Hey. Everybody's Ken and Danielle. Hello.
And we're here with Brian Bradley.
What's going on right Brian? Thanks for having me on.
You know, I appreciate it. It's going to be an important topic.
And I hope the concepts that, you know, I talk about and that we break
down, help your listeners understand a little bit better.
You know,
the knowledge of asset protection and just how to protect ourselves moving forward.
Yeah, well, it's a big deal.
We get asked this a lot,
and I know there's a bunch of questions we're going to fire at you.
But, you know, we focus a lot on real estate investing But, you know,
the worst thing that you guys can do is have everything in your own
name as a sole proprietor, because what happens is things happen.
Trust me, you know, we get sued and and,
you know, you need to have asset protection around all your assets.
So I'm excited to have you on.
You know.
So, Brian, you were voted best attorney of America's List for 2020.
Wow. Yeah.
Yeah. I was shocked, you know, about that one.
But I think it just I like what I do.
I'm good at what I do. And,
you know, it's
nice when you can combine your internal geekiness,
you know, and find a way to make people make money out of it as well.
Yeah, it is. Good. Well,
welcome, welcome, welcome.
So we're going to jump right into it.
Let's start off with, you know, what exactly is asset
protection and how and why do we care about protecting our assets?
Yeah.
So it's a great place, I guess the perfect place to start.
I think, you know,
because we hear about this fancy weird word, you know, asset protection.
I don't know any but, you know,
I think people really even understand what this concept is.
And so asset protection is not traditional estate planning.
It's modern estate planning.
And what we're doing is placing a legal barrier between your assets
and your, you know, in a potential creditor,
meaning the person suing you and trying to collect on you
and take your money from you before it's needed.
And that's the key word, you know, kind of we're doing this all beforehand
and it's just like a barrier, like a safe for your gold or your guns or 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 lever or reached, you know, just like the rich.
I really enjoy, you know, the Tony Robbins saying success leaves clues.
The rich don't own things in their personal names, their businesses
and their trusts do.
They just get the beneficial use and enjoyment out of them
while they separate out, you know, the legal liability.
And then, you know, to get to the second part of your question,
why do we care about asset protection?
I got an asset protection from the litigation and trial side of law.
I'm just having clients being sued
and their lives just turned completely upside down.
Coming to me after the fact, you know, after they were already being sued.
And at that point, you're just way too far down the rabbit hole is like
trying to go and get car insurance after you already had an accident or fire
insurance and home insurance after you already had a fire in your house
and I see a lot of people thinking that they don't need to do anything
until after the fact.
And that's just riding Lady Luck and you're too far down the hall.
You know, at that point, it's just wishful thinking.
Or they think that their insurance will always cover them, which it while
it's important to have, you need it and you need to have good insurance.
You know what?
We're getting more and more claims
that are just in radically in excess of their insurance coverage.
So being underinsured is a big problem.
Then there's a really big misconception.
You know what full breakdown I think pretty extensively on LLC is.
You know what a lot of people think like, oh, I'm just going to create an LLC
and that's a one stop silver bullet, you know, fix all.
But they missed the literally the first word first letter they tell you
straight up in the name limited, you know, they're not hiding this fact.
And the sad thing is, if you look around our legal system in the U.S.,
it's just broken. We're so happy Nirvana.
And if you don't mind me, you know, setting the stage a little bit further,
you know, on what's going on in this world, this
I think is important because this way we have more of a context,
know what we're actually fighting against.
You know, the everybody's like says throw everything into LLC.
But you said the word L is limited so what are some misconceptions about LLC?
Because I think
a lot of the industry just says, you know, just throw throw your assets into that.
So let's start this LLC the very beginning is asset protection one on one.
Generally, you're going to be starting out in an LLC
when you have zero to three rental property, like zero to three units
and your net assets below probably $250,000 or less.
So you're just starting out, you have nothing or you about 250 grand
debt or less.
And then as you grow and you start adding more assets, you're going to hit around
that four unit spot probably around 500,000 $700,000.
That's when you start scaling up in the next levels of protection.
All right now the LLC is this first layer.
They're your holding companies, they hold your risky assets like real estate.
