid of some stress, and I want to preserve my lifestyle in case something bad happens. And it really just comes down to more importantly, how collectable you are. And we do this by placing different legal barriers between your assets to the proper uses of you know, LLC is LPs, different types of asset protection trust, which are more flexible. And what my firm specifically does is work with, you know, higher risk professionals and investors who genuinely have around 1 million net. And with our bridge trust or a quantum living trust for those below 1 million on we’ve collectively protected over 4 billion worth of assets now.

J Darrin Gross  4:44  

No, that’s great. And so if I heard you, right, you came from the trial side of things?

Brian Bradley  4:51  

Correct. Yeah. I came out of law school right when the recession started 2008 2009 was about to, you know, have a hand given job to prosecutor’s office. And then there was hiring freezes across the whole state of California where I was at. And then I ended up getting into civil litigation. Same thing, but no money in that industry. You know, no, no one was able to pay bills are, you know, clients weren’t able to pay. And so I literally just work for free, you know, no joke. For three years, I went to different state agencies and said, Look, you have a lot of people who need representation, I need to get into court, I’ll do it for free, you cover the court costs. And I did that for three years. And just, you know, you think about how many people want free representation at that time, you know, you’re in any time and I ended up building such a big name and experience for myself in the trial world that in three or four years, I had more trial and litigation experience than most people with 25 years of practice. And then that trickled down into, you know, becoming a legal janitor, of essentially, hey, we’re stuck in this trial, we don’t know what to do or how to do it, we have no litigation experience, can you come in and help, you know, and be a miracle worker. So I started getting hired case by case and built up to like $40 million cases. And I just got tired of seeing people come in after the fact. And that’s when I wanted to transition my practice to being proactive and helping people protect their investments protect what they have all that hard work and energy you put into building your portfolio and legacy before something bad happens. And specifically, also, because I’d like to invest in myself. Last thing I would want to see as everything I’m working hard to pass on the my kids and my grandkids down the line be completely wiped out, and nothing I can do about it.

J Darrin Gross  6:37  

That’s your experience there? I’m sure is, you know, one that not every attorney has. And you know, I’m kind of curious, he, he, in your experience kind of being the hired gun there to come in and work on on trials in that? Do you have any sense of how many attorneys actually get experience in in the courtroom as opposed to you know, more just legal work?

Brian Bradley  7:06  

Not many, and even just trial work, not many, because there’s a different you have transactional attorneys like real estate, business, stuff like that. And then you have litigation attorneys.   Most litigation 99% of it settles, it’s in both parties best interest to settle as a matter of how do you force that settlement. And that’s a big play of what asset protection is, is if you have systems that are created really strong, and they’re seen as impenetrable, you are now in the position of strength, you now have the legal negotiating leverage to force a case to go away or to settle it very, very cheap. And I really wanted to incorporate that into my practice, but 99% of cases I get filed, they’re just getting filed for a settlement, you just have to go through the expensive litigation process. So most even litigators don’t have a lot of trial experience. So they wouldn’t know how to run a trial if they needed to. So I really focus in the beginning on how to run a trial, how to talk to a judge how to talk to a jury, you know, jurisprudence, how to pick a jury on how to create arguments and triangles, that you would need to prove a case. I’m not many people actually have that type of background and experience. And so it was even hard to find mentors and really good mentors. So I reached out to just like the best of the best, you know, Friedman, David Ball on Gary Spencer, and these guys, and just said, like, these are the best of the best of this, I’m just going to copy success. And I always made a point to where I don’t care if cases are going to settle. I always take a case two cases to trial every year just to keep developing those skills. I just pick really interesting cases now that changed the law on the state because I was able I’m able to cherry pick now.

J Darrin Gross  8:48  

No, that’s awesome. I appreciate you sharing them. So let’s talk about asset protection. Now, you mentioned that, you know, people were coming to you kind of after the fact as opposed to I mean, when when essentially they could couldn’t do anything they were it was too late. What can you you know, I mean, there’s multiple levels of asset protection. I mean, as an insurance broker, like to think that we participate in an asset protection as one of the easy, you know, options. But can you kind of break down the different, I guess levels or the different types of asset protection that are available?

