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The BIG difference between a trust based asset protection plan and an LLC based plan - YouTube
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Howdy friends. Colin Ley here.
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I'm an attorney at LayRoots,
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which is an amazing asset
protection law firm.
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Today, I wanted to highlight
one of the very big differences
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between trust-based planning,
asset protection trust,
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and LLC-based planning.
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And I'm doing it in the
context of something
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that's very scary for people
if they are ever involved
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in a lawsuit.
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So say somebody decides to
sue you for whatever reason,
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there's a part of the
lawsuit when the creditor
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gets to find out all
of the assets you own.
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Basically, they wanna know,
are they gonna get paid?
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Is there a way for them to collect
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if they go through all of this trouble,
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because the way our legal
system works is attorneys take
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these contingency fee cases.
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They only get paid if they win.
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So obviously to take the case,
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they wanna make sure they can get paid.
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And traditionally, this,
I think it's called
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meeting of creditors, comes
at the end of lawsuit.
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Say they win a judgment against you,
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and then they drag you back into the court
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so you can lay out all your
financials, all your assets,
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basically putting everything on the table
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so they know what they can
take so they can get paid.
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But oftentimes now that
comes at the very beginning.
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So say you get the threatening letter,
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the initial claim against you,
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some old granny shows up on
your porch late at night,
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asks if you're so and so,
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and when you say yes, she
shoves a stack of papers
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in your hands and you're being sued.
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And these attorneys don't
wanna wait to the end
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to know whether they will get paid or not.
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So what they do is they try to have that,
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that meeting of creditors,
basically the analysis
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of what assets you have
at the very beginning
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before they get started, so
they don't waste their time.
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So here's the table here.
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Here's the table that
you're gonna show up to
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and put all of your assets on there
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so they know what they could take.
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So, I've got some props here.
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You got your home,
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say you got your rental property,
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and your cash money in brokerage accounts.
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So we're simplifying things here.
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There's a lot of exempt assets,
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maybe your retirement accounts, your IRAs,
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that sort of thing.
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Those aren't gonna be something.
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Those might not be,
depending where you live,
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something a creditor could take.
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But these are some
common assets that we see
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that people have that they
really don't want to lose.
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So you got your home here,
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you got your money, you got your property.
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So own all of these things in your name,
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and these can be taken away.
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Your home could be sold at auction,
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your account could be seized,
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same with your rental property.
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Now, start doing these
first steps of planning.
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Maybe somebody is looking at LLC,
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maybe they're debating LLC-based
plan, trust-based plan.
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Let's highlight some of the differences.
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So, we've got our entities here.
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We've got our asset management LLC.
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We'll call it maybe a holding
company type of thing,
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umbrella LLC, many different names,
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and we've got a little sub-LLC.
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What happens, people show
this rental property,
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their sub-LLC,
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and then they take that,
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they put it in their asset management LLC,
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take your brokerage account,
put that in there as well.
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Now, show up at your
meeting with these attorneys
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who are suing you, you
don't know what you have,
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and so now you're showing up,
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"Well, I own this LLC.
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It has my brokerage account,
it has a rental property in it,
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and I have my home.
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I kept my home in an LLC
because it's my business
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and it's not gonna really
do you any good that way."
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You still got these things to lose.
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You could lose this.
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Maybe you already argue for
a charging order protection,
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and you're hoping that
if you can weigh them out
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and you won't need the
assets inside of here,
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something like that,
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or maybe they talk to a
judge about a turnover order,
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because this is still an
item of personal property.
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A judge could order you to
turn it over if they wanted,
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if that's the result that they wanted.
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So this provides some protection,
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but you still can be vulnerable,
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you still can't lose these assets.
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So this is the big step
up from LLC-based planning
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to trust planning (indistinct).
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Let's pull out our trust here.
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Boom!
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So we got our trust.
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I'm gonna take our home, put it in there.
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I'm gonna take our LLC,
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shove all this in there.
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So this is the big distinguishing feature
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between an LLC and owning a trust.
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A trust is going to sever
that personal ownership.
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So you own that LLC personally,
it's an item that you own,
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but put things into a trust
and it severs that link
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between you and the trust.
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So no longer do you legally own the assets
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that are in the trust, but
you still get the benefit,
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you get the use of these items
with a properly set up trust,
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you can even be in control of the trust
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in certain circumstances.
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So when you show up to
that creditor meeting,
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or potential creditor meeting,
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that trust is not on the table.
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Now, you got this empty table here.
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When they ask you if you own a home,
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"No I don't own the home.
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I don't own that brokerage account.
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I don't own that LLC, I don't
own that rental property."
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It's all been put in a trust,
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so you don't have to tell
them that you own those items.
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Showing up to that table
with those attorneys,
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once you have that
trust-based plan set up,
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you have your assets in there,
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your table is cleared.
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And why is that important?
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Because when there's
nothing on the table here,
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those attorneys are not
gonna have an easy payday.
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So either one, they go
away, the lawsuit's dropped,
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it's not worth their time.
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Or you then have a ton of
leverage to turn around and say,
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"Hey, take my insurance
policy. They'll pay you off."
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They'll go away.
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Or maybe you pay them a
little bit on top and say,
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"Hey, I'm not gonna give
you the million dollars
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you're asking for,
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but here's $10,000,
please be on your way."
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That's the idea.
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That's the difference,
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big difference between trust-based plan
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and an LLC-based plan.
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And Hey, if you've watched
this long and you are wanting
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to set up some sort of asset
protection plan like that,
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you have questions about your planning,
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please visit livemorecarefree.com,
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set up a free initial chat
with us here at LayRoots.
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Again, that is livemorecarefree.com.
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Thanks for watching. See you next time.
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