932: Do These Things Before Getting an LLC - Asset Protection Level 1

Because it's illegal for a lawyer to give a kickback to a non lawyer on illegal work. That's why. And so we have these dip out there that aren't lawyers out there selling or giving away LLCs so they can upsell crap people don't need. And I'm sick and tired of it. Please stop paying for this stuff, stop supporting it and ask your real estate coaches for real tax and legal. Being smart to me means always getting it in writing. So many people think doing it via email or a handshake is okay. Or sending over the money before the agreement signed.

The contracts really matter. The details are important.

Work in every deal. I look around the table and if I can't figure out who the dumb money is, it's me. Quit trying to save money and pay someone under the table. They get hurt, they screw it up, they break something, they start a lawsuit. Guess who's liable? The owner said so. Really? Well, your owners are freaking criminal.

Welcome everyone to the Main Street Business podcast with Mark Kohler and Matt Sorenson. We're delighted to be with you today because we have a trilogy, trilogy series we are about to drop today on asset protection.

I even have a client testimonial that I've been carrying around for 10 plus years that I'm going to read.

Yeah. Now we're talking about asset protection. There's. We are in three parts on this. Okay. This is part one. We want to get the foundation laid, make sure everybody knows where they need to start.

We will come to scams in a moment. That's number two, because there are so much crap being sold out there on asset protection. And we want to talk about the perspective of how you approach asset protection. But number one, number one, which we kind of fell into last week, we got it. We didn't start with this number one, and then we realized this is really number one. So tailoring it to your individual needs, Matt, how would you unwrap that?

Well, it's like a good suit, you know, you don't just buy it off the rack. All right. You don't buy a bigger one then. You know, you haven't even been to the weight room yet that you're kind of. I'm going to grow into this or I'm going to. I'm going to slim down to this. No, no. Okay. Buy it that fits your situation now and have it tailored to your situation. The asset protection planning Mark might do is different than me. Okay. Even though we might do very similar things and you might think that, that your Other friend that's a real estate investor, just like you might have a totally different asset protection plan. So everyone's going to be unique. It's a lot of different things at play. We're going to get into some of those things today. So just know this is not like off the shelf. Everyone gets the same setup, structure, which

leads into scams here in any moment. Because the. There's so many companies that want to just sell a one size fits all. And the other perspective I would make is on this, tailoring it to your individual needs is it doesn't have to be expensive. In fact, some of the best asset protection is free. So number two. So number one, everybody is tailor it to your. Tailor your asset protection plan to you. Don't think that you have to spend a lot of money. Don't overdo it. Okay? Number two is scams.

Fire.

I am so sick and tired of these companies out there that have to sell you an LLC for everything you need or give you free LLCs or as many LLCs as you need, thinking that they. That that's all you need. You fall prey to this, and I apologize for some of you that if this has happened to you and you think, oh, this is great, my asset protection needs are done. And they scam you. They want to upsell you on credit, repair credit lines. They want to sell you other garbage that you even don't need. Further, just this week, I had a client that. It was on my live. My YouTube live. He said, hey, I have a Wyoming S corporation and I live in Florida and I'm a physician assistant. Is that. Am I okay? I'm like, no, you don't need a Wyoming S Corp. And he knew it, and he was embarrassed. And a lot of us get scammed and we don't even want to talk about it. And, oh, I'm just so mad. I've got more to say on this. But, Matt, your take on this scam industry, it's really one of the worst in the legal profession.