Brian Bradley  9:32  

Yeah, absolutely. And I think you know, like a good starting point is just understand like, What even is asset protection, like we hear the word I don’t think very many people even understand what it is as basic conceptual level. And it’s just modern estate planning, fighting modern wealth destroyers, you know, like we’re not talking about taxes, death, taxes, destroying wealth, you know, and what we’re really talking about are predatory lawsuits large and out of control legal Little system, out of control, legal costs, divorces, these are the things that destroy your wealth while you’re alive, you know, living wills, revocable living trusts and stuff like that only come into effect once you die, so there’s no protection that’s going to be coming out of that. 

So we’re placing a legal barrier between your assets and your potential creditor before it’s needed, it has to be done before you’re under a gun before you’re being sued. Because if we start transferring assets after the fact, after you’re sued, then we have, we’re going to be looking through fraudulent transfer arguments. And so of course, like asset protection done before you’re being sued, because it’s preventative, just like insurance is preventative. That’s it, it’s like a safe that you would put, you know, your gold or your guns or your watches or other valuables in anything of value as an asset wise, you also want to put behind the legal barrier or legal safe out of your personal name, so that it’s not easily attached with a lien, you know, or reached with a judgment. Like we have a saying, we want to make you as ugly as possible to a creditor, which is kind of against human nature, because we all want to, you know, look good take care of ourselves. When it comes to litigation and lawsuits, you want to be seen as unattainable, very ugly to collect on and very expensive and difficult and not worth anybody’s time to attack. And we do this through different layers. And the general layers would be, you know, in an LLC, limited liability company, and LP, a limited partnership, and a variety of different types of asset protection trust. And you know, there’s lots of different flavors of trust. And we can break all these concepts down when, you know, in a little in a little bit. 

And like you said insurance is an entry base level layer on you got to have insurance, but I think most people just need to understand. When it gets into litigation road of things. There’s things called insurance defense teams, whose job is to create legal separation from you and not pay claims. So you should have it you should have it for you know, as much as you can afford. But you also understand that you know, insurance doesn’t cover you for fraudulent acts. They don’t cover you for intentional wrongdoings. And in litigation world. That’s what the insurance defense team are going to start implying is intentional acts and wrongdoing arguments to create wiggle room for large judgments to say, Hey, we’re not going to be able to cover this because of an intentional act, which can be as simple as you sending an email because a judge will look at that email and say you wrote this.  Writing is an intent, now that just transition that whole case into an intentional potential wrongdoing. And that’s now the legal separation and trial that an insurance legal team is going to use to pay down less of a claim.

J Darrin Gross  12:40  

And just for clarification, this insurance defense team you referred to that’s essentially the insurance companies working to protect their assets. Is that is that correct?

Brian Bradley  12:52  

It’s the insurance. Yeah, it’s the insurance, legal team, looking at a case and deciding Are we going to pay this claim, or we’re going to pay this claim in full, um, and insurance as a business make money by taking premiums and not paying out large amounts of claims? So they’re going to look at a case and say, here’s a million dollar claim, potentially? Are we going to pay this or not? Where’s the legal separation? And they’re going to protect their own interest?

J Darrin Gross  13:19  

Gotcha. So you mentioned multiple things, I mean, layers LLCs, LPs, and trust? Yeah. Can you go into each one of those and share kind of what the construct or what the protection they provide? And I don’t know how deep you want to go. But but just some sort of a way to explain that for the listeners to kinda identify and recognize what what each one can do?

Brian Bradley  13:55  

Yeah, absolutely. And so we’re just going to call it you know, the key concepts and tools of asset protection, and like you said, you know, LLC, LP and an asset protection trust. And so I think the best way to conceptualize it is to think about winter. You know, when it comes to asset protection, we have different layers. I’m from the mountains, I’m originally from Lake Tahoe, we get lots of snow. I also lived in Michigan, it was freezing out there. And so we learn how to dress in layers. You know, the first layer is your base layer is generally made from merino wool, and it sits on your skin that’s going to be like your LLC, and your insurance. And then you want a mid layer which is usually a little bit thicker and it can be synthetic wool, that’s going to be like your limited partnership. And then you want an outer shell layer or waterproof layer, this is going to be your asset protection trust. You know, this keeps you nice and dry and warm when the weather is you know, really cold and bad. But by layering you’re now more flexible. When it gets hot and you’re skiing or your ice fishing. You know, you can take the outer layer off the inner layer off the middle layer off, you can adjust and make yourself more comfortable. And the same thing applies with your asset protection. 

