Main Street Business

#568 Asset Protection and Privacy: Reality or Illusion?

• Mark J Kohler and Mat Sorensen

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In this episode of the Main Street Business Podcast, Mark J. Kohler and Mat Sorensen give you the blueprint for bulletproof asset protection. From LLCs to trusts to holding companies, find out the smart, cost-effective strategies that work without the extra fluff.

Here are some of the highlights:

  • Mark & Mat break down the biggest asset protection scams and how shady promoters convince people to buy unnecessary LLCs, trusts, and offshore entities.
  • Mat discusses when you should separate your real estate properties into multiple LLCs vs. keeping them together in one—so you don’t overcomplicate things. 
  • Mark reveals the truth about “anonymous LLCs” and how to use Wyoming holding companies for real privacy protection.
  • How to build an asset protection plan that actually makes sense for your wealth level—so you don’t spend money on pointless legal structures.
  • How to avoid setting up LLCs that end up costing you more in taxes than they save you in protection.
  • Why your asset protection structure must match your tax return—or it could get torn apart in an audit or lawsuit.
  • When you should separate your real estate properties into multiple LLCs vs. keeping them together in one—so you don’t overcomplicate things.
  • How to legally minimize tax burdens while keeping your asset protection plan airtight.
Speaker 1:

Welcome to the Main Street Business Podcast with your distinguished hosts, mark J Kohler and Matt Sorenson. Both are best-selling authors and have over 25 years of industry experience, with 10,000 client consultations, making them the leading tax and legal experts in the nation. Together, they'll unpack the most complex tax, legal and financial strategies crucial for saving more, stressing less and building generational wealth. Today they're your personal advisors, ready to break it down for you and make the tax and legal game easier than ever.

Speaker 2:

Here is Mark and Matt. We're doing this to have a more private life where we can be protecting our brand, our reputation.

Speaker 3:

I had a Grammy award-winning artist, very famous you would know who it is and they were very concerned about privacy. When we up the llc and we use this structure we're talking about here, you might not have a high public profile, but you're like I just don't want my name out there.

Speaker 2:

I just don't need it out there floating everywhere, yeah, and your brand, your social media presence. All of a sudden, someone sees a little something. They just want to make a big deal about it, and it it's not a big deal, but your name was there. Bottom line. There should be no fear. There should be no pressure. We're not just TV lawyers.

Speaker 3:

We're real lawyers. It's not just two good looking guys.

Speaker 2:

We could have been on suits Right.

Speaker 3:

Welcome everyone to the Main Street Business Podcast. This is Matt Sorensen, joined by the incredible Mark J Kohler. We're excited to be with you today because we want to talk about keeping the money and all the hard-earned assets that you've built up.

Speaker 2:

Yeah, and I think the topic that goes hand in hand with that that I've been so vocal about over the last 25 years is also making sure you don't get scammed and sold crap you don't need. There is so much out there in this asset protection industry of you need a Wyoming entity or you need a Nevada entity or Delaware, and you can hide and oh, get in your vocal trust and go offshore and you know, and there's just so much crap out there too. So we want to be a voice of reason, give you some straight answers today on what works, what doesn't, how to take action and what it might cost, and then you're more well-equipped to go out and choose the professional you need.

Speaker 3:

Yeah, and I hate to say it, but every bad idea and recommendation out there has a little dose of truth in it and it's kind of built off of that and then overdone. So we want to talk about what should you actually be doing? It might be different in your situation. We'll try to give you some guidelines here about what may work and make sense for you, but at the end of the day, you want this to be tailored to your situation. Okay, so we're going to come back to that towards the end.

Speaker 2:

So the main goal here is let's bring this in from 30,000 feet down to 2010. We're going to land this baby safely with all the FAA stuff going on.

Speaker 2:

Oh my gosh, so 30,000 foot view. A lot of people are like okay, I'm buying rental real estate, I'm investing in the market. Okay, I'm buying rental real estate, I'm investing in the market, I've got XYZ assets. I want protection If something goes wrong. I'm driving a car, my teenagers are driving, there's a lawsuit that comes after me or inside one of those operations. And number two I'd like a little more privacy. With the web and transparency out there and Siri listening to everything I'm doing, I just feel like I could use a little more privacy, because it's a layer of protection, but it's not protection itself. I call it the camouflage. So what we're really looking for is kind of that bulletproof vest that'll help you to some degree. That's asset protection. That's asset protection. And then the camouflage that will help you just be a little less noticed. And if I'm going to go into combat, I want both, and that's what we're going to talk about as we zoom in here.