Yeah. And they're not even legal professionals. They're not real lawyers, okay? Saying they're part of the legal profession is like saying the person selling you essential oils is like a surgeon. You know, I got an essential oil for this. Oh, it'll cure cancer. Just rub it on. It's $100 a bottle. All right? That's kind of what these people are. They just, like, they have a solution that you think is legit, and they sell it to you. It's usually overpriced way more than Lawyer. Even if you're a real lawyer. That's what blows my mind. It's not necessarily cheaper. So in many instances we'd rather you go online and do it your frickin self. Then these people that set up this super complicated structure that doesn't fit your situation. Because here's, let me say the two reasons why. There's so many reasons why people get screwed on this, but I'll give you a couple. You're gonna lose money, you're gonna waste and throw money away. You're gonna spend more money having to fix the thing. You're gonna be in a state that you had no business being in. You don't do business in that state. Why are you going to Nevada or why don't we set this thing up? It has nothing to do with the business that you're doing in Florida or whatever state. You may have your administrative cost to keep that thing active to pay states in a state you've never even set one foot in. Why am I doing this? Okay, there's all this baggage that comes with this bad decision, let alone all the cost. You have to restructure and do it right the second time.

And one last word in this and we'll move on. I is. You can have the last word as well. Matt is. Yeah. Are there times where you need to set up in Nevada? Sure times. We are going to set up clients in Wyoming. Absolutely. There's some high end double layer cope. We're going to talk about charging or protection in level two and three in our future podcasts. Please listen in. But 90% of the time you don't need that stuff in these companies. Make it sound sexy and sell it. Now here's the one that just pissed me off the other day too. This was about a month ago. This client, she, she knows who she is. She calls me up, she, she's listening. I know she listens to the podcast and says, hey, I'm setting up a new entity. What should I do? And I'm like, well what are you doing? Oh well, I'm coaching a bunch of real estate investors and I'm really doing well. I love it. I'm coaching. My goal is to have two or three hundred students that are just following me and I'm helping them with their real estate. And I go, oh well that's great. They're going to need some tax and legal. How can I be of service? I mean, this is great. Thank you so much. Total pause. Well, well, the groups that I speak on stage with, we, they, we well, we have a relationship with this company that they, they do their LLC for free. And I go, really? Wow, that's great. Why? Well, just because, you know, they want to sell them other things. And, and I go, do you get a kickback for that? Yeah. Yeah. Well, why aren't you calling them? Why aren't you calling them to get the advice you need right now? Well, they're not lawyers and they don't know what they're doing really, so. But it's good enough to give them to your students. But you yourself don't even use them,

who don't know enough to know that they're getting duped. Yeah.

And I'm the only reason. If some of you want listening, you know, you go to these real estate gurus, I could start listing their names and then I'll get some nasty letters and I don't need the time and effort of dealing with a slander accusation. But you know who they are, and they're speaking and they're talking about good real estate strategies. And then they let some bozo on the stage sell entities for unlimited entities for a flat fee or no cost to entities so they can upsell crap. And, and the speaker gets a kickback. Now you may say, well, Mark, why don't you do that? You can get out on. Because it's illegal for a lawyer to give a kickback to a non lawyer on illegal work. That's why. And so we have these dip out there that aren't lawyers out there selling or giving away LLCs so they can upsell crap people don't need. And I'm sick and tired of it. Please stop paying for this stuff, stop supporting it and ask your real estate coaches or for real tax and legal. Damn it. That was a moment, James. That was a moment.

We're, we're, we want to sell more llc. In many ways it's counterintuitive for us to be like, stop doing all this. You would think we would say no, just do the same thing with us because we're real lawyers. No, what they're doing does not make sense. I wouldn't do it for myself. Why would I incorporate this legal strategy for all my clients? So here's. So when you get to asset protection, we have stuff that's way overcooked, way overdone, way overkill, overspent, way too much money, way too much administrative risk. You're paying more taxes, by the way, and fees to have that stupid structure. And then we have people that do nothing and have their head in the Sand, There's a happy medium here. Everybody's a little different, like we said at the beginning on how we tailor it. But I think the next two items we want to talk about your risks and your assets are the perfect starting point here. Are you really doing that type of thing with this unlimited llc, whatever thing you bought? Hey, let's assess these two things because that's where asset protection starts. These are the next two points we want to hit.

