What's up guys.
It's Clint Coons here.
And in this video, I'm going to show you the strategy I used
to save one of my clients over $16 million in a lawsuit.
All right. Let's get started.
All right. So here's the deal.
I started working with this client years ago when it came to planning.
And when they came to me,
what they essentially had is they had multiple businesses set up.
So they had many of these were limited liability companies.
And so for purposes of this video, I'm just going to dry out three.
They had three LLCs created
and we'll just pick a state, let's say they were set up in or not.
Washington It's the three Washington limited
liability companies and these were active businesses.
And if you look at the active business, you would see
my client listed on each of these businesses
as either a manager or a member
manager of those limited liability companies.
Now, they also had several pieces of real estate that they owned.
Now, many of these were just investment properties.
They had a commercial property over here
that was leased to two one of the businesses.
Right.
So they had investment real estate, they had cash
on the side savings.
So let's say they had $1,000,000 here in savings.
That was also in their personal name.
Now, of course, they had vehicles and things like that.
I'm not going to concern myself with.
And then they also had a personal residence.
All right.
So they had their personal residence right here that was also in their name.
So this is the way they were sitting.
They've been really focused on setting up companies.
They're working with a CPA and a local attorney
who create a new limited liability company or in some cases,
it was a corporation whenever they opened up a new business.
And so they had this multitude of LLC set up.
But then a lot of assets like this just setting in their own name.
So my concern for them was I, as I told them when I started work with them,
I said, Hey, listen, all your assets traceable right back to you.
You're active in these businesses as well,
so that can bring personal liability to you.
So what we want to do is separate you out your ownership
out from the public record so people don't know that you own these businesses.
We want to strip the assets out of the businesses
and I want to get the property out of your name and your cash protected.
Now, of course, we looked at that and said, this sounds really cool.
What do we have to do to set all this up?
Well, number one, enter into agreement with me.
Right.
So so what we did is we started first with the businesses.
So I looked at the individual businesses themselves
and I created let me see if this blue pens working for me.
I created a couple of Wyoming limited liability companies.
Okay, like this. It's not that great.
So I created some Wyoming LLC just for the businesses.
Now you could take all three of these businesses
and put them into one Wyoming Limited Liability Company.
But what I felt like is that if I did that and somebody looked on title,
they did some research to the business, they would see that it was in Frank's
name in 2015.
And then it changed from Frank to this Wyoming
LLC in 2016, because what we're going to do
is we're going to
when we set up the new Wyoming LLC, we're going to make it the sole member
of this company right here.
Now, some of these companies were
corporations, and so that's why it's really imperative
that we're setting these up. These are all disregarded
limited liability companies here.
So they didn't have to file tax returns and we weren't going to blow their s
corporation tax status.
So I didn't want them to see this is a creditor.
Look, it would say Frank 2015
Frank 2015.
And all the active businesses now came down here
and pointed to this one LLC,
because if the creditor kept searching, they would see that all these companies
now were held by one limited liability company, and they might assume
that the the Frank, my client consolidated
his companies down into one LLC and he's still the owner,
even though you cannot determine that by looking at it at that Wyoming LLC.
So what I did is instead of creating one Wyoming LLC,
I took the most risky businesses.
The businesses that that were engaged in certain types of activities
that that brought a lot of like potential liability to him.
And I would set up separate Wyoming LLC for each of those businesses.
So we'd have a Wyoming LLC for this business, number one, we'd
have a second one for two, a third one for number
three, just like this.
So now again, none of these LLC have to file tax return.
So if you're looking to court, wow, that's overkill.
They're going to file a ton of returns.
No, they're not.
They're all disregarded.
So now if we got that set up,
then I started looking at the properties themselves and of course
in putting together protection for their properties, we did something similar.
We created one Wyoming LLC down here like that,
and then I created Separate LLC.
So let's say these are Washington LLC, Washington, Washington, Washington,
all owned by this one Wyoming Limited Liability Company.
So we have anonymity now.
So we set this entity up and then I created the Washington LLC and
those got set up and then we transferred the properties into each of those
Washington limited liability companies.
Now here's the thing.
When you deed the property into the LLC,
an aggressive creditor could look and determine
that the transfer itself was exempt from transfer taxes.
So no sales taxes were paid when that transfer was made.
And that would tell them that
the owner of the property is somehow still involved with the asset.
So I went to my client about this.
I said, Hey, there's two ways we could do this.