Speaker 3:

Yeah, and everybody might be a little different here, okay. So once you just keep that in mind here as we're talking through this. The other thing I want you to think about is two other overriding considerations here. One is taxes. We want to make sure we're doing this in a tax efficient way. We definitely don't want a structure that's going to cost us more in taxes, so I make sure we're doing it in a tax efficient way, maybe even considering audit risk too. There's a couple ideas there we'll have for you. And the other thing is your cost and administrative burden. A lot of times we'll see stuff that gets set up for people and we're like you're a dentist with one rental property. What do you need 20 LLCs for? I mean, I hate to say it, but you got oversold here. You don't need all this crap, not just because of the cost it took to set it up, because of the cost to maintain it.

Speaker 2:

Yeah, and I want to be very this is. This is peeling away the onion, pulling back the curtain. You're going to see wizard of Oz, right here is what what certain law firms even there's a lot of promoters out there that don't even have the legal license to sell a lot of their asset protection and crap but what a lot of times they'll do is say, okay, so let me put it this way A client comes in and they've got this elaborate structure, just like Matt said, they could be any sort of profession, they've got way more than they need and they're on a path. But we're like, holy crap, this is a lot of work and it cost them a lot. And the reason why it happened is these companies or firms that promote this will say, well, this is where you want to go, so let's set up the structure so you have it when you get there.

Speaker 2:

And a lot of buyers, consumers, business owners, investors, like you maybe, are like yes, I want to have what I need, so when I get there, it's already good to go. I understand that and I want to be sensitive to that. But it's expensive and you don't need it. I don't go out and buy a pair of jeans that I can't fit into right now, it's a waste of money. And buy a pair of jeans that I can't fit into right now, it's a waste of money. Now, if I work out and I'm on my diet and la, la, la, okay, then I go out and buy that pair of jeans and that's how we feel. Let's not overdo it, let's not buy more than we need right now and we can build on a proper structure. But I just wanted to recognize, I think, why people get there and again, it's that sliver of truth that gets exploited, yeah, so let's talk about your first consideration.

Speaker 3:

As you're thinking about this, if we're going to build asset protection and let's maybe start there, we'll come to privacy here in a moment we're thinking asset protection. We first need to think what are we protecting? What assets do I have? Do I have?

Speaker 3:

a significant amount of assets. Yes, right now. Now you at least might have a paycheck, a W-2, maybe income from your business you don't want that garnished. Even your bank account, right that you might have even some day-to-day money or maybe some savings. Your retirement accounts are otherwise typically protected, so we don't need to have entities for those. You can file bankruptcy and still keep your Roth IRAs and your retirement accounts.

Speaker 2:

And in a lot of states your home could have homestead protection and a lot of things.

Speaker 3:

You get a homestead exemption in your state. There's certain limits that could be. Some states have a lot, some states have a little. So you might want to look that up and Mark's got a guide in his book. It's even in his calendar If you want to look that up. Those details we got on our site as well. But I want you to just focus in and think about that. What do I have? Maybe I do have a significant brokerage account, a lot of real estate that I own, some land, a second home, other businesses. I want to protect those things from other incidents that could happen in other places of my life. The more of that you have, the more asset protection you need.

Speaker 2:

You know and we've talked about this in one of our other podcasts when you're starting to work with your retirement accounts, doing an inventory but I think this is a great opportunity to say this now If you are concerned about asset protection and privacy, I want to see your financial statement, I want to see your balance sheet and it's attorney-client privilege. You should be working with an attorney on this process, obviously, but sometimes clients come in and say I need asset protection. Well, what do you got? Well, I got this, or well, I got that. Well, what entity do you have? Well, I think I set one up over here and I think I've got.

Speaker 2:

Okay, why don't you do an inventory first? And you're going to feel more in control. You're going to feel more strong or weak based on what that looks like, and we want to make sure that we are making good decisions based on correct data. And so I think step one in this process too especially before you even get on a call with one of our attorneys, for example is have at least a list what are the fair market values and what are the mortgages or debts against those, and what's your equity? Because if you've got a lot of assets but they're leaned to the hill. Okay, we're looking at the net exposure, not the fair market value.

Speaker 3:

Exactly, and I think when we do, and I think when you're working with any lawyer here, you can work with our amazing team at KQS Lawyers. But I'm just saying here, what they should be doing is taking that inventory to know what assets am I trying to protect. We're going to have different structures depending on what type of the assets we're trying to protect. Or we might not need any structure, For example, if all your money's in retirement accounts or something like that, or we can do very limited things.

Speaker 3:

The other thing I want to we want to look at is your actual tax return. Okay, we want to look at your tax return and see how are you reporting income? Where are assets showing up on your tax return? Sometimes there's tax and planning opportunities. You don't want to do some asset protection planning, which we see all over the place that jacks up your taxes and now you're paying more taxes because some idiot didn't understand tax law. But they thought they created a great asset protection plan, so it's got to be coordinated they do, and I love where you went with this.

Speaker 2:

And, by the way, we're going to give you some practical. What does this look like typically and what would you do? Next steps here in a moment. But this mindset and perspective is so important because you want to be aligned on what you're trying to accomplish and know what you have and where you're going. So I just want to piggyback what you just said too.