Yep. Number three.

Number three. Okay. And this is so important. This is where asset protection starts. This is where it starts. Assess your risks. You might be in a type of business or investments that are risky. You might be flipping properties where you've got subcontractors, people at a property, a new buyer that buys it, or a tenant that goes into it after the whole thing's been rehabbed. Maybe you're a doctor or a medical professional. They just get sued all the time. We know if there's malpractice, lawyers, advertising on TV all day to sue you. You know, I don't care what profession you're in, but. But some of us just have a little bit more high risk business or operation that's gonna ratchet up our asset protection planning. And as a lawyer, we wanna assess that and kind of ratchet it up a little bit to know, all right, you've got more risks in your world. We wanna do some additional planning to protect you and your assets from those risks. And not everyone has risks.

Yep, yep. I love it. And examples.

Okay, go ahead.

I think some examples are good. You might be selling used jeans on ebay. Not a lot of risk there. You know, someone might get a paper cut opening your package. Right.

Okay.

You might be traveling this summer to county fairs, doing bungee jumping off a crane.

Okay.

Could be a little risky.

Risky.

Okay. All right. You might be providing consulting on social media. Not a lot of risk. You might be a surgeon or a doctor delivering babies. Lots of risk. So people look at your lifestyle. If you live a pretty low risk lifestyle, we can adjust your asset protection plan accordingly. Sometimes we got to lock things down. I mean, you are a target for a lawsuit, you know, but other people, they're not, so.

And you know what? Some you might. And I had a conversation with a client about this years ago, and I can't remember, I think he was actually a dentist. And I was like, okay, you might have. I'm like, are you doing, like, surgery? Like, you know, you pulling wisdom teeth and like, what are you doing? Like, are you just filling cavities and Stuff, you know, and he's had a pretty modest practice. But I remember he said, he says, but my wife is a terrible driver. And he's like, honestly, I fear for her safety, and I've told her not to drive, and I wish she wouldn't, but she does. And she's like. And he was just terrified of a lawsuit just because of a weird little personal situation like that. I mean, their business might be pretty. Not as risky, but their personal life, lot of liability options there.

All right, now, number four, as you assess your risk, you're going to assess your assets. And this always blows my mind. And I'm not trying to beat up the newbie that's getting started building their wealth, but I have folks that call me up and they're like, oh, my gosh, I need asset protection. I was at this workshop and I got to get asset protection. And luckily, they called rather than buying the prepackaged crap. And they go, I need asset protection. I know I want to do it right. I'm like, oh, my gosh, let's dive into it. Tell me about your assets. Well, I'm driving a gremlin, like the one Wynonna Ryder drives in Stranger Things.

That's the collectible. That's a collector's item.

Those gremlins are collectibles. I go with that.

Yeah.

No, Rentals doesn't own their own home yet. And I'm just like, you know, we can tone down the asset protection and ratchet it up as you start to build some equity, you know?

Yeah. And no sense on building a fence and a wall around, nothing inside or building this huge vault or safe and not putting anything having anything in it. Look at the assets you're trying to protect. The more assets you have, the more asset protection planning you have, the more risks you have, the more asset protection planning you have. Now, I do want to make one caveat, though, on the asset thing, because we do still have clients that have no assets, but we want to show you some asset protection planning for a couple reasons. Well, really for one key reason. They have income. They've got a good job. They've got a profitable small business. They don't want a lawsuit against them that could attach and have a wage garnishment or take out money in their bank account or whatever. So they might have a lot of assets in terms of real estate, stock portfolio or retirement accounts or cash or. Or those types of assets, crypto, whatever it may be, but they've got a good income and they just can't. They Just blow it all. But they don't want that income to be jeopardized by a lawsuit either. So a large, profitable business that has income, even though you blow it all, that's still an asset we want to protect. We don't want judgments against that. I like it.

