All Forum Posts by: Brian Bradley

to add on to what @Scott Smith said. Going the LLC route means you really have to go by the book when creating your LLC structure. So I would say have an AP Attorney do this for you.

I read a lot of the forums and questions and answers. t's interesting how many people think that simply having insurance, and an umbrella policy with an LLC will really do anything to protect them. That's not asset protection.

1. Insurance companies, and this includes umbrella policies, will deny or challenge your claim especially if the damage / claim is high and based on negligence or any fault of your's, READ your small print and don't think you are so good at landlording that accidents won't happen. They will, and in today litigious environment thats a lawsuit.

2. LLC will NOT just protect you automatically, and the veil can be very easily pierced i not set up correctly and managed correctly. Talk to and get an AP attorney to get this set up correctly for you and your long term growth plans and current needs. Scalability is a big issue for you since starting out.

I love insurance and LLC (and the Series LLC) and think that having BOTH is the STARTING point to AP and an AP plan. But as in building a house, it is just the foundation for a stronger house. AP is about creating barriers. Their is no such thing as a bulletproof plan to avoid personal liability, but you can get close. The more fences plaintiff and his attorney have to jump through, and the more money they have to spend, or time and resources to get to you, the better protected you are.

An LLC is a useful devise in separating business from personal affairs. But it is just one of the tools in the system that has to be joined properly with other tools from its initial filling to create a legal and enforceable AP system. Otherwise it will be useless. If you commingle funds and have bad books etc. If you keep your property in your own name, and not in your LLC and Trust. If you only have a domestic trust, then you are not bulletproof. If you do not have quality documentation working together to build a wall against lawsuits and creditors then your wall will just fall down on you.

The goal should be to have insurance and as much as you can get (even an umbrella policy), AND establish an LLC that works with a Asset Management Liability Company, that then works with a Domestic Trust and once you have about 500k-1.5M in assets a Foreign Cook Trust that can be used if an event tiggers the foreign trust. Then you are protected. Just having Insurance or a LLC and or both, is NOT good enough if the goal is AP.

I am back after a long tiering move, which I decided to do myself. 

I have read some of the forums and questions and answers, as well as, talked to a few potential clients. It's interesting how many people think that simply having insurance, and an umbrella policy with an LLC will really do anything to protect them. That's not asset protection.

1. Insurance companies, and this includes umbrella policies, will deny or challenge your claim especially if the damage / claim is high and based on negligence or any fault of your's, READ your small print and don't think you are so good at landlording that accidents won't happen. They will, and in today litigious environment thats a lawsuit. 

2. LLC will NOT just protect you automatically, and the veil can be very easily pierced. I get this question or comment a lot and read it a lot (I have an LLC I am good to go etc). Wrong, you are not, and it does not matter if its a typical LLC, LP or Series LLC. I have structured them all, and litigated against them, and for them. Nobody is perfect, and a lot will depend on the personal view of the judge or bias of the jury (out of our control)

I love insurance and LLC and think that having BOTH is the STARTING point to AP and an AP plan. but as in building a house, it is just the foundation for a stronger house. AP is about creating barriers. Their is no such thing as a bulletproof plan to avoid personal liability, but you can get close. The more fences and plaintiff and his attorney have to jump through, and the more money they have to spend, or time and resources to get to you, the better protected you are.

An LLC is a useful devise in separating business from personal affairs. But it is just one of the tools in the system that has to be joined properly with other tools from its initial filling to create a legal and enforceable AP system. Otherwise it will be useless. If you commingle funds and have bad books etc. If you keep your property in your own name, and not in your LLC and Trust. If you only have a domestic trust, then you are not bulletproof. If you do not have quality documentation working together to build a wall against lawsuits and creditors then your wall will just fall down on you.

The goal should be to have insurance and as much as you can get, AND establish an LLC that works with a Asset Management Liability Company, that then works with a Domestic Trust and a Foreign Cook Trust that can be used if an event tiggers the foreign trust. Then you are protected. Just having Insurance or a LLC and or both, is NOT good enough if the goal is AP.

No. Talk to an asset protection attorney for this. Only an asset protection attorney after discussing all your assets and total net worth can advise you on what is the best structure. An LLC will NOT blindly protect you from liability. The veil is very easy to be pierced if not set up correctly with property AP terms, and it will need to work in conjunction with a Asset Management company partnership controlling the LLC and a trust to really protect you. It is a misconception to think that just setting up an LLC will protect you from liability.

@Chase Cline it depends on a lot of factors. Talk to your or a asset protection attorney and your CPA. Their are lots of corporate structures you can choose from to accomplish your goals. The best type of lawyer for your question is an asset protection one that specifically deals with investors. A business or real estate attorney or estate attorney will not know enough specifics in the detail to arrange true protections of combining cost efficient LLCs and managing holding companies and trusts to shield you from liability. And you will need to understand the tax implications and annual maintenance fees. Best of luck.