Speaker 2:

It's not always, yes, you want to make sure you're not undermining your tax planning or whatever, but a lot of times we look at your tax return and we're like yeah, that's not what your asset plan says. Because to me, a tax return is like your blood work. You're like, oh, I hurt here, I feel bad, I've got all this stuff, I've got all this. Really, I just looked at your blood work, that's not the problem, it's over here. And another way of saying it is just, does your tax return reflect your legal structure? Because if it doesn't, now you've got issues, but potentially an audit, and if you get into a lawsuit, this is what plaintiff attorneys want to do. They're like this guy says this is what he's doing. That's not what he's doing, because your tax return tells the true tale.

Speaker 3:

Yeah, yeah, it can be discoverable and you sign it under penalty of perjury. So trying to backtalk that with any lawyer when you're on the stand and like a penalty of perjury, you did sign that, so were you lying then? Are you lying now, sir? That's the question. Are you lying to?

Speaker 2:

the IRS or you're lying to me. Uh well, I thought my accountant knew this. I thought my lawyer and this is a problem too is you work with a lawyer that doesn't understand taxes and that's not going to help. So can I say this Now let's get practical, let's get baseline, and what we do with all of our clients when we start this process is we build what we call a trifecta.

Speaker 2:

We want to have a visual representation of what you have now, your legacy. It's a foundation, your revocable living trust, which is great, which we know. Revocable living trust don't have asset protection inherently, but they're a key part of your legacy, your estate and where things go that we need that piece. And then on the right side we're going to put your assets and on the left side we're going to put your operations. And in a typical trifecta you might have an S corporations for your operations, or you and your spouse, or you're flying solo, have a W-2 day job. That operation side will again look unique to you.

Speaker 2:

And then on the asset side there'll be kind of an A-B piece. There's going to be an A piece of your retirement accounts and all this, and then the B part, kind of the after-tax piece like what are you doing individually? And so we want to build that picture and it could very easily be one entity on the left, one entity on the right. Your entity for your assets is set up in the state where the assets are. Your name might be on a state website, but you're protected from the operations of that rental property and it all flows down. That's typically what we do. We have an LLC to protect you from the tenant. You have an entity over here to protect you from a customer and you're going to make money, and it all flows down to your revocable living trust.

Speaker 3:

Then you start talking asset protection. Yeah, and I think that layer one is really important and if you have that rental property, we're going to recommend that LLC to own that rental property, so that you contain that liability there.

Speaker 3:

If you have the business, the operational business, where you might have customers or employees or whatever it might be, we want to contain the liability there. We don't want to cross-contaminate. Those entities don't own each other. The only connection of those things is you or your trust down here that happens to own both of them but they're not owning each other and we'll see that jacked up a lot too. But let's talk about over on that asset side too, the rental property, for example.

Speaker 2:

I like what you said there and I just want to kind of add to it and I'll let you keep riffing this is good, is that right there? We're not talking about Wyoming. We're not talking about Delaware, nevada. We're saying where's your restaurant, where's your dental business? Where's your, where you operate as a realtor, manufacturer and influencer? Where do you live? That's your operational entity. And then where's your rental property? Oh, I got a rental property in Tennessee, or I got one in Georgia or Arizona or New Jersey. Okay, so we have an entity there.

Speaker 3:

In that state where the property is yeah, that's baseline.

Speaker 2:

And does your trust own those? Do you have a revocable living trust People? Holy crap, if we can just get 95% of our clients to have that structure with good documents, with annual minutes, with the proper ownership and title transfer, yeah, if we can just get that, that's asset protection in and of itself. Yeah, you're organized, you're clean. Then we can go to layer two.

Speaker 3:

Yeah, but let me go to layer two, which I this might not be, or this might be 1.1.

Speaker 2:

I don't know, yeah, I like it. You go, baby, we'll see.

Speaker 3:

Okay, layer two I want to talk about. Well, what if I have multiple assets over here? What if I have three rental properties, matt Do I, and they're all in Georgia. You know it's a great market. I've been investing there, I know it. I got a good property manager, I got my team there, so I'm just doubling down in that same market. It's all in Georgia. I got a Georgia LLC.

Speaker 3:

Should I put all three rentals in the same LLC? It depends on what we talked about earlier. How much equity do you have? What are we trying to protect? If those three rental properties each have 10,000 of equity, so you got total Great, let's put them in the same LLC. Something happens on property number one, they can sue the LLC and they can get all of the equity, but in that case it's only 30K. But let's change the example there and say there's 200,000 of equity in each of those three properties. I don't want 600,000 of potential equity to be in one LLC that if something happens on one property, all three are at risk. So we would set up a separate LLC in that scenario for separate properties, because there's enough equity there. And this is where it starts, depending on your situation of how many LLCs you may have, you don't need one for every property unless you have a lot of equity in those properties. I love it.