And so to break each one of these layers down the base layer, like I said, is your LLC and is holding, for example, your real estate, your mid layer is going to be, you know, the limited partnership. And you generally will be looking at that mid layer to be in a good state that has some good protections like Arizona, Nevada, Wyoming, Delaware, all the base layer LLCs, you want those k ones to be able to flow directly through to the management company. And so we want those to be single member layers, as long as members as long as you’re using that mid layer, limited partnership. The problem generally is that most clients come to me with 15 LLCs. And they’re all single member LLC, but they’re also on that clients personal name, because they had their CPA create them or someone who doesn’t know much about asset protection, create them, or they created them themselves. So the problem with this is that courts have a tendency to fully disregard single member LLC now. And so they’re basically worthless, what you want is that single member LLC that’s holding your real estate to them be held and owned by a multi member Limited Partnership, not you personally. And so by doing this, what you’re not doing is properly layering your asset protection system. And then people really do have a lot of confusion on where to set these up, you know where to set these LLC up? And because they’re thinking about charging orders, but they don’t really understand the concept of this. 

So do you go to Delaware, Wyoming, Texas, Nevada, you know, when you hear about the states are really good, you know, they’re really good about protecting the LLCs. And some of the states have privacy. So people say like, Oh, it’s better to do that. So I’m going to go do that because I read some blog, or my CPA told me about this, but my CPA is not a lawyer, but I’m just going to do it anyways.  It really comes down to an issue of just what are you holding? So let’s say for example, as California real estate you’re holding, and you set up a Wyoming LLC, because somebody on the internet or your CPA told you that it was better to do, and you go ahead and hold a key piece of California real estate in it, you’re also a California resident, and you’re paying California franchise tax, what you’ve done is just convert your Wyoming LLC to a California LLC, because you’re doing business in the state of California. And not only are you going to be paying the California franchise tax, but if you ever do have liability, you’re like meaning you’re being sued. A California judge isn’t going to care, you know, like about your Wyoming LLC, the law that’s going to be applied is the law from California because that’s where you reside, that’s where the injury reside. That’s where the property is. That’s the jurisdiction. And the same thing applies for any other state. So general rule of thumb is that for your real estate, you want to create the LLC in the state that the asset is in because that’s where the lawsuits coming from, those are the rules that are going to apply. That’s where the jurisdiction is going to be. All you’re going to be doing by using states in another state is doubling your maintenance cost. And so just remember the rules, you know, the laws don’t transfer. 

And then I hear a lot of confusion about series LLCs. And so the big misconception with series LLCs is that there’s not really any case law around them. So with no case law to rely on the only fuse, there’s only a few states that have series LLC statutes. What this means is that if you live in a state that doesn’t recognize series LLC, you won’t get the benefit that’s intended from them. So just realize I only use and recommend series LLC structures for clients that reside in a state that has series LLC legislation and the assets in a state that has series LLC legislation. Otherwise, it’s not going to be recognized. So you got to remember what states are you in

J Darrin Gross  18:38  

Real quick? states? You said there are some that do recognize that can you identify those states? I mean, I’ve heard this term and didn’t.

Brian Bradley  18:45  

Texas is a great Texas has series LLC legislations I believe Ohio does. And there’s some more that do. But most states don’t. For example, the entire West Coast California, Oregon, Washington, they don’t so California, for example, and I’m gonna probably like people like why is this guy bashing on California so much. It’s just an example. There’s so many people there are a lot of money there. And California will not recognize a lot of type of entities. So that’s why I use California as an example a lot of what they’re going to do is just say great, I’m glad you created a series LLC structured with children LLC is underneath it. We don’t recognize that we don’t have a series LLC structure, we don’t have series LLC statutes. So your children series are not going to be recognized is just going to be seen as one LLC, any asset that blows up bleeds into all the other ones, and they’re still going to charge you the surprisingly enough the franchise tax on each single cheer series LLC that you made. So you’re paying the franchise tax on each one of those subs LLC, but you’re not getting the benefit of it. So you really have to look at where your residence at where do you reside, where’s the liability going to come from? Where’s the asset in and see what works in those states and so on. is a really big thing that you need to go through legal analysis to find out what works. 

