How to Protect Your Business and Never Lose Everything – Learn the Secret!

Hi, I'm Tom Powell and this is the Powell Perspective. And I have two marvelous guests joining me today, some longtime friends and professionals within the space of asset protection and, and overall entrepreneurial success. To begin with, I'd like to introduce Jacqueline Kuyper, or Jackie as we affectionately call her. We also call her a pit bull with a tutu.

Jackie and I have known each other for coming up on a decade and she's been general counsel for a number of our companies as well as a very close personal friend and litigation partner and legal strategist and overall great person. Jackie, thanks for joining us today.

Thanks for having me, Tom.

Jackie's also one of our principals in Laughlin Black, which we will be talking a little bit about today. As I've mentioned on previous shows, I do have an interest in Laughlin Black. So as we're talking about that, we're not marketing or selling anything, we're just talking about how to get things done and hopefully you take some value away from that. And to that point, Laughlin Black would not exist if it were not for Aaron Young being the chairman and principal of Laughlin, which is a 55 year old company who we were talking to Brent on an earlier show. And Aaron, you've been involved with Laughlin. It's a 55 year old company but you've been involved with them for almost two decades, is that right?

We bought it when it was 29 years old. So I've had it since 2001.

2001. Good timing for that. You've gone through a number of ups and downs.

I bought it. Lee Morgan and I bought it. It August 27, 2001 and our first seminar was September 12. I just want those that are thinking about history to think about the challenge surrounded about trying to fly somewhere on September 11, 2001.

What, what location was that first seminar in?

It was in, it was in Lake Tahoe.

Lake Tahoe. And we didn't have really zoom back then.

No, no. So I hopped in the car and, and drove 10 hours from Portland, Oregon to Lake Tahoe knowing that people were stranded there and this was our brand new stewardship and they were going to be just as nervous as anybody else. So I better go see them.

Got it.

And that's how it, that's how it started.

Well, so, so tell me about Laughlin as it was the start and that's how you and I originally met and have known each other for gosh, coming up probably two decades almost.

Harley Laughlin, way back in 1971 was a Teamster had truck drivers that worked for him and was helping with. He was right there in Carson City, knew all the, There's a certain level of cronyism, at least back then, I'm not saying now, but he knew what was going on legislatively and Nevada really wanted to pass these business friendly laws. He got involved and was one of the first people to really jump on the idea that forming a Nevada corporation, especially for long haul truck drivers was a great idea and they could take advantage of the best business friendly legislation in the country for the, for his group of people. And then for 29 years, Laughlin was kind of known as the big Nevada incorporation company. Now when Lee Morgan and I purchased the company.

Back in 01, my concern was what if the, if the assembly changes the rules then Nevada may change from what it is in our whole business that we just bought is based on one state's legislative decisions. So at that point we began to spread out to all 50 states, which it is now. And now we have clients not only from all over the country and all over the world forming Nevada companies, but what we call home state companies. So if you're in Nebraska or Iowa or Florida or Maine, we can help you form your corporation, manage your.

Corporate compliance, meaning your board of director compliance and so on. So that's where we started.

There were lots of challenges in those early days, deep seated and what we would now consider to be.

I don't know, kind of like troglodyte behavior.

The company had about 17 lawsuits against its clients when we bought it.

People were required to show up for a daily prayer session. Women had to wear dresses, men had to wear suits. Only a woman could answer the phone. There were a lot of things. And consequently they had about 300% turnover annually at Laughlin, which now the average 10 years exceeds 14 years now.

Wow.

We had to change the culture in order to make it survive.

Well, so I'm going to change gears a little bit because this joint venture with Laughlin to create Laughlin Black came about and part of that came about in talking with Jackie, myself, one of our other co founders, Steve Tafoya and Candice, my oldest daughter, and saying how we utilized Laughlin to thrive through numerous lawsuits and operations not only in 50 states but multiple countries and continents as well. Jackie, can you kind of speak to what we were able to do in our companies in the past that formulated the idea for Laughlin Black, where to start?

We use Laughlin so extensively and I guess a bit of context is when you say our entities, I Think there were over 150.

I was told when we started this there was over 200 entities.

I believe it. I believe it. There were a lot. And it's a lot, it's a lot to manage, but there's a reason behind having all of those entities. So when, Tom, when you ask what we were able to do, we were able to put together a strategic, like organizational map utilizing these entities, creating special purpose vehicles and really creating protections for the owners of the entities and also creating a map, if you will, on how to kind of organize your business activities, your business affiliate. When you've got a business that provides a lot of different professional services and may engage with employees, independent contractors, vendors and others, you need kind of a lot of different entities to interact and contract properly and at the same time deliver services and protect yourselves and your people and those you're working with. So kind of a big answer to a short question. But Tom, when you say what we were able to do with it is we were able to kind of create a constellation of entities that functioned together, but it wasn't just one company, it was an enterprise. But a lot of different organizations within that.