Speaker 2:

I will want. I do want to call that level two. I think I'm good with that, because level two is getting our eggs in separate baskets. I like that.

Speaker 1:

We haven't even gone to Wyoming.

Speaker 2:

We don't need an extra layer. We just want to make sure the layer we have at level one is properly structured, and so stage two is really okay. Do I need more entities there? And again, are they in good standing? Is the title where it's supposed to? And people do not worry about mortgages and due on sale class. We have set up 20, 30,000 LLCs in the last 20 plus years and I think I can count on one hand anytime a bank even asked what the hell was going on. Your mortgage has already been sold. Keep paying the mortgage payment, you're fine. So we're going to move assets around as needed in stage two, to just make sure you don't have too many eggs in one basket. You're organized properly in the right states, the ownership is correct and, again, that's a huge accomplishment for a lot of people. But they get excited with the oh my gosh, I need an entity in Wyoming.

Speaker 2:

They jump over three steps and stages to go over here and set it and they're still jacked up over here in level one. So we want to take it progressively, slowly and carefully, and that would be that next stage and that's where I guess I want to say it now. It's kind of a comprehensive consult. Let's give everybody kind of what this might look. Can we digress for a minute? Like what it would look like in the process.

Speaker 3:

I mean, really, this is where you need some tailored advice in your situation and that's where our lawyers help. At KQS Lawyers, We've been doing this for 20 years now, helping clients, business owners, entrepreneurs, real estate investors across the country. Try to organize this, make sense of it and get an actionable plan that helps them specifically in their situation.

Speaker 2:

And not break the bank.

Speaker 3:

Yeah, and not to break the bank and have it done with a real lawyer, okay and so. But let me even just say, on that layer too, just to see a little more nuance to this you might be in a state that allows for series LLCs Mark mentioned Tennessee that you might have rental properties. Maybe all your rentals are in Tennessee. Well, they allow for what's called a series LLC. If I had those three rentals, I don't need to do three separate LLCs. I could do one series LLC that treats each separately and it creates a series LLC. You don't have to file to the state. They get separate asset protection amongst the separate properties. Only one LLC filed at the state and there's like 20 states that fall into that. But what if you're in the other 30 states? Well, it's a different little strategy and we dig into that as one of many things as we're trying to implement this for you. I love it.

Speaker 2:

And on that digression, this is not an infomercial.

Speaker 3:

Yeah, it could be any lawyer that knows what they're doing.

Speaker 2:

Yeah yeah, no, I was going to say I thought you could have said more, so I'm going to say something too. No, I just. I want people to realize, when you start to get in this topic, it can be overwhelming and you're like, holy crap, my lawyer doesn't think like this. The only other place out there is going to charge me 20 or 30 grand and they're selling stuff you guys aren't even talking about. Where do I start? And so I just want you to know.

Speaker 2:

There is an option, and we like to build what's called a comprehensive consultation, and this plan is a trifecta. The entry point is about two grand. If you've got a lot of stuff going on, the most you pay for that comprehensive consult is around five grand, and we're going to build a plan. You're going to meet with a real lawyer on Zoom you don't have to be in your state with you or face-to-face and they're going to diagram this out, give you an action plan and answer a lot of these questions and say, hey, yeah, this is where you want to go, we can get there, but we're going to go here. Then we're going to go here.

Speaker 2:

Here's what we would charge, and we want to build a relationship that makes sense financially and intellectually and emotionally. We want you to feel like you're not getting taken advantage of but, of course, feel like you've just found a new confidant, a real advisor, and so I just wanted to bring that up again, that, as we go to the next stages in this and how technical it could get, and we want you to know that you can always fall back to okay, I'm ready for my appointment, I really am ready to go there and I know I need to do some cleanup.

Speaker 3:

Yeah, all right, so we've got to layer two.

Speaker 2:

Yeah, I like layer two.

Speaker 3:

Separate assets okay and separate treatment of entities.

Speaker 2:

I'll lay out layer three. Matt, I've got about a million dollars in equity. I might have five to 10 properties Ooh. And I've got a big stock brokerage account Ooh. I've got a lot of equity in my home. I could live in a hard state. That's like California or New York or Illinois, and I've got a second home, maybe. Yeah, and so now I'm like, what would you do?

Speaker 3:

Well, we would want to look at what is your personal risk? Okay, because we could have a scenario where we're not talking about a liability that happens on your rentals or a liability in your business. What if I get a liability of Matt Sorensen? I'm driving to the store to get a gallon of milk, you know. Okay, the classic example there get an accident, it could be tragic, okay, and I get sued. My insurance doesn't cover it or it only covers a certain amount, and I got a million dollar judgment against me and the plaintiffs are like we want to go collect on this. Well, I want to limit them from getting it.