And then yeah, and then the next big misconception with LLCs that I get is the term anonymity, you know, and the thought that you can just create an anonymous LLC and that you just disappear and can never be found like this is just completely false. When your LLC is sued, you’re going to be legally required to appear and defend and defend it. If you don’t, a default judgments going to be entered against you, then the complaint will simply be amended. And you’re going to be named personally. And also, the simple reality is that once the lawsuits filed, the discovery process begins, and you’ll be subpoenaed and forced into court. And what’s even worse is that if you want secrecy, you know, anonymity to even work. This is also known as lying under oath. And so that’s a one way ticket to jail. And so an example of this is that very shortly after judgments going to be entered against the debtor, meaning you, the creditor has the legal right to demand information about the assets that are owned, and by you and the courts and forces very, very broadly and taken very, very seriously. So at this point, in litigation, the only way to keep an asset anonymous or a secret is to lie about them and commit perjury. And so that’s why we don’t advocate for hiding, we just prefer to have full disclosure of proper at you know, of assets and just have a proper asset protection plan that’s in place. And so to do that, that’s this is the first two layers, like you have an LLC, and then you have limited partnerships. The Limited Partnerships are just a step up of a class of an LLC, that limited partnership would own your LLC sees those LLC s would own the assets as holding companies. And then you bring it together, and it works best together when you add a Bridge Trust or an Asset Protection Trust to it.

J Darrin Gross  21:54  

Gotcha. What’s interesting, all the LLC stuff there. I mean, I know I’ve heard the series LLC, and you know, finding the state, far and wide that charges the least and like you said, If you live in the state and the properties in the state of the the, you know, suit is in the state. You know, nice that you had that LLC and that. I think Wyoming is one that I’ve heard people like a lot but you know, the the the court doesn’t care. I mean, they’re going to find out like said even with discovery, they’re going to find out who you are. And I also wanted to go back to you mentioned that the single member entity or the disregarded entity that the courts basically are I mean, is there no protection with that i mean is it is it give you any protection?

Brian Bradley  22:52  

It gives you some it gives you a base layer level of protection, but like all LLC is like the very first word limited, they don’t hide the fact that LLC are not created to be a magical, you have no liability, it’s just all going to go straight into the corporation. It’s very limited. And then you pierce the veil. Some states have good charging order protections, you know, like Arizona, Texas, Delaware, Wyoming, the strength of it is like are you resident of that state, and is the asset in that state because I’m not going to be transferring charging orders from my home in California. So that’s the importance of multiple layers. But to get to the question of, you know, the single member LLC, the piercing the veil is completely destroyed the strength of the LLC. And it is now so easy to pierce the veil, especially for real estate investors that this is the importance of having multiple layers of protection. And then depending on where you get in the net worth of the sliding scale, a really strong Asset Protection Trust, which will bring next, but piercing the corporate veil, just as a real estate investor is two easy arguments that work on nine times out of 10 an extension of yourself, you’re holding that real estate as a holding company, you know the real estate in a holding company, it’s not doing business, it’s just a holding company, for an asset you own right there, that’s going to be a piercing the corporate veil argument that wins nine times out of 10. Then the next one is commingling of assets. Most people do very, very poor accounting. And so you’re bringing business money in to your operating company or that LLC. you’re transferring it incorrectly into your personal account your personal account into that account, you’re commingling money back and forth. You’re using that business as a personal extension of yourself. So just making those two arguments right there. I’m going to pierce that veil. And most young attorneys can make those two arguments without even thinking about it. And depending on the state that you’re in the wind all the time. And so that’s why the single member entities are just essentially becoming worthless. It creates the level of the separation which you want is an entry point. Got to have something is better than nothing. It’s just going to cost a little bit more money for the person suing you to pierce that veil.

J Darrin Gross  25:07  

So we talked about the the base layer being the LLC midlayer, being more like a limited partnership. And you said that the limited partnership then is the, the single member of the LLC.