Anything that has a key that needs insurance, they can go boom
and hurt somebody.
You want to put them in the LLC?
How many?
Just depends on the client specific situation.
Now, the first problem generally is that most clients have
a single member elses and they're all in their personal name.
The problem here is that courts
now disregard single member LLC.
The second big problem here is what we talked about.
You know, charging order, chasing it.
It's like, where do we set these things up?
And there's a lot of confusion on this.
And I see a lot of CPAs and other lawyers
really kind of alluding something that doesn't need to be very difficult.
And then the final really big misconception with LLC is,
like I said, is the big word.
People are falling in love with an amenity.
And the thought here is that you can just create an anonymous LLC
in that you just completely disappear and you can go start a lawsuit.
And this is completely false.
But I get this question every day, and when your LLC is sued,
you're going to be legally required to appear and defend it.
And you also have to have a personal agent of service.
Their sole job is to say, Hey, guess what can congratulations.
Your LLC just got sued now go get a lawyer and get your butt in the court
and defend yourself.
Well, I love the fact that you came from the litigating side.
And, you know, I think a lot of times,
you know, as a litigator, what were you looking at?
You know, now you're on the other side protecting this.
It's very interesting.
You know, what were you looking at is a litigator.
What were you trying to pierce?
I was I was always looking at when I
when I would request discovery, I would want the operating manuals.
I want their policies and procedures, you know,
like I look at how the LLC is a software funded.
How's the manager?
How's the money being managed in their accounting?
Are they co-mingling accounts?
And then that's generally those are the easiest ways to Pierce
LLC is nine times out of ten, especially if it's real estate.
You're the argument is, well, this is not a business.
This is just an extension of themselves holding real estate boom
like nine times out of ten, just that argument alone is going to win.
And the next is people are horrible with accounting and managing their money.
And so next thing you know, they're going
to start paying bills out of their business account
as money comes in versus pay themselves a disbursement into their personal account
and paying bills from there.
So there aren't co-mingling assets and there's no operating agreement,
there's no operating manual, there's no policies in place.
So as you're in litigation, you start requesting all this information,
I'm requesting this to stack up the piercer bill to get to your house,
to get to your stock account, to get your cryptocurrency,
to get to your real estate investments, to collect on all my client's money.
Yeah, that makes sense, because when you set up
an entity, there are rules and most people don't follow those rules.
And most people are shopping around.
Unfortunately, skimping on the most important thing
when they set up is their foundation systems.
They're business entities and they don't pay attention to
what happens if everything goes belly up.
And I mean, it's just human nature.
It's like, why do most people put off creating, you know, family estate plan?
Because people don't want to think about their own mortality until it's too late.
Same thing with asset protection and trading, you know, businesses.
Most people would rather skimp on that part of it,
wait until they get sued,
then come back in and fix it after they've just lost $1,000,000 lawsuit.
Yeah, that makes when the mindset should be completely opposite.
It should be protect yourself, get a good CPA, get your business
foundation established in place, then worry about the profit lines.
So we get questions sometimes on the co-mingling of accounts, too.
Is that how long does somebody need to start over with a whole
nother account if they have been doing that?
Or do you just advise them to just try not to do that?
Or what's your.
I would just I would just say, you know, talk to your CPA,
see how bad of a mess you really are, and then just like most people
don't even like get a basic QuickBooks account
and then, like ledger things out and track money coming in and money
coming out at least, and then give you a CPA what is it like?
I like accountant access to it, and there's a reason
they're professionals at this.
Like let them do their job.
They will save you money in the long run.
But if you have your books in order, in your accounting, in order,
if you get sued, one of the most expensive things that people have to spend
money on is forensic accountants to backtrack all the money and pennies
of where everything went.
And most of the time you don't have the money to hire
those type of experts to do that because they're super expensive.
And so save your time and energy and just manage your money
and your budget a little bit better and track money coming in receivables
basic QuickBooks account.
Well, Brian Bradley, thank you.
I'm sure you'll get lots of traffic.
Appreciate your wisdom and we'll talk to you soon.
No, I appreciate it. Thank you. All right.