Listen Here
Kevin L. Day is one of the leading estate planning and international asset protection planning attorneys in the United States. He was a university academic administrator for eight years, a law professor at the doctorate level and a law school Dean of Students, before going into private practice.
Mr. Day is very active in both business and community affairs. He was a member of San Diego’s International Affairs Board and has served as a delegate on many economic and trade missions.
Kevin’s words are known to inspire and motivate audiences, with his expertise in asset protection he shares the ever-changing world of finance, he dives deep into asset planning for entrepreneurs and high net worth individuals.
He takes you through the different types of strategic trusts and their advantages. He explains the different trusts that you can use as an investor to protect your assets and how these trusts have the bulletproof result you would want to have.
Kevin’s interview is one to keep in your books. He has great intuition for your wealth protection!
In This Episode
- Kevin’s background and how he got to where he is today.
- The proactive way of looking at asset protection.
- What is the roadmap to asset level protection?
- How do you architect the right asset wealth strategy?
- Domestic Trust Vs. Offshore Trust.
- How does Kevin accelerate his own wealth and the counsel he has for you!
Hey, everyone, and welcome to today’s show on Wealth Strategy Secrets. Today, we’re joined by Kevin Day. Kevin Day is one of the leading estate planning and international asset protection planning attorneys in the United States. Mr. Day’s bachelor’s degree is in Chinese Studies, and he holds both an MBA in International Management and a JD degree. He was a university academic administrator for eight years, a law professor at the doctorate level, and a law school dean of students before going into private practice.
In addition to his legal expertise, Mr. Day brings his extensive business knowledge as an MBA in international business to his law practice. Mr. Day is also a regular speaker to professional and business groups on issues affecting business owners and high-net-worth individuals. His expertise in asset protection and estate planning makes him a noted speaker at continuing education conferences for legal professionals as well as accounting professionals. Attorney Day is also the co-author of four books: “Lawsuits, Taxes, and Asset Protection,” “Offshore Money Strategies,” “The Privacy Guide,” and “The Ultra Privacy Guide.” Attorney Day believes in giving back to the community through charitable and civil involvement. Kevin, welcome to the show.
Thank you, Dave. I’ve forgotten some of those accolades.
It’s always a long bio and interesting to listen to it, you know, speaking of yourself. What’s interesting is the Chinese studies. How did you start studying Chinese?
Oh my gosh, I was tired of Spanish, and UC (the University of California) requires a couple of years of language. I was involved in martial arts at the time and chose Chinese. It just sucked me away. Wow, I had a political science minor and went over and lived in China for a couple of years during my degree period. I really got into it and enjoyed it.
That’s fantastic. I’ve traveled through Asia and have been learning Italian for the past five years, but Chinese is a whole new level.
Yeah, we don’t have a basis for it. Most other languages have kind of filtered into our motley English, so we have at least a bearing, but I really enjoyed my time and really enjoy that culture.
Sure. So, yeah, maybe you can shed a little light for folks who aren’t familiar with you, a little bit more on your background and how you eventually got to where you are today.
Yeah, I did cross-border contracts, maquiladora contracts, with Panasonic and others. I’m here in the greater San Diego area, and I had a partner at the time who was a living trust guy. We had somebody come with a very simple example. He said we could use this giant slingshot, and everybody’s seen it with the two beach babes and the beach brawn pulling it back. You put balloons in here, never point it at anybody, never put rocks, and never shoot an egg at somebody’s head. Of course, three or four times a year people got hurt, and suits arose.
The U.S. had signed the Hague Convention on Trusts a few years earlier, and that was revolutionary. This is important for the listeners: prior to us signing the Hague Convention on Trusts, the only way you could get a lawsuit-proof trust was to give it away. You’d put up an irrevocable trust for your children, give it away, have no ownership or control, and have the bank trustee or someone else being the trustee. That’s great if you have way too much wealth, but most people, even very wealthy people, say, “Hey, I want my kids to get it after I die, but if my spouse and I want to go to Europe and blow a million dollars in a year, I want to be able to use my money.”