Speaker 3:

All of these assets that I've built, all of this, this equity and this real estate that I've built, this empire I might have my businesses, my brokerage account, my second home, even my house, whatever it may be. So how do I get that type of protection? Do LLCs give me that protection? Well, this is where people bring up Wyoming. This is where you talk about a charging order protection entity or a COPE, and what a COPE entity structure is and what charging order is. It says if you have a judgment against you personally and a plaintiff's lawyer is trying to collect on that they can get anything in your name. So stuff in your bank account could be at risk. Any assets in your personal name could be at risk. But what if the vast majority of my ownership is up in my entities, in my real estate, for example? Well, I could have a Wyoming LLC. This is where Wyoming comes in all right as one of the options.

Speaker 3:

Not the only option Operating is like a holding entity. So my trust would own my Wyoming entity holding company and that Wyoming entity owns my Arizona LLC that owns my rental in Arizona. The reason being is they go up the chain there because they're like well, what does Matt Sorensen own? He doesn't own an Arizona LLC that owns a property. He owns a Wyoming LLC. The Wyoming LLC owns the Arizona LLC. So they got to start down here which Wyoming says we're not going to let someone break up into the LLC in that scenario to get at the ownership, force the sale of the assets Some states do. By the way, some states will let the plaintiff blow right through that and make you force the sale of those assets in the LLC.

Speaker 2:

Wyoming, doesn't? I love the way you explain that and I'm going to say it another way, so it might click for some of you too, in a different manner, is that when you set up an LLC, it's to protect you from the tenant. That's in all 50 states. That's a golden Done. But when you get that liability, it's coming from the other direction. It's a two-way street when it comes to asset protection. So all 50 states protect you from the tenant as long as you're not a slumlord and crazy and whatever. But if you get a personal liability whatever it could be, or even one of your teenage drivers, who knows? And now they come after you is that LLC going to protect the rental from you?

Speaker 2:

And so many clients over the years are like well, of course it does. That's why I set up an LLC. No, no, no, no, no. We set up an LLC to protect you from the tenant, not to protect the rental from you being an idiot. Oh well, what states give me that protection? Well, there's where we go to the handy dandy trifecta 2025 calendar. I've been doing these for five years. Matt collaborates with me on this and I've got a sheet in here I'm looking at it right now that says oh, in all 50 states, which ones have series protection?

Speaker 2:

Which ones have coat protection, which ones have privacy? And you can start looking at that going oh well, in Arizona, oh, it's a different rule than maybe in California, and more states are providing this coat protection. But they may say, well, it's got to be two members, not one member, and we're not even a privacy yet. We're just saying which LLC would protect me? So if I'm in Arizona with rental properties, oh, they have coat protection, okay, that's cool. In what instance?

Speaker 2:

And this is where you don't want to play lawyer You've got a busy day job and you're like okay, I get the concept and your advisor helps walk you through it and tailor it to you. So I don't want to again overwhelm you. But this calendar you can buy on my website, marchaidcodercom. It's like 30, 35 bucks, it's got all the tax deadlines for the year, it's got all these fun little tables and things like that, and this helps you be equipped as an entrepreneur and investor so that you can kind of get a quick reference guide. But anyway, the point is, as Matt says, you've got to look at your state, the equity, what you're trying to accomplish, and then we could add that COPE entity in between. It really doesn't own anything itself, it just owns the LLCs you already have.

Speaker 3:

Yeah, and that's a key point, do not put properties or anything that run a business out of this holding entity, this COPE Wyoming entity. It owns other companies. It does not operate in and of itself.

Speaker 2:

Now, on that note, some of you may be going well, how many states have COPE Right now? Currently 22 states. Some have a very clear statute on this. Some of them have case law. Some of them say, well, is it a two-member LLC or is it a one-member LLC? And this is where Wyoming has kind of risen to the top. 20 years ago, when I started as a lawyer, it was Nevada. You go to Nevada, you know you can hide out in Nevada, set up a Nevada LLC and la la, la. Well, nevada's kind of crushed that in their legislature and the fees there a lot. It's kind of a pain in the butt. Well, meanwhile, wyoming, kind of the sleeper state, said we're going to give this a clean statute and they have kind of this cool thing regarding the single member LLC. Now, how would you explain that?

Speaker 3:

Yeah, the one thing of what why Wyoming has caught so much attention and a lot of lawyers do use it we think it's been oversold, frankly, but we do use it for a lot of clients wanting this charging order protection is Wyoming does specifically say in their statute that you get charging order protection even if it's a one owner, single member, LLC, even if Matt Sorenson owns a hundred percent of that Wyoming holding company, this LLC, and Matt Sorensen's got a judgment against him.