Yeah.

You know, and I think in our conversation with Brent previously, one of the interesting parts of that that you said, and I love that word constellation, I use the theory chessboard. Right. So 100 years ago, an entrepreneur, a business person, put out a shingle. Whether they were an attorney or they were mowing lawns or they were going to be a physician. There really wasn't this licensing side and there definitely wasn't this creation of necessarily an entity, a corporation was formed to raise capital. Right. So in the most part, and now somebody would not want to be in business as a sole proprietor. And we were very clear about that as to why, and we've talked about that in past episodes, that the sole proprietor takes 100% of the risk individually and engages. If they're, if they're a two person household or a multi person household, all of that becomes at risk. Right. So the vehicle of choice today is oftentimes the LLC corporation is the second one. Partnerships as kind of a third tier of that. And Aaron, I think you mentioned something. Laughlin allows Laughlin Black to be in all 50 states, which is important because there's some places that actually you'll watch late night TV and it'll say, come to Nevada. It's a tax free state. You can form your company and be in Nevada. And that's not even remotely, yes, you can come here and form the entity but you still have to be. You have to be domesticated into the state you're in, right?

Yeah, I'd like, I'll speak to that. Because that was a big thing that happened back in 01.

When I said, look, folks, we had 80 employees there when we bought the company. And I said, nevada is great. Nevada is great as a strategic.

Tool, but the industry is built on half truths. Sure, it's true. If you're in Nevada and you have a Nevada company, you get all these benefits. And there's reasons why big distribution hubs are in Nevada. There's a reason why Visa is collecting money through its company in Nevada because there's advantages to it. However, if somebody from California next door to Nevada says, oh, we have really high taxes in California and Nevada has no state income tax, I'll just run all my money through a Nevada company and I won't have to pay any of that tax. No, that's actually tax evasion in California. It's against the law. But even if you go, if you go to any of the big providers, even if you go to the Secretary of State's website, Nevada, it'll say, come to tax free Nevada. Do all this stuff in Nevada. But if you live in Iowa or you live in Wisconsin or New Hampshire, you want to use Nevada, as you said, as a chess piece in a bigger constellation of your business plan. I'm going to riff off all of your words. You guys are saying, I'll draft off all you smart guys. But the point is Nevada is a tremendous tool when used properly and a terrible problem if you use it inappropriately because you're going to get in trouble all over the place in your home state. So I came in every said, we're going to lose business. I said, well, we'll lose sales.

To people who don't know better, but we'll maintain and renew a lot more people. If we tell them the truth at the beginning, tell them the truth, we'll get the right people and we will be very financially successful. Renewals, in my opinion, are more valuable than new sales. If you have to re sell it every year, that's a lot harder slog than just keeping your customers well.

So let's move back to this chessboard idea. And Jackie, again.

You'Ve been an integral part of the creation of various pieces. And sometimes it sounds like to certain people that doing asset protection and having multiple entities must mean that you're doing something wrong.

No, no, no, no. And adamant. No. And I'm curious. I'm just interested in where that.

Negative association comes from, I don't know.

I've seen it in some of our lawsuits that people file, that attorneys file against ours and says they must be hiding something. They've got all these entities.

No, not true.

I had a government, a federal government prosecutor in a conversation one day say to me, there's absolutely no reason to have a corporation if you don't have employees. And I said, what? What? People use corporations to put a patent. Coca Cola's formula, you know, Joffrey, the giraffe from. From Toys R Us. Stick that intellectual property in a corporation. You don't need to have an employee. But if. If people who are not using them regularly or who have no experience needing asset protection because they're a W2 employee or whatever, they're going to make assumptions only out of their. Out of ignorance. They're not. They're not stupid people. They just don't know yet. It's no different than using certain financial tools, you know, that the banks don't really want you to use, like whole life insurance, you know, but there's tools that you can use that are designed to provide people in the know with additional benefits. And that's why a show like yours, Tom, it's why this matters that these conversations are had, so people can start finding out there's a whole secondary game going on that rank and file employees don't know about and wealthy people do, and exposing that and letting people that are aspiring to wealth or to grow their investments or protect what they've built, this is a good place for them to learn about that.

Well, so we'll keep going down that pathway. And I'm trying to build a story here. Jaclyn, you are a master, as I know you won't call yourself that, but you do a great job at yoga. And I think the proper term is yogi. Is that right?

I would call myself a yogi.

You would call yourself a yogi. Okay. And I know that when you were coming to work for me directly the first time, and we're talking it, and one of the don't pass go, don't even need to have another further conversation is at the time, you were going to Bali every year for a month to certify a bunch of people to become yoga teachers. Is that right?

Yes.