Those sorts of trusts, these children’s trusts, I’ll call them trusts for children, only really happen when people are older and starting to do gift planning. When the Hague Convention was signed, entrepreneurs immediately heard that other countries allowed you to be the beneficiary under certain conditions. That’s an irrevocable trust. Because the U.S. signed the Hague Convention on Trusts, it became the law of our land. Effectively, we can have an irrevocable trust, which means you don’t own it, you have legal deniability of the assets that the trust owns, they’re not pierceable, and it removes U.S. court jurisdiction under U.S. law.
They said, “Sign me up,” and away we went. I started writing books and got pushed up to the top of the Arnold Goldstein out of Florida. I became one of the continuing ed gurus throughout the United States.
Wow, that’s excellent. I’d really like to jump in. I think our listeners are going to get a ton of value out of this. I believe that in terms of asset protection, this is something people should look at proactively. Unfortunately, the reality is it probably happens more reactively when there’s some type of event that catches people off guard. A lot of folks in our community are busy raising families, building businesses, and focusing on capital creation. But as you start to build wealth and become ultra-high-net-worth, preserving your wealth is key. Being proactive about it is critical.
So, Kevin, just to frame this a little bit for our listeners who are newer to asset protection and estate planning, why don’t we start with the basics? Can you explain the big picture around asset protection and estate planning?
Yes, my firm has 28 people, and I think four more are coming on over the next month. Our firm consists of estate planners. We do charitable remainder trusts, and we have a litigation department that handles estate litigation. We do all the basic wills and trusts as well. My department, Lawsuit Protection and Privacy, focuses on lawsuit protection and privacy, which, while not necessarily the same thing, work hand in glove.
Lawsuit protection and privacy are really important. As you said, your business plan, your wealth plan, and what you’ve worked hard for are only as good as how well you’ve planned to keep them if something happens. Lawsuit protection boils down to the seemingly simple concept of legal ownership. If you’re on the title, the court can take it and give it to your creditor. If you own things, they can be taken.
A lot of people go by the seat of their pants and think, “Oh, my sister has a low lawsuit profile. She has no employees or tenants, so let’s put things in her name or a child’s name.” But then, if the child or trusted person has a freak accident, it’s way too dangerous. It also has bad estate planning consequences. That’s where these irrevocable trusts come in. It’s really about changing ownership.
After the Hague Convention, we now have domestic trusts, which are much cheaper. You’re still within the U.S. court jurisdiction. The Hague Convention trusts remove U.S. court jurisdiction, which is fantastic. For someone with a small shop or small investments, a W-2 employee just starting to get into single-family residences, offshore might be too big of a hammer. There are less expensive domestic versions that are workable.
You mentioned transition trusts, sometimes referred to as bridge trusts. They can be as cheap as ten thousand dollars. That’s cheap insurance in any business owner’s mind, to get something that really won’t allow your estate to be invaded or taken.
So, who do you think this is really for? I think certain people might think they need to have a net worth equal to a specific amount before getting into this type of asset protection. What would you say to that?
Yeah, I used to avoid that question because it was a dollar amount for years. For about 10 or 11 years, I just wouldn’t answer it. But what I noticed is, when did my clients choose to go offshore versus when did they choose to stay domestic?
Most business owners or wealthy W-2 people go to a corporate lawyer, real estate lawyer, or estate planner and say, “I want lawsuit protection.” They hear, “Great, how many assets do you have? Oh, you need seven LLCs, period.” That’s the end of the story. There’s no other option for lawsuit protection, and there’s so much more. What they’re saying is, “We’ll put eggs in different baskets, and if your CO2 detector doesn’t go off and you have a family of four who died, you will lose that building to the lawsuit because you won’t have enough insurance. But at least it won’t take your other assets or your home.”