@Roger Steciak Asset Protection snd estate planning are very different areas of law. You wil use Trusts in Estate plans but for very different reasons. To distribute property at death and to save money on taxes. That’s not what asset protections is for. We use corporate structures and trusts to protect assets and shield u from liability. Not to pass down assets of for tax benefits. I do asset protection and estate planning. But they are very separate from each other.

@mike 

@Mike S. I will IM you a few articles about LLC VS AMLP's as well as a good article on the Olmstead ruling in FL and how it applies to other jurisdictions and the AMLP. Essentially the AMLP would not be effected by the FL Olmstead ruling.

@Roger Steciak here are a few good articles to read on SD401ks relations to AP. https://www.investopedia.com/articles/personal-finance/040716/which-retirement-funds-are-protected-creditors.asp https://sdirahandbook.com/self-directed-ira-news/asset-protection-for-your-self-directed-ira/ Another great resource is @Brian Eastman The Godfather of everything self directed IRA. Not all plans are the same. No what they say. Generally ur still going to be liable.

@Jade S. Jurisdiction will have a HUGE say. Just a basic negligence lawsuits can see judgments in the 40k-500k. This would kill the typical BP investor. And we see the need for AP to be that new "neighborhood millionaire" since people with assets above $2.5 millions have tended to have structured an AP Plan by that point. 

I just saw a judgment for 350k for a basic landlord negligence case where a tenant was injured. Judgments can very from state to state, even city to city and county to county, and injury type. Some states have caps, others do not. Jurisdiction is powerful. The laws and rules that govern will change from state to state, state to federal, country to country. Heck, you can live in Delaware or Nevada, have a LLC in those states, then like most investors have a investment property in lets say California where you are sued, and the courts will not care what type of LLC you are or where you are incorporated, or the state you live in. Neither will the Full Faith and Credit Clause of the Constitution when they try to enforce the CA court judgment. You could be driving your car, owned by your LLC, get in a car accident, horribly injure somebody, then hire somebody like me to show that you made a substantial deviation while driving from the scope of your employment, hence personally liable. The scenarios are endless. Series LLC's won't protect you in states that don't recognize them like CA, and federal courts where they have not been challenged.

The last thing you want is to have anything in your personal name. You want it in your LLC and Trust. And somebody is going to have to personally guarantee your loan LLC or not. Especially if your LLC is new and young with no history. Commercial loans are different. So, you are still personally liable, and would be named in a complaint when I see you are the owner and have assets to come after. Plus naming you personally keeps me out of federal court.

The corporate veil is very easy to pierce. Hence the need for additional protection then just an LLC. Theoretically yea the entity is deemed separate, and the courts will hold it separate unless shown you did something wrong or not. But how many people actually run a tight perfect ship in compliance with every single law, rule and regulation? Who has perfect accounting books and have not commingled a single dollar or forgot a reimbursement? Then what if you personally guarantee a loan or someone is injured by your carelessness/negligence while operating your LLC? What if you failed to follow your LLC formalities or underfunded your LLC? Etc Etc Etc. You are dealing with unity of interest, fraud, or the catch all injustice that a judge rectifies. Public Policy and judicial bias are very real and scary.

Distinction between Legal Authority and Practical Authority need to be understood also. The problem comes when a judge without the legal authority to do those things, nevertheless chooses to exercise his practical authority power and do them anyway. This could be done in direct contravention of establish statutes and case law, or it could be done with some ‘rationale' like saying that your LP or LLC is invalid, or is considered your ‘alter-ego'. In any case, the result is that the practical authority of the court is used to take assets with a questionable (or no) legal authority.

The solution is to remove or vastly hinder a judge’s practical authority over your assets, so that he cannot usurp the legal process and if forced to rely on legal authority. However, when it comes to domestically local real estate we have a particular challenge. We cannot just move the real estate. We can properly structure the legal protections, but in order to still protect against a misuse of judicial ‘practical authority’ we need to do more.

What you really want is an Asset Management Limited Partnership acting as a (COP) which owns the LLC in any State, which in turn owns a piece of property. The only remedy would be a charging order only against the partnership interest.

Check out video 6 and 7 on my site, which explain jurisdiction. 

@Jade S. Thanks for your reply. I will IM you and we can get into whats ur set up like now and more detail about what you're goal is rather then posting in-detail about yourself publicly. 

@Keith Meyer good article on umbrella policies. Just remember, get insured as much as possible, and if not more. But, also remember that insurance companies are a business, and do not be confused with what you are 'covered' for and what the fine print says and what they will end up paying out in real life. Don't get false security of thinking your insurance and umbrella insurance will save you vs judgments. They won't. READ your policy and ALL the fine print and ask what you are covered for when it comes to judgments and law suits, negligence, etc. You will be very surprised what is NOT covered. Hence, getting more distance and protection in addition to your insurance. Insurance companies are not in business by paying claims. They make money and stay in business by taking your payments, and not paying out claims. I have litigated so many cases where insurance providers refused to pay claims.