So they're there practicing with a professional to learn how to do yoga. Yeah.

To become certified yoga instructors. And I remember this conversation. I know. I remember telling you, yeah, I want to work with you. I go to Bali every year. Is that okay. And you said, can you work while you're there? I said, yeah. And you're like, well, great, great, great.

And, and I kind of joke about it because the, the, the practice of law is so cerebral and, and at times it's so creative, but at other times it's so cutthroat almost. You have to be, you have to stand up and be very tough. And yoga's almost the exact opposite of that seemingly. Right. But where I'll go with that is that although I can buy a tape and learn how to do yoga, the best way for me to do it is actually using a professional. Professional. So it's really along the line. As Dan Sullivan says, the who, not how. So it's not so much that I'm learning the, the what's of or the hows of yoga, it's that I'm working with a who. Who can position me. I mean, I did my yoga at 6am this morning, right. And I've got. You've met Katie before and she comes over and after eight years of working with her, she's still like, nope, that's not it. Right. Because I can't see that. So this is where we go with Laughlin Black. We carry that professionalism away from that. This is far more complex than just a simple midnight show. I gotta set up an LLC and can do that on Rotary, you know, Rocket Lawyer or Legal Zoom or whatever else place it is. This is really something. If you're going to take the step and be in business or own assets and want to have them protect, protected, you really need to surround yourself with the team of hoops.

You quickly learn when you launch in that you know nothing. Even if you know a lot, you know nothing because there's always more to know about tax code, about the different state laws and how they differ, federal laws. Depending on what type of business you're in, you could be accessing a whole new area of the law. So yeah, it's really important to have professionals and great teams, teams around you to protect you, help you avail yourself of those benefits that not a lot of people know about and kind of keep you on the rails, so to speak.

And that's where Laughlin Black comes in. So Laughlin Black, in this world of do it yourself, I can watch a YouTube video, a video like this, I can start trying to figure stuff out. I can do the research. Laughlin Black is a done for you service as opposed to a do it yourself service. Is that a fair way of saying it?

I'd say that's exactly accurate. The whole idea is that the people that want to work with Laughlin Black already have a level of complexity in their life. And for them, as to Jackie's point, for them to try to become educated on all the different markets that they might be in, the different entities, the different relationships with joint venture partners or investors, or if they own real estate, you know what the laws are from one place to the next for dealing with their tenants. They will get bogged down in trying to function on this compliance stuff, and they won't go out and do what they're great at. What we've done at Lawful and Black is bring together a team of experts who can meet you where you are and. And figure out what your goal is and then design a plan for you and help you implement the plan so that you're approving it, but you're not. It's sort of like building a house. Like, if you're going to build a big custom home, you. You first have to know what you want to build, then you get somebody to draw it, then you get the engineering done, and then you go, is this still what we want to build? Yes. Then the contractors come in and you check on them. Is the window in the right place? Is this. Is this going to work the way I want it? Am I going to have the view out of my bathroom that I want? But you don't have to know how many studs you need, what kind of nails, what kind of siding, what kind of epoxy. You don't need all that, but you want to do is make sure you get the result you wanted. So Laughlin works with you as the. As the consumer, and we make sure that we have all the experts to build exactly what you wanted so that you get the result you want and you have the quality of life and the quality of experience that you've been dreaming of.

And I like that analogy, Aaron. I'm going to take it a little bit further, and Jackie, I'm going to come back to you on this.

Building the house is one thing. Maintaining the house and making sure that we have zero deferred maintenance is an entirely different thing. And part of that is on the design side up front. Right. But it really is making sure. And we did a project up in Northstar, and when we drive into the project, one of the pieces that we've seen that the contractors had recommended, the architects had recommended, requires the homeowners to spin a wrench once a year to tighten up the little fence line. Now, these are second Homes that sell for two and a half to $3 million. So they're kind of entry level up there, but they're still second homes. I said you cannot build or ask a second homeowner that when they come up there on their four weeks of vacation of the whole year, that they've got to go around and do maintenance. We need to build these homes that there's very little deferred maintenance. But the reality is there's always deferred maintenance and you need to be making sure that that's taken care of. So within this asset area, when we go back to Laughlin Black, give me a couple examples maybe along the lines of even just the intercompany borrowings that can happen. So if we've set up a structure and maybe there's a trust within there and you have payments to two things or various assets or rentals, how complex can that get to need to be able to have a system and a structure that that follows up on those. Because if it doesn't happen, what can happen then in the legal system?