We don’t think that’s good enough planning. We have strategies that can protect the equity within properties. Offshore is something to consider very seriously if you have 4 million and above in total assets. If you have 2 million and below, then domestic asset protection is an option. If you’re between 2 and 4 million, we do an analysis on how much risk you have.
If you have super high risk, but only a 2.5 or 3 million dollar estate, you have machines that can take people’s arms off. How many teenage or young adult drivers do you have driving your car without owning their own cars? The more tenants you have, or if you’re on a rocket ship trajectory, you should consider it.
If you’ve made some home runs and upgraded your home, and have a certain number of employees or tenants, why not go domestic just to move it offshore in the future? Transition or bridge trusts can be around ten or eleven thousand dollars. Once you start to get tenants, a little coffee cart could have a bad evening. They might not have enough insurance to cover that. A ten thousand dollar investment for comprehensive lawsuit protection is worth it.
For people with a W-2 job, if you get one or two single-family residences, maybe you can put it off a bit longer. But if you have more wealth, you don’t want it taken away. For every million and above with passive investments, you want something in place.
Yeah, okay, no, that’s helpful. And tell me if I’m wrong here, but the way I like to think about asset protection is in terms of layers, like an onion. At a basic level, you’re probably going to have a will created, and you’re going to have insurance for your auto. The next level might be umbrella insurance, which is relatively cheap, and then you start getting into more sophisticated concepts like the bridge trust. These seem to be additional layers that insulate and protect your wealth. Is that a way to describe it, or how would you describe it?
Absolutely. We get so many people that are far down the track who say, “What do I need?” and “I really need a comprehensive package.” But for those starting out, you want a roadmap. You don’t want to throw all your money in it initially. As you said, preserving your wealth is much more exciting than going out and finding an investment to put it in.
You’re correct: a will, and then a trust, a living trust, a revocable living trust really involve about 11 different documents to be a comprehensive estate plan. Then you’re talking about a corporation, and fundamental lawsuit protection involves putting eggs in different baskets. The insurance, obviously, includes cash value insurance and infinite banking. When you do that, you usually want an irrevocable life insurance trust (ILIT) to protect the backside of that wealth because not all states have protection over cash value.
If you’re doing a lawsuit protection plan, we can include the ILIT provisions in it, so you don’t need two separate trusts. It is a progression and it’s absolutely about layers.
Absolutely, yeah, okay, that’s great. We’re very familiar with the infinite banking strategy and have crafted what I’d call a comprehensive wealth strategy because we look at wealth holistically in our community. It all starts with having the right mindset and then exploring different asset classes that people can invest in, beyond what conventional wisdom suggests.
As you build your wealth and get into these opportunities, there are clearly multiple layers, like the infinite banking where you’ve got your capital warehouse. There’s that initial layer of asset protection built into it. I can’t stress enough the importance of starting to build those layers as people develop their wealth strategies.
We have everyone from entrepreneurs making exits in their businesses and needing to put something in place quickly to those still growing incrementally but on a fast track. These layers are key as they build out their strategies. But help me understand and talk to the listeners about structures. When I think about this, you have your CPA on your team. We also talk about building a dream team, Kevin, so I see you as a key member of that team. You have a CPA, your infinite banking person, and the CPA will talk about the tax dynamics to consider on this wealth-building journey.
In some cases, they might be talking about creating different entities, like a holding company. You might want to create a trust from an asset standpoint. Help us understand: is there one strategy you would recommend, like the trust from a top-level view, or how do you start architecting the right asset protection strategy?