Now I want to call an Omaha. Omaha 32 Omaha. That's it. It's football season. Yeah. Football season is almost upon us. That's a Peyton Manning. Okay. Rather than go talk about insurance right now, which was typically our number five, and then umbrella insurance, which we've got to talk about, people. That's 5 and 6. Regular insurance and umbrella insurance. 5 and 6. I kind of want to get into just being smart. We're kind of on this be smart stuff, and I. What do you think? Be smart and due diligence. Seven and eight. That'll be five and six. Be smart. And then due diligence. What do you think?

Okay. And then come to insurance.

Then we'll still hit insurance.

Yeah, let's. Let's talk about be smart. Okay. And there's a lot of things that go into this. Let me just give an example. On. On be smart. What we mean by this. When you're out doing business or investing, you know, there's stuff that's risky. Don't be a moron. Okay. Your brain.

All right. I love your advice. Don't be a moron. Keep. Keep going. You're making. I love your detail in this, but I'm serious.

Some people get excited about making money either in a business, a real estate deal, whatever it may be, and they start overlooking stuff. They start doing dumb things that if they took a step back, they'd be like, that was totally stupid. I went into business with this person or did a real estate deal with this person. I didn't even freaking know, and I got ripped off. I. Or I got sued because of something they did.

Yep.

When you business deals, who you're doing business with is a huge risk.

Yeah.

Be smart with those people.

Yeah. And this bleeds into due diligence. And so for some of you that might not be familiar with that term, it means doing your research on your person, on the deal, things like that. And so we might jump back and forth on some of these points, but on being smart, to me means always getting it in writing. So many people think doing it via email or a handshake is okay, or sending over the money before the agreement's signed. Oh, we're in a hurry. We're in a hurry. We got to move and then I have people over the years have called and said, hey, so and so's not paying me, and I'll go, okay, well, show me the agreement. Well, we never got it signed because we were in such a hurry. But it's still binding, right? No, it's not. Well, they said this.

I've got five emails from that said they were going to do this.

That's so sad. Yeah.

There's something called the parole evidence rule, by the way. This is a really important legal tip. Parole evidence rule. This is not what's presented at your parole hearing, Mark.

I know, I know. I went back to my po, My parole officer. For those of you that have a P.O. you know what I'm saying different. Yeah.

Okay. Parole evidence is basically stuff outside of a contract. If you have a contract about something, real estate business operating for an llc, but then you have all this other outside stuff, like emails and stuff that's like, well, we're going to do this, we're going to do that. And that stuff didn't make it into the contract. It's not enforceable. Okay. All week. This comes up so many times with new business owners, real estate measures. The contracts really matter. The details are important. We're saying, be smart about it. If it was important enough to talk about, put in an email, put it in the damn contract at the end of the day.

And I'm going to make you a promise. Everybody and I really. This is. This is the honest. This is not being facetious or for those that know that word, this is not joking around. I promise you there will be another deal next week or next month if someone's pressuring you. And I'm saying this, especially the ladies, and it sucks out there. There's a lot of jerks out there that are going to pressure you and go on a motion or whatever it takes to pressure you to do a deal and say you don't have time to talk to your lawyer or, oh, I already have a lawyer on the deal. I know you got a comment on that, Matt, but if people say, we gotta move quick, and you said, well, Mark, I had to move quick, that's when you use me as an excuse. Or, Matt, you say, I'm sorry, but I promised Mark or I promised Matt that I would have them or one of their attorneys look at the agreement, well, you don't need to. Yes, I did. I promised it to them and I literally did. I've got to do that because there will be another deal. Now, that doesn't mean you can go into analysis paralysis, where all you do is look at deal after deal after deal and never pull the trigger. But we don't want to go to the other extreme. But at the same token, you can feel good in your heart and feel good in your mind. And you say when those two things align and I'm not being pressured.

Okay.