Brian Bradley  25:22  

So yeah, so the limited partnership, you broke up on your question. So I’m assuming you’re like, what’s the role of the limited partnership. And the limited partnership is the managing member of the LLC is the owner of the LLC. And then you would be the managing member of the limited partnership and your spouse can be and we you can set up succession planning through that limited partnership. The great thing about Limited Partnerships is they have two classifications of ownership, a general partnership and a limited partnership, the general partnerships is going to be owning all that LLC sees like if you have pasos syndication shares are going to go into that, you’re going to be doing your receivables through there with your bank account that’s going to be doing the management, the business end of it, the face part of everything, all those separate LLC will be owned in that general partnership, which makes all those separate k ones flow straight through one tax filing, cleans it up, you know, your CPA will be happier about the number of hours, but not so much because his billable hour rate will go down on that. So you know, it makes your system cleaner. But then the second great thing about Limited Partnerships are the ownership interest is separate. So that’s where the asset protection trust comes in and owns that limited partnership. You’re the beneficiary of the asset protection, trust, and Asset Protection Trust are very special because they’re called Self Settled Spendthrift Trust, this means they’re created by you for yourself as your own beneficiary, and then you can create them in two different areas offshore or onshore.

J Darrin Gross  26:56  

So you can you can literally go offshore, and basically, then that another layer of tax estate, is that a tax strategy then? Or is that more of a legal?

Brian Bradley  27:07  

No, it’s a pure strength, strategy, strength, yeah, it tax, we don’t asset protection, the work, it needs to be tax neutral. If you call them like, hey, I want to lower my taxes and start, you know, putting money overseas, I would say go talk to a CPA or wealth manager guy about that. Asset Protection needs to be done tax neutral, not for tax avoidance, because that’s fraud against the law, or for hiding assets, or, you know, from knowing creditors. But the reason that you go, we’ll just break down like asset protection trust, and and kind of answer the, you know, question itself. So the jurisdiction, you can go offshore, the Cook Islands, they created asset protection trust about 40 years ago, in 1984, you know, the famous Cook Islands. What jurisdiction means and why it’s so important is that the laws and rules that govern you and trust and business entities are different, you know, from one jurisdiction to another, meaning one country from another one state from another, even one county from another. 

You know, think about criminal law movies, or old westerns where a body falls on the county lines, like there’s my jurisdiction, now, there’s my jurisdiction, they’re just trying to figure out and fight over who controls the laws for what’s going on. Um, you have two options. When you create asset protection trust, like I mentioned, you can go offshore, or you can do them domestically. On the Cook Islands, I prefer just because they have what’s called statutory non recognition. That’s why an offshore for Cook Islands asset protection trust is still the global gold standard after 40 years. What this means is that a US judgments completely worthless in the Cook Islands, you have to start your case all over from scratch, you’re going to be facing the highest legal standard in the world, the murder standard beyond a reasonable doubt to prove a civil case through the plaintiffs have to front all the court costs and flying a judge from New Zealand. You can’t take your US attorney with you there. There’s no contingency fee attorneys there. And if you lose, you pay, and we don’t have that type of system here in the US. So just the barriers to entry are almost impossible. And there’s only a one year statute of limitations. 

But like there’s pros and cons to everything. To be purely foreign. You know, not everybody needs that level of protection. For most, it’s just overkill. And honestly, to be purely foreign. It’s a hard pill for a lot of people swallow because of the cost, you know, generally like $50,000 or more, and there’s extra IRS reporting and disclosures that have to be done. So what happens is most clients will just settle on a domestic Asset Protection Trust. They came about 10 years later and interesting enough, the Cook Islands, creators of the Asset Protection Trust came to the US to help create our Asset Protection Trust of all places, Alaska started first and then you know, Wyoming, Delaware, Nevada, like once one state does it, they’re going to get in on the game. So now we have over 20 states with domestic asset protection statute. 