Kevin: yeah we um although we do have tax attorneys on staff i think we have three of them but it’s really in the formation of 501c private foundations and charitable trusts we’re we’re not tax advisors we’re not cpas so we always want to work with the team we want to work with the client cpa and we have become skilled at creating a structure that let’s call it disregarded for tax purposes so even though we might be adding a lawsuit-proof trust whether
(19:31) it’s offshore domestic nevada or wyoming privacy company to be a holding company of wealth we usually will create them as disregarded entities so it doesn’t mess with your plan clients usually come to us and they already have the lost carry forwards and profits balanced out but working with your cpa if they’re saying no we really need this entity to be a c corp because they’re making too much money and we don’t want two bites at the apple we want it growing in there they don’t need that income for their lifestyle uh then
(20:08) we make sure those types of entities are put in place yeah but the having a team that communicates is essential to our clients success
Dave: yeah absolutely so also um can you talk to us a little bit about we we have a lot of investors who are investing in real estate syndications other alternative assets on the private equity space so can you talk to us briefly about the inherent asset protection you have as an lp at one level and then what would be that next layer of asset protection you could get
Kevin:
Dave: Yeah, okay, no, that’s helpful. And tell me if I’m wrong here, but the way I like to think about asset protection is in terms of layers, like an onion. At a basic level, you’re probably going to have a will created, and you’re going to have insurance for your auto. The next level might be umbrella insurance, which is relatively cheap, and then you start getting into more sophisticated concepts like the bridge trust. These seem to be additional layers that insulate and protect your wealth. Is that a way to describe it, or how would you describe it?
Kevin: Absolutely. We get so many people that are far down the track who say, “What do I need?” and “I really need a comprehensive package.” But for those starting out, you want a roadmap. You don’t want to throw all your money in it initially. As you said, preserving your wealth is much more exciting than going out and finding an investment to put it in.
You’re correct: a will, and then a trust, a living trust, a revocable living trust really involve about 11 different documents to be a comprehensive estate plan. Then you’re talking about a corporation, and fundamental lawsuit protection involves putting eggs in different baskets. The insurance, obviously, includes cash value insurance and infinite banking. When you do that, you usually want an irrevocable life insurance trust (ILIT) to protect the backside of that wealth because not all states have protection over cash value.
If you’re doing a lawsuit protection plan, we can include the ILIT provisions in it, so you don’t need two separate trusts. It is a progression and it’s absolutely about layers.
Dave: Absolutely, yeah, okay, that’s great. We’re very familiar with the infinite banking strategy and have crafted what I’d call a comprehensive wealth strategy because we look at wealth holistically in our community. It all starts with having the right mindset and then exploring different asset classes that people can invest in, beyond what conventional wisdom suggests.
As you build your wealth and get into these opportunities, there are clearly multiple layers, like the infinite banking where you’ve got your capital warehouse. There’s that initial layer of asset protection built into it. I can’t stress enough the importance of starting to build those layers as people develop their wealth strategies.
We have everyone from entrepreneurs making exits in their businesses and needing to put something in place quickly to those still growing incrementally but on a fast track. These layers are key as they build out their strategies. But help me understand and talk to the listeners about structures. When I think about this, you have your CPA on your team. We also talk about building a dream team, Kevin, so I see you as a key member of that team. You have a CPA, your infinite banking person, and the CPA will talk about the tax dynamics to consider on this wealth-building journey.
In some cases, they might be talking about creating different entities, like a holding company. You might want to create a trust from an asset standpoint. Help us understand: is there one strategy you would recommend, like the trust from a top-level view, or how do you start architecting the right asset protection strategy?
Yes, and it’s not dissimilar to what my wife and I have gone through. We are both W-2, although I own my firm, but my income is still considered W-2. We got to the point where, when people reach about 3 million, all their creature comforts are taken care of. They’ve upgraded their cars, done this and that, and then they think, “I’m fine, what do I do with this extra cash?” Often, they buy a single-family residence. We bought a bunch of those and didn’t want to manage them. It was fun finding them, but then we decided to invest in other people’s projects because we didn’t have time for this.
Syndications are the perfect answer on the limited partnership side. Typically, with or without the lawsuit protection trust, we will lower the client’s profile by using a Nevada or Wyoming company. Their name isn’t in the public record, making it the holding company of zero liability or very low liability assets—cash portfolio and limited partnership interests. It’s very low liability for the client, and that’s what plaintiff’s attorneys look for. They want cash, portfolio, limited partnership interests, and notes. They don’t want real estate or businesses, and that’s what we want to hide. Whether we have the lawsuit protection trust or not, we want a holding company with anonymity.