I might take the leap. Yeah, there's going to be risk. It's okay. Buckle up. But don't do it under pressure. And. And. And I promise you there'll be another deal. But, Matt, there was a lawyer there, right? Yeah.

So when someone says, oh, my lawyers already reviewed these documents. They're good. Don't worry about it. In fact, you don't even need to read them. Just go ahead and sign. Okay. All right. That's like when you get arrested and you're at the, you know, Law and Order, and you're in the police station, and they're like, oh, we got a lawyer here, and it's the prosecutor. Oh, okay. So I should just tell you everything you know. Okay, that's not your lawyer.

All right?

They're not looking out for you to throw you in the. In the can.

All right?

They want to lock you up. All right, so why are you representing your interests?

All right. Yes.

That's what look for. Someone's going to advocate for you. Find the stuff that matters for you. Now, I have one other thing, because when it comes to contracts, and we're kind of hitting back a little bit, due diligence contracts is. This is a really important point, something I've been saying for a long time. A bad contract makes a good deal bad. You can have a great deal, a great investment or business opportunity. If you have a crappy contract, that thing's not going anywhere. It's not going to work. It's just going to fail. Okay? You've got to have good contracts in these types of things, particularly the really, really good deals. Those are the ones that fall apart. You don't have a great contract.

See, and this is why, people, I love this podcast because did we say you had to spend thousands of dollars on an entity in Wyoming or Nevada? Or a trust offshore or a land trust or an irrevocable trust, or hide this or hide that. No, just. Just be careful. Just be. Look for reasons why you should do the deal, not reasons of why you shouldn't do it. That's very subtle, everybody. Let me repeat that. And I fall prey to this. Matt Sorensen knows this. I am so trusting. I have quit interviewing for employees anymore. I always look for the good in people. I'm looking for reasons not to hire a person rather than reasons to hire a person. See, and there's the difference. When someone presents a deal and you're like, oh, my gosh, this looks like a great deal, you're looking around of why not to do it. That's the wrong perspective. You should be like, I'm not going to do this unless I'm talked into it. Like, there better be some damn good reasons why I do this. That puts your. Your. Your guard up. It makes you careful. It makes you smart.

Love that. Okay, this is what before, even, like, again, the entities, the. All the other. The trusts and all these other things you could be doing. Okay, what we're talking about now is how to protect yourself from even having a liability in the first place. Stuff and everything is like, you've already got a judgment against yourself.

Okay?

You're already sick. This is like preventative healthcare. This is preventative asset protection. We want to prevent you from having a liability in the first place. All right? So be smart out there. It may sound a little simple, but again, in business and investing, sometimes our emotions take over. We get excited about stuff, or sometimes we're just new to it and we don't know the normal course of things. We don't know that it's okay to do diligence. We. We don't know that it's okay to say, have your lawyer review this. We don't know that. All these little pieces that we're talking about here, we just haven't done it before. So just be smart, take your time, get stuff in writing, ask the right questions. And I think, like what you said, Mark, is make it make sense in your mind and in your heart. Feel good about it. And once those two things are both convinced, you're ready to go.

Okay, now I'm almost ready to read this little testimonial, but before we do it, let's. Let's now vet a little bit of due diligence. So everything we said was about really focused on taking proper steps, being careful, not being pressured. I mean, we could talk about this for a whole podcast, which we have, if you look into our podcast history. We have due diligence podcasts in our sister podcast, the directed Ira podcast. In prior shows here on Main street, we talk about being careful with your investments. But due diligence and good asset protection is two things, in my opinion. It's knowing the deal and knowing the people you're dealing with. And they're two different things. You may say, I know this deal is good, but you kind of have a bad feeling about the person. Or you maybe have a good feeling about the person. You have no idea what the hell you're doing. And maybe. Matt, can I take the know the deal part and then you take the know the person part?

Love.