We could do it.
The exempt transfer route, which leaves a trail to you,
or we could go the other route where we treat it as a sale
and you pay sales taxes on the transfer.
Now it's really client dependent if you want to do that.
I had some clients that tell me
they don't want any trace back, any little loose ends like that,
and they have elected to pay that that tax in order to get
that asset out of their name, to make it fully appear.
If someone knows where to look, that this was a sale
and not just an exempt transfer, that the original owner
has some type of relationship to after that's done.
So we set this up.
So we had basically now we had Wyoming LLC number one,
we had Wyoming LLC over here number
two, Wyoming LLC number three and then Wyoming.
Wyoming LLC, number four, setting right there.
So we had four of those.
Now the other issue we had, of course, was the cash, right?
And the building
with the building, we did the same thing.
We created a Washington LLC for that.
And in this one again, I chose to create a separate Wyoming
LLC down here for that building because I didn't
want to tie all the real estate that formally is in my client's name.
Those operate in the businesses all back to this LLC.
So we set up another one over here again to get it out of their name
and to further diffuse anybody who's looking.
Any types of connections between these deals.
The $1 million cash we set up another LLC for over here
like that, and then we created a personal residents
or a land trust for the personal residents.
And when we set up the land trust, I served as their nominee trustee.
So on title, if you looked, it would have my name.
I'm still listed there as the trustee of this trust,
and so this is what we had set up.
And then we took it one step further
with the assets itself inside of some of these businesses.
The concern was, is that there's receivables coming in.
So as I explained, only said, you know, those receivables, that's
what a creditor would like to step in
front of your business and get those if they sued your business.
So we need to protect those.
So what we ended up doing is enter into a line of credit agreements.
So this was their Cash LLC down here.
Let me just circle these blue ones here.
So you know what we've got as far as Wyoming is concerned.
So I took that Cash LLC
and I came up here and we entered into a line
of credit agreement against some of these active businesses.
And then we filed
a you see see one financing statement
against each of the active businesses with the secretary of State
stating that this company has entered into business lines of credit
with these other companies, $4 million, and we secured $1,000,000 in assets.
And so I explained to them, you don't want to leave a lot of cash
accumulated inside of your business. That is a mistake.
Take your cash, your profits out.
Take it down to here, take it out to yourself
re contribute it back to this entity and then loan it
back to your business to secure your assets.
So we got all this set up and it sit there, it's in place
and then unfortunately, tragedy does strike and they're being sued now
and the creditors are asking for $16 million in damages.
So the creditors didn't actually take it to to to trial.
But what they did do is they ran an asset search, of course,
and they brought them in and they negotiated,
ended up negotiating the settlement.
That is, the creditors took my client's policy, limits
their insurance, and then gave them a full release.
And one of the comments
it was made is that it appeared that my client doesn't own any assets.
And so to move forwards against him trying to get a judgment on $60
million of which they wouldn't collect
because he had no assets, just didn't make sense.
Now, the reality of the scenario is my client could have paid a judgment
like that.
However, the creditors did not know what he was worth because of the structure
and we'd done here on the back end to get his name off of title.
So when you when you ran his name through title to see if he owned anything,
he didn't own businesses.
He didn't own real estate.
Of course, you're not going to find the bank accounts.
But he didn't own a personal residence.
None of this was in his name.
All appeared on for these businesses is that he was a CEO of the business.
He worked in the business.
He managed it.
Nowhere did he ever described himself as an owner.
And that's something else, too.
If you if you go through a strategy like this,
you want to make sure that
when you have your business cards, don't hold yourself out.
As the owner of the business if you're trying to set up a strategy like this.
But it works.
There wasn't actually another defendant in the case who was not structured
that had all these types of assets in his own name.
And when he tried to settle for his policy limits, they specifically declined
stating this You have the money to pay this judgment.
You're the other defendant did not.
That's why we settled with him.
And that couldn't be further from the truth.
In fact, the person they settled with had more assets
than the one they chose to to go after.
So that's how he saved my clients in a $60 million judgment.
This is what you can do.
I know it looks really complicated, but here's the thing.
When it comes to planning, planning needs to start early.
If you want to talk to someone here at Anderson,
all you got to do is go into the show notes.
We have a link where you can sign up for a free strategy session
and somebody at my firm will discuss with you your options and putting together
a plan and how that plan can grow with you as your business starts to mature.
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Take care.