If you’re making too much money, you want to be on the general partnership side, where you can get accelerated depreciation, but you’re signing up for the liability as well. That’s when you definitely want a lawsuit protection plan, so your exposure is minimized and most of your estate is protected.
Right, that makes sense. So, would that be considered almost like a holding company for this kind of trust? For example, we just had a guest in last week who has over 57 different syndications. Would you roll those all up into this singular trust, or would there be multiple ones underneath?
We try to have one trust as a surrogate for you, but we can totally go to court and say the only way to attack an irrevocable trust, domestically or internationally, is for the plaintiff to allege fraudulent conveyance. The only way to unravel it is to prove you had a known existing creditor when you set it up, and your intent was to not let them get your assets. Not because you have a dangerous business, or a dynamite manufacturing facility, or anything else that could cause harm. If nobody’s arm is blown off, or nobody has a claim against you, you can set these things up.
Entrepreneurs don’t want to be like a Kennedy grandchild, having to ask the trustee for things. So, we put a piece of paper of ownership in that trust. We have the underlying company for two reasons: one, to amass all those low liability assets and two, to give legal control back to the client. They have the checkbook, decide what they invest in, when they pull the trigger, and how much they get paid. It’s very entrepreneur-friendly.
We have a second trust for something very dangerous but also the golden goose that’s making the money. This is where we might have a two-lawsuit-proof trust structure. A good example is Elon Musk, who defamed another billionaire and flippantly said, “Go sue away, I don’t own anything.” The only way to create non-ownership is to have separate legal entities. A corporation can be owned by an LLC, owned by an LP, owned by another corporation, and so on, but there are only two ultimate owners in our legal system: a flesh-and-blood human and an irrevocable trust. That’s why they are lawsuit-proof. They aren’t you; they’re an ultimate owner independent of you.
Interesting. So, explain the difference between doing a domestic trust versus an offshore trust.
Yes, there are only about 15 states that have passed statutes copycatting the Hague Convention trusts. Of those, only about seven have any teeth to them. Even if you live in a state that’s good, I would put you in a different state that has better laws because of reciprocity at the U.S. Constitutional level. The U.S. Constitution’s Full Faith and Credit Clause says that we have to respect the law of other states. That’s why you can live in New York and have a Delaware company, or a Nevada company, or a South Dakota company. You can also use trusts in different states.
If you live in a state that has a statute, they’re more likely to recognize a better state’s law. But if you live in California or New York, which have not adopted these copycat trust laws and probably never will, it’s a gray area. They might say, “We have this judgment here in New York, and we want to bring this Nevada or Wyoming company and the trust that’s in South Dakota or wherever we have it, into our courts in New York and subject it to our laws.” The counter to that is, “Because of Full Faith and Credit between the states, you have to recognize the law in Nevada, and you have to come to Nevada and attack our trust.”
There haven’t been any cases yet, and it will be a long time before there are. This kind of challenge would go to the Supreme Court, which takes eight years and millions of dollars. If there’s going to be that kind of dispute, there’s millions of dollars in the trust, and those people use offshore trusts. I think domestic trusts, even if you’re in a state that does not have the statutory trust for lawsuit protection, are still very strong. For a smaller estate that wants true lawsuit protection, domestic trusts are very viable and will be into the foreseeable future.
What if everything you thought you knew about investing was wrong? Would you like to create a wealth strategy like the top one percent and get exclusive access to top private equity deals that provide downside protection, tax efficiency, predictable cash flow, and a lucrative upside? Discover how with the Pantheon Advantage, and join our investor club today at pantheoninvest.com.
The reason you would want an offshore trust versus a domestic trust is to become more bulletproof, right? You have that additional layer of protection. Would you say that?