All right. Know the know the deal part. I have two comments. One is Warren Buffett is famous for this. He would say, I never invest in anything I don't understand knowing the deal. Number two, I had this Texas client that was just so colorful, and he was like, if I. If I don't understand deal, then I ain't doing it. And I'm like, what are you talking about? Goes work in every deal. I look around the table, and if I can't figure out who the dumb money is, it's me. And I get up and walk away because he's like, there's always dumb money at the table. And I want to know who that idiot is. And if I can't figure out who it is, I'm out. And I'm like, oh, that's smart. So you know. So know what you're doing. Know what you're doing. That's my point. What about people? I mean, you brought that up. Partners. I mean.

Yeah. Well, here's just a simple example. And I just remember this lesson just for myself. Let's just take a simple rental property, okay? Buying a rental property, you know the deal. You analyze the property to death. You've shopped the right mortgage rates, or you've negotiated some awesome creative financing on the deal. You know the market it's in, you know the rents you can get. You've got this expectation, and you've run some analysis on how it's going to appreciate. You've even thought about the tax benefits and all this stuff. You're like, man, you, like, you got an awesome deal, and then you buy the thing and then you rent it to the first moron that sends in an application to be your tenant, okay? Because that tenant is in business with you. They're either going to pay you every month or they're not. And this only works if you have a good tenant. And so it may seem simple, but you need to be choosy about the people you're doing business with that are going to pay you in a deal. Like a tenant. Maybe you're hard money lending and it's borrowers. Maybe you're going into a business adventure and someone's supposed to do a bunch of work, do Your background and research on that person as much as you do in the deal itself.

I love it. Now, by the way, this reminds me, I've got to go back to being smart people. Quit paying workers under the table. Let me just repeat that. Quit trying to save money and pay someone under the table. They get hurt, they screw it up, they break something, they start a lawsuit. Guess who's liable? You are. So for crying out loud, hire reputable people or don't do it at all, or do it yourself, but quit paying people. Well, they only do it if I pay them under the table. Then tell them to take a hike and go live in a different country. Because you know why they want to get paid under the table? Because they don't want to pay taxes like you and me. Now, there's tax strategies out there to pay the least amount, but to have someone say, well, I just get paid under the table. But I was at a farmer's market about a month ago and about half the farmer's market would take cash only. And the other half was like, yeah, I'll take a. I'll swipe my card, whatever. And people I go up to, I started getting pissed. So I'd walk. Not me. I know many of you can't imagine that. But I started going up to people and like, how much for your, you know, steaks or your whatever the blueberry jam or vegetables or whatever. And they tell me, and I'd be like, okay, here's my card. Or do you do Apple pay? No, I only take cash. Really? You only take cash? Why is that? Why is that? You can't take. You don't know how this works. Let me show you how this works. And I just start demeaning them. Well, I know how it works. Well, then why aren't you doing it? Well, the owner said so. Really? Well, your owner's a freaking criminal, you know, And I freaking just unload and walk away. I'm going to go buy it somewhere else because I'm going to buy it from an American citizen that's willing to pay some taxes. Yeah.

And let me, let me say to you business owners, this includes real estate investors, is if you're paying people under the table, guess what that means you're not doing. You're not expecting it.

Yeah. You're not getting a write off. All right.

Okay. You just lost. I mean, that, that money is totally not expensive expense. So a lot of reasons, tax included, of why you shouldn't be paying people under the table.