The problem with purely domestic Asset Protection Trust is that they fail on effectiveness. This is because of the US Constitution, the full faith and credit clause. And so now we’re seeing a pattern of Domestic Asset Protection Trust being pierced in court, for example, California doesn’t have asset protection statutes. And so what you have with a lot of California residents is going out of state to Nevada. So they create an out of state Nevada asset protection trust. Well, there’s a case kill Cobra still in 2012 said, hey, you’re a California resident, we don’t have that statute here, we don’t recognize them. So we’re not going to recognize your out of state asset protection trusts. So he created an asset protection trust, five years before he was ever sued, completely disregarded. California still went in and then created a 10 year look back period. So this is the issue that we’re starting to see domestically. And so what you want is to create a hybrid is called a Bridge Trust, it was created about 30 years ago. And what it does is it combines the best of both worlds, it creates a fully foreign asset protection trust, you know, in the Cook Islands registered from day one offshore with the foreign trustee, and the secondary position from day one, and then it’s built back to the US like a bridge. That’s why it’s called the Bridge Trust, just connecting two countries together. And the way we do that is by maintaining IRS compliance with the IRS codes, and we’re just maintaining compliance with USC section 7701, called the Court Test to Control test. So what this does is it classifies your foreign offshore trust as a domestic offshore trust. And then that means is going to be cheaper and costs generally around $30,000 to set up is going to cheaper on maintenance, generally around $2,100 to maintain an annual fees. And you still have the St. Germain protection, which is an anonymity, you don’t have to add any really disclosures at all on what’s held in that trust. But the benefit is, once you get sued, and we declare a state of duress, we drop the domestic compliance, the trust is automatically within two days of fully foreign asset protection trust with the statutory non recognition of the Cook Islands, and then we just if we have to transfer the equity out, now you’re fully protected. So you’ve got the benefit of both

J Darrin Gross  32:17  

Got it. So you mentioned the cost, I mean, 50,001 way versus bridge being 30,004. For somebody that’s more domestic, you know, investor that has multiple domestic assets. You know, maybe they’ve got as far as just setting up LLC is, is there a map? Are you able to work with what they have to strengthen it and make it more impenetrable. And if I said that, right. Unable to penetrate the, the protection.

Brian Bradley  32:55  

Yeah, so what you do is you just look at where you are on the sliding scale and your you know, your liability wise, and realize those systems, it’s scalable, flexible, and you grow. So when you’re starting out, you shouldn’t be looking at a bridge trust or a foreign asset protection trust, that would just be a very expensive solution for something that doesn’t carry much liability. So if you were to call and say, Hey, I’m just starting out, I want a bridge trust, I would say no, you don’t, you’re not ready for that yet. Um, you would be starting out with an LLC, and insurance.  Generally, you know, $1,000, you know, give or take law firm for an LLC for asset protection, then you get insurance. After you get to about 250 $500,000. net worth, that’s when you really should be looking into cleaning up your system, because by that point, you probably have a couple LLCs, two to four LLCs plus a couple, you know, four to six units, your liabilities, expanding your passive incomes, expanding your your visible target and need to clean up your system and add a second layer of protection. So around that 250 500,000. net, you know, worth mark, add the limited partnership, when you hit about 1 million net worth is when you want to start looking into adding the asset protection trust for a bridge trust. And then if you’re under 1 million, you’re like, Hey, I really want an offshore component, I just don’t have a million dollars net worth. There is a trust called a quantum living trust, which is about $14,000 you know, with an asset with a limited partnership. So that’s like $8,200 just for the trust on what they generally go for. What that is it gives you offshore components. It’s just not fully registered offshore from day one. So it’s a it’s called a quantum trust because there’s a sub trust that’s created domestically. But that secondary trust relies on the quantum trust force offshore component. And then you can quickly change out once you hit that million dollar net worth mark, the quantum trust for a bridge trust, but that’s a good entry point for someone who wants offshore protection but can’t isn’t ready yet for a bridge trust.

J Darrin Gross  35:00  

Got it.  And for somebody that I mean, the word trust gets thrown around a bunch. And I don’t know that people have a deep understanding of that. We’ve been talking about here is Asset Protection Trust. Yeah. How does that fit in with with somebody that’s doing? Like a personal trust? You know, for for when when they die? Transfer of assets?

Brian Bradley  35:34  

Great question. So, trust, there’s a lot of different types of trusts, you know, an estate planning trust, like a revocable living trust is not an asset protection trust, you still will need one of those, you don’t have to have one, but you should have one on the way that those would work with asset protection trust is they’re named in the asset protection trust, and then when you and your spouse died, then the assets would be distributed per who you named as the, you know, the beneficiaries of the assets in that trust. And so that is very flexible, they work together, irrevocable living trust would wouldn’t own the assets, they would just essentially be your medical directives, your financial directives, naming your beneficiaries, and then you would have your assets and you know, the structured tiered up system, LLCs, LPs, and then the asset protection trust, and then when you die, the assets would be distributed per the revocable living trust. But just remember, revocable living trust aren’t asset protection trusts, they’re just a state planning to avoid probate, which means avoiding the courts telling you where your assets go, and death taxes and, you know, death taxes have been increased, I think it’s like 24 point 1 million. So for most like, the only really affects is 0.01% of people in society. So you’re not talking about losing your wealth, you know, because you died on generally you’re talking about lawsuits. And but you do want to avoid probate because you don’t want a court telling you where you’re at, you know, where your assets are going to go. You want to direct where your assets go and have control over that.