Yeah, they’re recognized in all 50 states. The IRS recognizes them. There’s actually a form for them called a 3520 for those who are audit-shy. We’ve been doing this for 30 years and have seen no incident of audit. If you have an offshore company and you’re filing a TD 90, you’ll get an audit every five or so years. They just want to say, “Hey, we’re watching you; we know you have an offshore company or an offshore account.” But forming a trust and filing a 3520 has never triggered an audit.
That’s really powerful because, as a piece of the defense file, if somebody sues you and brings you in, and you have this offshore trust, the other side will try to play to non-legal issues. They’ll say, “Oh, there must be something wrong,” but we’ll respond, “Here’s the law; it’s recognized in all 50 states, and by the way, Your Honor, here’s our filing of the 3520.” Judges are as frightened of the IRS as the rest of us citizens. It’s the nail in the coffin right there. It’s very powerful. You’re not in any gray area; you’re not just relying on me saying, “Hey, this works, trust me.” This is something institutional, recognized by the government.
It removes U.S. court jurisdiction. Someplace like Gibraltar has instant lawsuit protection under bankruptcy standards. Someplace like the Cook Islands has an effective statute of two years, but a drop-dead statute of attacking it in one year. We could set it up today, and if you get sued tomorrow, we could drag the U.S. case past that statute, removing U.S. jurisdiction. U.S. lawyers aren’t barristers; they can’t carry on the case internationally. Attorneys are business people too, and they will then push for settlement.
Some foreign jurisdictions like Montserrat and the Cook Islands require a cash bond from the plaintiff to run the case. It’s a huge impediment, even if they know about the trust and are suing within that one-year statute. They are really powerful. Anyone in their right mind would want offshore protection except for the expense, and that’s part of the equation. That’s why we have transition trusts or what you’d refer to as bridge trusts. They create a domestic trust with provisions allowing it to move offshore if and when you want, due to risk increases, wealth increases, or simply because you’ve been served.
Interesting. So, that process to transition it to offshore, is it fairly seamless?
Yes, the provisions need to be there because if they aren’t, the client, as the beneficiary, can get all their wealth back and then set up the offshore trust, which starts a new statute of limitations. But moving from one trust to offshore isn’t a change of ownership; you’re not back in the ownership chain. The other side will necessarily have to call it fraudulent conveyance because that’s the only way to attack it. We’ll be able to say, “No, the change of ownership happened two years ago when the transfer occurred. The trust always intended to go offshore, and it’s not a change of ownership, so it’s not a fraudulent conveyance.”
Right, so I’ve actually had some experience on the offshore side. Talk to us a little bit about the complexities of that, as well as the administration and cost. Can those be significantly higher on the offshore side versus domestic?
Yes, on both the setup and maintenance costs. For full transparency, an offshore trust will be anywhere from thirty thousand dollars to maybe up to eighty thousand, though rarely. Our Cook Island trust, Isle of Man trust, is thirty thousand dollars, period. Most of our competitors are in the forty to fifty thousand dollar range for a Cook Island trust. The maintenance is going to be about three thousand a year, which includes the annual government registration fee and trustee fees.
For a domestic trust, you could go to a bank trustee, but they will charge way too much for this structure because they really have no money under management, and we don’t want them to have any money under management. We are entrepreneurs, and we are smart and educate ourselves to do better things with our money. We have trustees that charge as low as seven hundred dollars a year, and that would be the bridge trust too.
Okay, yeah, and you guys can provide some of that administration support, so you’re not having to deal with some other entity or company?
Yeah, and that’s the whole point of not having an active trust. The active trusts, like Carnations and Kennedy grandchildren, have to go to the trustees because they have the money and wealth. That’s not the way we structure it. Rarely, we have a few clients with needs or desires for that, but it’s less than one percent. Everything is done at the underlying company level. Most of our clients, especially in the first four or five months of creating a structure, call us every month asking if they remembered correctly or about to make another investment. They ask whether to put it in their right pocket or left pocket, in the lawsuit protection side, or in their name because of the risk. That’s regular dialogue we have.