Okay, here's my. Here's my paper. All right, now this is for those that are able to watch on YouTube. You can see this tattered piece of paper here. I want to point that out. No. Okay, now this is seriously. A woman walked up to me at the end of a workshop, I think it was in Phoenix, Matt, at least 10 plus years ago. And she had tears in her eyes and just handed me this note and I was like, oh no, did I offend her? You know, I mean, my jokes are so clean and never racy or edgy. So I thought I couldn't have offended her. But no, she handed this to me and I, there are people around. I'm signing a book or whatever. And then I, I read this later back in the room. Another sad story. Question mark One main reason I was drawn into real estate investing is I'm going to read it word for word. Sometimes there's a little grammar issue here, but we're going to do it. One main reason I was drawn into real estate investing is because the first time I heard the term, quote, real estate investor was when my husband announced that he was investing the full amount of his retirement to a longtime acquaintance who was an obviously, quote, successful, quote, real estate investor, end quote. My husband asked few questions as to where the money would be invested, nor did he require liability beyond a two page contract. Neither did he consult with an attorney or CPA because it was, quote, too expensive. I, on the other hand, at the time knew nothing of real estate investing, but asked one question of this acquaintance, Mr. Tim, and I won't say his name, quote, shouldn't we have a pile of paperwork to sign, question mark quote like I remember when we got a mortgage. Mr. P retorted, quote, what is the matter? Don't you trust me? End quote. Then he looked at my husband and said, quote, g the husband's name. This is so unusual to have the wife involved in these investment deals.

Quote,

After 18 months, I became aware of this. I became aware that we were receiving no income from Mr. P. I insisted on getting an attorney who is trying to investigate this for us. Also, the SEC is investigating him. Mr. P obviously knew much about all this asset protection stuff. Final paragraph. This information is bittersweet for me. It is good to know for the future as I prepare to start my life over. But upsetting to think that Mr. P is maybe and probably successfully secured our $2 million retirement fund for himself.

See, wow. That is what asset protection is is. We said be smart, but also it's okay to have some backbone. It's okay to push back and, and I. Some people feel like I, I can't believe that comment that that person made. Like, this is very unusual to have the wife in the room. I mean, if I was the wife, I'd be like, I'm the one that signs the check on this 2 million or approves 2 million going out. I think a lot of people, when you're investing money, you have the power. You're like the bank. Okay. They're going to put all these conditions on. They're going to investigate everything before they release money on something.

Okay.

You need to be doing the same thing with your money when you come across an investment deal. I know we want to be nice. I know we want to be kind. I know we don't want to create a scene or anything. This is business. It's your money.

You got to protect it. Yeah. Yep. I mean, there's so many lessons to learn from this very, very sad message. And you can see, many of you, why I've kept this for years. We had an SEC investigator come on our show a year or two ago who wrote a book on fraud, and he said the number one fraud in America is affinity fraud, where it's someone you know, someone in church, someone down the neighbors hood, in your real estate club, in your investment club family. And we don't take the extra precaution that we should because we think we know them. And so I just want to say the best asset protection is just being careful, smart, doing your due diligence, and then all this entity stuff and trust and structure stuff that comes next. And you need it. You need both be careful people.

All right, I think that's a great lesson right there. Let's get on to something very exciting. Insurance insurance podcast. After we say, well, now let's talk about insurance. All right?

Not umbrella insurance. You're going to just do regular insurance first.

That's regular. And then let's do umbrella. Okay. All right, let me talk about regular insurance. I want to give a couple examples to that. We want you to have insurance. LLCs and entities are not a substitute for insurance. You're still going to want to have insurance. All right? But insurance doesn't protect everything. And in fact, many of you might have insurance that doesn't even cover the risks that you have. So when you go back to your risk assessment that we talked about earlier, think about what risks you have. Did you have a home that you bought and moved out of that's now a rental property? Did you update that rental property with your insurance agent? Did you call Them and tell them, hey, I need to change it from a homeowner policy to a landlord policy because I might have a tenant that could sue me if you didn't change that. That risk that you had is not protected under the insurance. So you want to make sure that the risks you have are being covered by the insurance that you're paying for. Love it.

And you know people. It's so easy. And I know you don't want to do it. You want to call the little gecko. That's just so easy. And. Or you want to call Flo and say, hey, I need insurance. The end. You don't tell them that you're a realtor and might have clients in the car. You don't tell them you might have a rental property. You don't tell them you might have teenage drivers. You keep the information to a minimum because you want the lowest possible premium. I get it. I get it. But you're only hurting yourself because let me just tell you, when you have that claim, some of you have had those claims. Bender, Bender. Whatever.