Speaker 3:

Some states say, hey, if it's just one person or even a husband and wife that's got a judgment against them and they own an entity, we let them go in there. The whole thing of charging order protection in a lot of states was to protect other innocent partners in an LLC or entity. So a lot of states said, if it's just you or the person has a judgment, we're going to let them blow through the LLC and go get in there and force a sale of assets. Wyoming said, nah, we don't care, Even if that person that owns it has a judgment against them. It's just one, we're making them sit outside and they give you that charging order protection. So that's why we do like it and why you see it sold quite a bit.

Speaker 2:

So there is again this little dose of truth in some of the stuff that's oversold. Yeah, and at this juncture, when we're meeting with the client, wyoming may be a great fit. Why we may not be a great fit, and so, but you get the concept now. Now I'm ready to drop the next word in here privacy. Is that okay?

Speaker 3:

because some people are like what are we on here? Yeah, seven layer burrito. What is it is?

Speaker 2:

that layer one. You just get this number two. Uh, look at your eggs in your baskets number three maybe at a charging order stage four, maybe some privacy, okay.

Speaker 2:

so here's where someone says, okay, I've put on an extra kevlar vest, I'm feeling a little more protection, I got an extra layer in there. Doesn't give you carte blanche to go be an idiot again or be fraudulent. You want to always keep good documents, good funding of everything with proper titling and tax returns match. You're doing all those things. Then you go. You know what I don't like the world seeing everything I got. And if someone wants to come after me, I want to make it a little harder for them to find me.

Speaker 2:

And privacy can add really a pretty cool layer of protection in the sense that it's even hard for someone to find you. But once they do that privacy is really out the door. So you have to know it has its limitations. Well, here on our list we have 10 states that have some form of filing, an LLC where you don't have to disclose the manager or the member and it can be a moving target. States you know, have their own little filing process and some are online, some are over the through the mail and la la la, and our paralegals will say, oh, guess what, by the way, this state does want this now and whatever, but we've got some good experience here on which 10 states we could hide you as a manager or a member and give you some protection from a public search.

Speaker 3:

Yeah, yeah, and I think everybody's kind of got a little different viewpoint on privacy. How important is it to them? Because it's going to cost you. There's additional fees adding in another entity here. This could be this Wyoming entity that gives you some of that layer three charging order protection too and additionally it can give you some privacy. We'll get into how that works in the setup and how you can structure that, but that's going to cost you more.

Speaker 3:

So level one that we talk about, a lot of clients kind of end there and that's a great starting point. Maybe they have a business or a side hustle and they got a rental property or two and we're there. They got their trust. They have a business or a side hustle and they got a rental property or two and we're there. They got their trust. They got the rental property on the LLC. A lot of clients are at level two and they're like I have multiple properties and they stay there. Then the next client's at level three. They're like I got a lot of assets I've accumulated, I got a million dollars or more of net worth. I'm worried about personal liability possibly and exposing all my assets in my business or my LLCs. So now they get that charging protection. Now we're at layer four and we're like I need some privacy, Like an example, just when I had a Grammy award-winning artist, very famous you would know who it is but I had to sign a nondisclosure. I can't say who it is.

Speaker 2:

And you're a lawyer, so I'm like, so don't say their name no-transcript.

Speaker 3:

He's like that's the last thing I need and so, um, and I think many of you feel that way. You know you might not have a high public profile, but you're like I just don't want my name out there. I might have a lot of rentals, I might have a big business. I just don't need it out there floating everywhere and just for publicity sake, floating around on the internet for someone to chase down. What assets do you have? Plaintiff's lawyers being able to see everything that you have and all your entities?

Speaker 2:

Yeah, and your brand, your social media presence. All of a sudden someone sees a little something. They just want to make a big deal about it, and it's not a big deal, but your name was there. So, with privacy, we really want to again assess what you want to keep private.

Speaker 2:

If you in my book, the Tax and Legal Playbook here and there's a whole section on privacy where we also try to go through some stages of how much privacy do you really want or need for a certain asset, you may say I don't want anybody to know I own this ranch or this farm. Or I don't want anybody to know I own a rental property in an apartment building that might have some tough tenants that need evicting. But others are like but that's it, I don't need people, I don't care if someone knows where my home is, or I don't care if they know that I'm the president of this company or where my personal address is. Other people are like I got to be off the grid. Okay, that's going to be another stage, and so we want to kind of assess how much privacy you need and want and start giving you some price tags as well as pain in the butt.

Speaker 3:

Tag, yeah, and this is where I see some of the structuring too, where we'll kind of take different opinions on other people that are setting this stuff up. I'll see a lot of people using this holding company for their operational entity and then they're using this Wyoming LLC and they're using a Wyoming LLC for their assets, and usually on the asset side, if they got enough, I'm like I get that Charging order protection. Maybe they're using it for privacy too. So the kids they'll use that Wyoming LLC as the member and the manager, so it kind of discloses any ownership on these other LLCs in other States. We can talk about that here in a second. But there's there's great ways to get more privacy and it makes sense on that side. But on the operation side I'm like, oh, you wanted privacy for that operational business that your name's on the website as the president and you go out and promote yourself as the owner of that business. I'm like, what are we doing over?