Got it. Okay, and help us understand as well, I think there’s a lot of confusion out there when people start to build entities for a business or a real estate investment opportunity. The laws between the states like Nevada, Wyoming, and Delaware—people always talk about Delaware, but I’ve been using Nevada and Wyoming. As an expert, please explain to the audience which are the best states to use and for what purpose.
Yes, Delaware is seen by corporate America and business owners. Even before they get into business, you have a little machine shop or something, and Delaware is where the business companies come from. What they did in Delaware and not in any other state was take control; it’s really for a public company. They took the power away from the shareholders and gave it to the board. So, unless you’re going public, you don’t need a Delaware company. Even if your intent is to go public in the future, but you’re not now, you probably don’t want a Delaware company.
Nevada, in its infinite wisdom, took Delaware law and precedent, codified it, and gave the power back to the shareholder. You have very good business law in Nevada. You can have a Nevada company, operate for seven years, and if you need or want to go public, you can do a merger and transfer it to a Delaware company. There is a lot of administration in Delaware companies. We form them, but we usually recommend Nevada and Wyoming.
Also, in Wyoming, there are no chargebacks, correct? Correct, exactly. Nevada requires an officer and director to be listed. You can hire nominee officers and directors, or you can use your sister or brother-in-law with different last names. Wyoming is much cheaper overall for annual maintenance between registered agents and annual registration fees, and they don’t require a nominee. You can also hire nominees there or use a family member with a different last name.
We actually like a name in the public record generally because we don’t want your plaintiff’s attorney seeing transactions between “Golden Mountain Lending of Wyoming” and looking it up to see if you’re related. If they see a name, it throws them off. They don’t see a name; they usually don’t think small business owners use sophisticated structures like this, so it blindsides them. Lawyers being cautious creatures, if we can throw a name in it that’s not yours, it’s good.
Yeah, you made a really good point earlier that I think people don’t think about as well. In the legal world, lawyers are business people too. From a creditor’s standpoint, if you don’t have any layers of asset protection in place and, God forbid, your teenager has an accident and a creditor comes after you, the first place they’re going to look is your stock accounts, your cash, your house, and things like that. But the more layers of protection you have, they’re eventually going to give up because it’s not worth them fighting the chase if you can really build a fortress around your wealth.
Yeah, not only layers, but we have another strategy we haven’t talked about—equity stripping. If we have this lawsuit protection trust and an underlying company, we’ll often form it with a name to make it look like a hard money lender, such as Pine Tree Lending or Golden Triangle Funding. We will create not just fake liens, but real consideration to put liens against the equity in your home, the equity in your rentals, UCC-1 liens against your automobiles, and your accounts, even accounts receivable if you own a business.
A contingency fee attorney, particularly in a car accident case, doesn’t need to hit a school bus full of children to have a 20 million dollar judgment. They can hit a family of four. Recently, there was a single motorcycle accident with a judgment of 65 million dollars, just crazy. A contingency fee attorney is going to be a business partner, not a crusader. They’ll say, “This is a great case. I’ve gotten four or five million dollars for this kind of case in the past. Let me look into it.” Then they see, “Oh, you own a home and five properties; your name is in the public record. You own Joe’s Sandwich Shop.” But it looks like you’re highly leveraged with all those businesses; Bank of America is on first, and Golden Mountain Lending is on second. They’ll say, “No, I’m not taking this case. It looks like a turnip.”
Hourly attorneys will take five thousand dollars, do the research, and take another five thousand, but they’ll come up with the same thing. They’ll pound their chest in interactions but behind the scenes tell the client, “Yeah, Bill’s Plumbing has ten trucks, his name is all over the place, but there are UCC-1 liens on it. He’s living the American dream beyond his means.” That’s the picture we paint in the public record. They’ll say, “We better get whatever insurance they have; we’re not going to be able to take anything else.”