J Darrin Gross  37:06  

Got it.  I appreciate you kind of distinguishing between the two there and kind of explaining how they work together. Like I said, trust is a word you hear a lot, but not always understanding that, that there’s a difference, and how they work together. So that’s good. Brian, is there anything more you wanted to cover under that? If not, I was gonna ask if we could shift gears here for a second.

Brian Bradley  37:33  

No, I think we we covered a lot and without frying all your listeners brains, like

J Darrin Gross  37:40  

It’s definitely a heavy load there. But I do appreciate you going in depth in it. And just kind of the simple model there of the, you know, comparison to going out and playing in the winter, you got your base level, a mid level, and then your you know, your outer level, I think makes it’s a great analogy. It’s easy to understand. And I think you did a good job with that. I appreciate that. So if we, if we could, I’d like to shift gears for a second. As I’ve mentioned, by day, I’m an insurance broker. And I work with my clients to assess risk and determine what to do with risk. And there’s three strategies we typically look at. The first is we ask, can we avoid the risk? If that’s not possible, we look to see if we can minimize the risk. And when neither of those are an option, we look to see if we could transfer the risk. And that’s what an insurance policy is a risk transfer vehicle. And I like to ask my guests if they can look at their own situation, whether it be clients, investors, tenants market, etc. How, however you want to frame it, I invite you to do so. But if you can take a look and identify what you consider to be the biggest risk. And again, for clarification, I’m not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you, Brian Bradley, what is the biggest risk?

Brian Bradley  39:21  

I think the biggest risk is not thinking that you have any. And I think ignorance is the biggest risk because I have a lot of clients who call ventures like why did you wait so long? You have $20 million, you know, of assets that are unprotected. And they had no clue where their risk even lies, because they thought, Well, I’m I have heavily mortgaged and so I didn’t think that I needed to protect anything, but then they have, you know, a lot of equity and that I think equity needed to be protected. So I think it’s just a matter of looking at your whole life structure and talking to a professional like yourself and myself and saying, What’s your day job? What’s your normal life like? What are the age of your kids Whereas the liability just in your general life, where’s your liability in your professional businesses, and where’s the liability and the things you own and how you own them, and then get a good assessment and knowledge based on that. And once you understand where all the risk and liability comes from, then you have the knowledge to start thinking, What do I do about this and mitigate those. But if you don’t take the first step to even analyze where your personal life and liability comes from? That I think is the biggest thing, because if you think of it like a pie chart, no, there’s things I know, there’s the things I don’t know. And then there’s the things I don’t know that I don’t know, if most of your liabilities and things that I don’t know that I don’t know, you’re in for a rude awakening. So I like to shrink that piece of the pie first, and start educating people to where once I know, I don’t know this, I can ask the questions and start solving that.

J Darrin Gross  40:51  

No, that makes a lot of sense. Unfortunately, there’s a lot in that pie a pie graph there of the risk. I don’t know that I don’t know. And that’s kind of ever, ever changing. Brian, Where can the listeners go if they’d like to learn more connect with you? 

Brian Bradley  41:10  

Yeah, they can jump on my website, www.BTBlegal.com. I have lots of educational information, lots of frequently asked questions, sections, media, educating seminars that we go and talk to. So it’s a great place for resource a lot of like, I love case law. So I have a whole legal resource case law library on there for people to actually go through and see case law of asset protection and how things play out and work out in real world trials. But it can email me Brian brian@BTBlegal.com. And I’m on LinkedIn. I love LinkedIn as a way to stay connected and educate people on.

J Darrin Gross  41:56  

Awesome.

Well, Brian, this has been been a great opportunity to learn about asset protection, I really want to say thanks for taking the time. I’ve enjoyed it. learned a lot. And I look forward to doing again soon.

Brian Bradley  42:14  

Yeah, thank you for having me.

J Darrin Gross  42:16  

All right. For our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow. That’s all we’ve got this week. Until next time, thanks for listening to Commercial Real Estate Pro Networks CRE PN Radio.

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