Speaker 2:

here yeah.

Speaker 3:

And also that entity. It's not designed to hold assets. We have that entity to basically receive income. Push your income and revenue over to building assets on the other side. So I'm like I don't know that it makes too much sense over there. I guess you could have value in the business. You may want to sell it one day I could see some reasons for it. But we really like it more on the asset side this Wyoming LLC charging order protection to protect someone from getting up to your business assets, from your personal liability, and then also creating more privacy on where your assets are.

Speaker 2:

So that's a little more private and not out for everyone to find on the internet. I like it. And another way I'd say it is if someone is trying to recommend a Wyoming entity for everything you know.

Speaker 2:

Like you need another entity for this, you need another entity for that or that it's going to save you taxes, which it won't, because it's where you're doing operations and where the assets live of, where you're going to be taxed, not where the entity is set up that holds it. That could give great asset protection, it could give great privacy, but the IRS is like I just want to know where you're doing business and our tax returns are private At least they should be. We've heard lately that Doge has uncovered a little bit of some releases of tax return information, but the average person does not have access to your tax returns and we want to be honest with the IRS. This is another cautionary point. We're not setting up these entities to hide income or hide from the IRS. We're doing this to have a more private life where we can be protecting our brand, our reputation, and not using it as a license either to be a bad person.

Speaker 3:

Yeah, but to take advantage of the laws that are out there in your favor too, because there are laws, LLCs right. And corporation structures that are, like created to limit your liability. That's what limited liability company stands for, so we can use these tools and structure it right to benefit us. There's nothing wrong with that, and we want you to do that, of course.

Speaker 2:

Like we want you to try to protect these assets you're working so hard to build. Let me give um, now I'm. We could sit here for three hours literally and just give some examples of some specific strategies that would work. And it's going to always depend on the types of assets, where they're at, the equity involved and what you're trying to accomplish. Blah, blah, blah. And that's the reason why you're going to do a tailored, comprehensive consult that's affordable, to kind of start that process and that journey.

Speaker 2:

But one example I'll just give kind of a fun one, matt and I like this is, let's say, arizona. It's actually one of the states where there is terrible privacy. Arizona is a bad state for privacy, although it might be better for asset protection. And see, that's something a lawyer that's in the weeds every day is going to help you identify. So in Arizona, when you file an LLC, you not only do you have to list the manager, you also have to list any member that owns 20% or more. Even if it's your trust, another company or whatever. You've got to disclose that. And if there's a change in ownership of anyone that owns 20% or more, you have to file an amendment. So it's at the state. Well, that's kind of a pain in the butt, but I want privacy.

Speaker 2:

So what we might do is set up that Wyoming entity that does offer cope protection, as does Arizona, but that single memberection yeah, pretty cool. And so that entity can now be the manager of your Arizona LLC and also the owner of your Arizona LLC. So when someone does a public search and says who owns that apartment building on Scottsdale Road and Thomas, oh well, xyz LLC. Okay, let's go look at it. Oh, and a Wyoming LLC is the manager and the owner, let's go to the Wyoming website and we go over to there, the Wyoming website, and they're like I want to know who owns this thing, damon, oh, it's a law firm that set it up, that's all I know. Dang it. So now it requires a subpoena and a judge to tell us. We have to disclose that.

Speaker 3:

Which would be very. You'd have to have done something very nasty for us to be able to have to disclose that, because at least with us it's attorney-client privilege. With some non-lawyer that set it up, there's no argument that they don't have to disclose that. Okay, so that's another difference of working with an actual, real lawyer. So we're not just TV lawyers, we're real lawyers. You know, it's not just two good looking guys that could have been on suits, right, you know.

Speaker 2:

I'd stayed at a holiday in last night, which gives me even more superpower.

Speaker 3:

So, yeah, yeah, that's a throwback joke that's like a 15 year old one.

Speaker 1:

They don't do that anymore.

Speaker 3:

They don't know. I stayed at a holiday in last night.

Speaker 2:

I don't.

Speaker 3:

I like that, old enough to know that joke. Oh my gosh, I am so old. Okay, well, there was a commercial that said Our demo, actually, you know, probably get it, got it.

Speaker 2:

I'll say that, yeah, the commercial was if you stayed at a Holiday Inn Express, you're going to work faster, move faster the next day and be incredible, and so I think it was a great commercial.

Speaker 3:

I thought it was too. I was just saying it's a little, you know, it's dated, it's dated.