They’ll do that because they don’t know our alternate wealth strategy. If they run a whole case and it costs their client 100 to 150 thousand dollars to run a case, and they find out everything is encumbered, that’s a formula for malpractice. They’ll run it for a while but look for an early and low settlement. If you have a bunch of houses with layers but a lot of equity, why settle early? Make you sweat; they might get another million on the table.
Interesting, and what would you say?
Our family offices use a similar type of architecture that you’re talking about. The family offices we’re involved with do, but it’s not one of the normal things. I speak at a lot of family office conferences, and we also have high-net-worth people that usually do that sort of thing and bring us in. Some of the bigger houses refer a bunch of clients to us because it’s not in the normal org chart of the things that people care about and usually institute. Family office lawsuit protection still isn’t one of them, other than simple corporate formations to separate eggs into different baskets.
Got it. Okay, excellent. That’s been super helpful, Kevin. If you could just give one piece of advice to our listeners about how they could really accelerate their own wealth trajectories, what would it be?
Save! If you live a little bit beyond your means, give up a little bit now, and you’ll reap so much more in the long run. I love the quote from Rockefeller in one of his last interviews. He was asked about the formula to his success, and everybody’s heard this quote, though they often don’t know where it’s from: “Own nothing and control everything.” That’s a good adage. Privacy is your friend, even if you don’t have lawsuit protection behind it. You don’t have that ultimate owner of an irrevocable trust to the point where you can say under penalty of perjury, “No, I don’t own Pine Tree Lending.”
Using privacy companies like Wyoming and Nevada to hide your wealth is the first good step. You don’t want them, if they run all the way to judgment, coming in the back door asking, “What do you own?” You don’t want to perjure yourself—that’s a felony. That’s lying to the court, not to the plaintiff’s attorney. You can then say, “No, I don’t own any real estate, but I own this company that owns a bunch of real estate.” You can do it in stepping stone fashion. We have a road mapping process—it’s $500—where we take in a client, look at all their assets, do diagramming so they can see what they have structurally, and then we’ll have an ultimate plan and a couple of baby steps to build to it. They kind of have a roadmap to where they want to go if they’re doing it.
Perfect. I love that because we talk about wealth as an overall strategy. A lot of people look at it one-dimensionally and leave themselves short because they’re not taking into consideration all these pieces: asset protection, tax planning, looking forward 25 years, and all those different things. So, it’s great that you guys provide that. How can listeners connect with you, Kevin? How can they reach out if they’d like to set up an exploration call and learn more about an asset protection strategy that might work for them?
Yes, our phone number is 858-755-6672. That’s 858-755-6672. My email address is [email protected]—that’s T-R-E-S-P as in Peter, D-A-Y. That’s my partner Elizabeth’s last name—trespday.com. My main job is speaking, and I will always make myself available, especially for the first meetings. But the head of our asset protection department, attorney Michelle Fishbein, actually runs that department and will ultimately handle the implementation. I can always be called back in—I like the bigger picture strategy part, not the implementation—so I want to warn everybody of that so they’re not surprised.
Spoken like a true entrepreneur. You have to understand your lane, for sure. That’s excellent, Kevin. We will also put a link in the show notes to all of that contact information, so if you’re driving right now, we’ll have a reference there so you can track down Kevin and his firm. It’s been such a pleasure having you on the show, Kevin. I know I’ve learned a ton—I’ve been taking copious amounts of notes and want to go back and listen to this episode multiple times. I really appreciate you coming on the show today, sharing your experiences and wisdom, and ultimately helping our community build a fortress around their wealth and protect their family and everything they’re growing for.
Dave, thank you for having me on. The fact that, because we’ve known each other for a few years, you’re taking notes is illustrative that you do need to listen to this maybe once or twice—there’s a lot of information there.
Awesome, thanks so much, Kevin.
Thanks, Dave.