Well, let's work backwards. When you are in the legal system, which you hope you don't end up there, but inevitably, especially if you've got a long standing business and you have, you know, a history of operating, at some point it's likely that some sort of legal situation can arise. Especially in the US We're a litigious nation. It's how we resolve conflicts. So if we work backwards and you head into a legal situation, what do you have to have to succeed? Documentation, records. Not only are legal issues going to pop up right away, but if you're talking about money, which that's going to be 99% of the issues relating to a legal situation, you need financials, you need records, you need tax stuff, you. So this spiral, this unraveling of the yarn gets very, very complex and so nuanced really quickly. So the more that you can be organized from the get go and have a group saying, have you thought about this? Have you thought about how to protect this? Have you thought about these types of records? And are you doing all your filings? Are your filings up to date? Is your entity active? Are you paying your fees? There's so many little things and bigger things as well, but so many little things that start adding up so quickly that it can become, I don't want to call it a burden, but it is. It's a lot to manage. So having a resource that you trust, who's on top of that for you, is Invaluable. And again down the line, if you end up in a legal situation, you've got your stacks of stuff organized, you're ready to go.

Jackie. In the done for you or know enough to be dangerous idea, which is I recognize that I can go to whatever it is and go online directly with the state of Nevada and start my llc. And then I just put myself into danger. I now know enough by watching this, enough to be dangerous, which is I need to hire someone to help me do that. What's the first steps and in really thinking about this process that you'd say enough to be, you know, know enough to be dangerous and pick up the phone and ask the right questions?

I think that's it. Knowing that you need to ask someone else and get support makes you all of a sudden incrementally more dangerous than others out there. You have empowered yourself by saying, I know there's a lot that I need to know yet. I got to go find someone who knows when.

Lawyers are charging anywhere from 500 to $1,000 an hour now, you know, which is amazing. Yeah. Even a lot more. The help doesn't have to be that expensive, especially the maintenance of it. You can save those costs. It's kind of like if you don't. If you repair the bike, it doesn't cost you nearly as much. If you can just continually keep it maintenanced versus if you wait until it breaks. Right. Aaron, Know enough to be dangerous in this realm of now leaving Laughlin, which is a company that's going to continue to run. It's a small service provider for Laughlin Black. What does someone need to know to be dangerous within this realm of wanting to launch a company? We have some really good clients that we've been working together with, and they have complexity. And every single time we start looking at their complexity, even when they've set it up properly, they didn't continue with the setup. I mean, and that's almost a universal. Till you've got a 50 million, $100 million family office. What does someone need to know to be dangerous within this realm? Meaning they need to know enough and then hire the right team.

I would say there's. There's two things. The first one is whether you're just going to start the company or you've become complex and you know that it's kind of gotten away from you. The very first thing that I think people need to really do some soul searching about is what is it exactly you want to achieve? Like, what's the finish line? Look like, what is success? Because there are multiple paths. You could take somebody that's got something of value, lump of money, a bunch of real estate, a movie, whatever. So in order for anyone to help you reach a goal, we have to know what the goal is. So the first thing, if you want to be really dangerous and. And get ahead of the vast majority of business owners, decide what it is you're trading your time and money for and what will feel like success to you. Then the second thing is on completing things, we see lots of people go, oh, that structure looks great. Using a trust to protect things looks great. But when it comes time to put the piece of value into the irrevocable trust, that word irrevocable is pretty terrifying for entrepreneurs who are a bunch of control freaks, and that includes me. All right. But knowing that you can do as John D. Rockefeller taught, own nothing but control everything.

That was his advice to his kids on his deathbed. Own nothing, control everything. You use corporate structures to own the assets so that when you get into the fender bender in the parking lot, there's nothing to get except for your insurance. When your kid goes out and does something stupid on a Saturday night as a teenager, people will just either call you and say, do you know what your kid did? Or they'll say, oh, Mommy and Daddy are rich. Let's go after them. So the difference in separating stuff and finishing the structure is the difference between keeping assets and having assets to leverage into the future versus the people that can lose everything over a stupid moment because they were simply not uneducated, but unprepared.

I love it. Well, Aaron, this is edition number seven of this, and I'm not sure how it shows up on the screen or not.

Okay. Yeah, the corporation manual.

It's a little outdated now, but it actually is pretty good. And I know that we've got the Q QR code where you can download this, and we've got a special running from Laughlin where people can get it for free. Where it's normally. I don't know how much it's worth.

49, I think, or 47.

So we're letting people get that. And you won't get contacted by anybody. You can come back and ask us questions if you want to. And it's going to get updated, so if you go sign up for that, you will also be then told when the new one comes out as the updated version. Not a lot of changes actually in Mostly tax. Yeah, mostly tax stuff, but you've got another book. I'm going to leave on that. We're going to come back and talk about that. And just just on the next segment of this. But I'm going to close out for now. Aaron, Jackie, stay with us because we're going to do another segment here. But thank you. And thank you to my producer and the team. And thank you for you guys putting this together. And I'm Tom Powell, and this is the Powell Perspective. Thanks for joining us.

Sam.