Speaker 2:

Well, hopefully, my example, guys. It gives you a little, you know, wets your whistle a little of okay, this is what we're trying to do and the lawyer is going to help identify the strategy. Tell me the cost how much is it going to be to implement and maintain and then you can make an educated decision. Bottom line there should be no fear. There should be no fear. There should be no pressure. There should be a visual representation of what you're doing that makes sense intellectually and emotionally and your accountant is going to be able to carry out the order of doing your tax work without conflicting what the lawyer says. And they're on the same team. And that's why we've built a network of tax advisors and train over a thousand tax advisors in a network that are trained by us and you pay them separately. We don't make any money on that, and they're going to work with the lawyer to help implement what you need. And so I don't know. I just wanted to give that example of what it might look like.

Speaker 3:

Yeah. So we want you to have confidence going through this. Whenever you set up, we want you to feel confident about it so you don't have to worry about that. Go worry about making more money. That's what you're good at, okay. Don't try to do this yourself or set it up online or work with people that don't know what they're doing. Like, get it done right, get it set. Work with the team that you can add and build on it as you need. Make changes too. Sometimes you got a life change. You might have a significant amount of assets come in, or a different income year or trouble on the horizon. That's what we're here for, okay. We want to be here to help you through all those challenges and the opportunities that are heavy.

Speaker 2:

I will say this, and I know you didn't mean this, but with the words you used, I don't want someone to think set it, forget it. We don't want that.

Speaker 3:

Yeah Well. I'm saying it's like have confidence in what you said so you don't have to worry about. Did I these idiots that I hired that aren't lawyers do what? Did they actually know what they were doing?

Speaker 2:

Yeah, and but I? What I mean by that, too, is I want you to understand it. You, you are. You may be using us as a quarterback, but you're the owner of the team and what I'd love for you to do is have that visual representation and take it into your family board meeting and you explain it to the family. And if you can't explain why something owns something or why it's there, you need to get back to that consultation and go. Why did I do this again? Because you want to at least understand the why, and we're going to do the work in the weeds and I think it's going to give you so much confidence and really be the leader of your family board meetings and teach your family about this.

Speaker 3:

Yeah, we're part of your team, all right, but you're leading the team. You let us know where we can help. We're going to provide our advice and expertise and want to add value to you, of course and whether that's us or someone else too this is not meant to be. We want to give you guidelines and information. We got a busy team. We want to help you. We love it, but get that good, solid advice. This is a critical component of how you build and grow wealth is making sure you protect it. This is defense.

Speaker 2:

Yeah, and we talked a lot about asset protection. I do want to say a couple more words about privacy. If this is something that's really interesting to you, first of all, in my tax and legal playbook pick it up on Amazon audiobook as well there's a whole section that takes you through these more extreme layers of privacy setting up ghost addresses, mail forwarding, which is a service we provide we would if you want to go off the grid and not share your personal address. How do you get there? And so check out that section on privacy.

Speaker 2:

Also, I love JJ Luna, probably one of the industry leaders in personal privacy protection. He's an older guy now. I've interviewed him, man, over the last 15 years on occasion on our Main Street podcast and his books are excellent. So I'd check out JJ Luna, and once you get into that genre, you're going to see some other authors that have different ways of looking at the privacy. But I just encourage you to always think of the cost-benefit analysis. What does this really mean? Because if you can't share your personal address, what are you doing when you go open a new account somewhere or register at a hotel and travel, and it gets pretty unique. You know, you think of Jack Reacher or Jason Bourne, and those shows are fun, you know where. No one knows where they're at or who they are. But it comes with a cost.

Speaker 3:

Yeah, yeah, it takes that If you've got a family and a real home. Life and people in school and stuff is a little different to try to do those gymnastics. But privacy could be very reasonable in many aspects of your assets.

Speaker 2:

Yeah, for your assets, and that doesn't have to be everybody's business Very achievable.

Speaker 3:

We can do with some LLC structuring, understanding the right states, implementing something specific for your situation. I love that note you had on the addresses too, of course, like we've got a service in our sister company, Main Street Business Services, where we provide a virtual address and privacy address type service to make sure that your address stays off of any documents. Yeah.

Speaker 2:

All right. Well, hopefully this has been informative and help you feel more equipped to make some careful decisions, because this can get expensive and whenever it sounds too good to be true, get this second opinion. You're going to be spending a lot of money and time over the next years to maintain and implement this. Making sure you get a couple opinions on the outset will really help you in the long run by far. So thanks for listening. So grateful to be a part of your lives, and if you've enjoyed this podcast, please share it and give us a two thumbs up. Five stars, 10 out of 10, high fives, whatever it takes. We appreciate you being a regular listener and we'll see you next week. I think open forum is going to be next week.

Speaker 3:

Yeah, we need to do some open forum. So if you've got questions, get over to MainStreetBusinesscom, submit your questions there. Mark and I will be going through them and we'll give you answers. So be there, we'll see you next time. Thanks everyone.

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Mark J. Kohler

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