I'm sorry.

Did you call your insurance agent and they said, oh. Oh, my gosh. I'm so sorry this happened. Let me rush over to your home and write you a check. We would love to, love to pay on this claim. That's not a problem at all. Don't worry about your provisions or your policy. We'll cover whatever the hell happened. Is that what happened to you people?

Just.

If that's not what happened to you, you got the wrong idea of what insurance companies are about. You have got to go through your life with your insurance agent and make sure the shiz you're doing is covered.

Yeah. And let me just say, even though I. I do love a good insurance agent, okay. And if many of you are. Have a bigger business or something, you have excellent insurance professionals. But if you're dealing with Jake at State Farm, and sometimes Jake is great. I love Jake. I know. Sometimes Jake doesn't know what he's talking about. All right.

Yeah.

I mean, first of all, does anyone really wear khakis anymore?

I. I mean, I knew you were gonna say that. Okay, I'm wearing khakis today. I'm trying to get on camera here with my YouTube. Okay. These are khakis, man. I can't believe you just said that.

Jeez.

All right, Jake. Jake's cool.

But. But sometimes Jake has limitations. Sometimes, like Mark said, you might be withholding information, and I am giving the information they need to tell you what insurance coverage you should Have. But sometimes Jake at State Farm is not that great. Okay, this is where. And I'm going to go back. You need to be captain of your own ship. Okay. Tell them what you need. Get educated about the type of insurance someone should have in your line of business.

Okay.

And then go demand it from your insurance agent. Okay. So. And you don't need to learn all types of insurance. Everything out there, just learn it for what you do. All right. If you're a doctor, you probably know about malpractice. All right, well, how much malpractice should someone have? What different types of coverage should this include? Okay. Like, think about those things that are going to apply to your type of business. Learn about what's done in your industry, and then go to your agent. Because Jake at State Farm honestly might not know your industry.

Yeah.

He might not know what type of insurance someone that does bug spray should have. You know? Well, you're spraying chemicals in people's houses and you might have workers doing the same. I don't know what type of insurance. I don't even freaking know. I'm just saying you might want to look into that for yourself.

You might be on the phone with Jake late at night telling him the truth about your life. That's okay.

Yeah.

If your wife walks in and says, who are you telling this to? Say, jake. She may not believe you, but. But you are, you know, Jake, what are you wearing? What are you in. Jake at State Farm. Are we at eight? Yeah, we're eight. Umbrella insurance.

Okay, okay.

Umbrella. Now, we did a whole show on umbrella. I've written articles on umbrella. I have umbrella insurance. Umbrella insurance is great. I love it because it's so freaking cheap. Matt, tell me why it's so cheap.

Because it hardly covers anything and no one ever uses it. The best type of insurance, if you're an insurance company, you want to sell something, what type of insurance? You want to sell the stuff that no one ever makes a claim on, that only. That only is used once all other insurance has been exceeded. And by the way, that's only insurance that covered your loss.

Yeah.

So let's break down. What insurance? This is the big misconception about umbrella. People think of the word umbrella and they think, oh, you mean like the umbrella that I put over the top of my head when it rains, I

don't get wet, you know, and it covers everything.

No, it's not that type of insurance. A better word for umbrella insurance would be excess insurance. Umbrella does not cover anything new. If you buy an umbrella insurance Policy that does not cover anything new at all. All it is covering is stuff you already have insurance for. And once that insurance you already have in place is exceeded, then you can make a claim on the umbrella. Okay, so think about it more as excess insurance. It's adding more insurance to insurance coverage you already have. It's not going to cover anything new at all.

I had a good friend say, hey, will you look at my umbrella insurance policy? I really assessed whether or not this was a good friend because who wants to read an insurance policy? And I thought, how much can I charge for this? I would never do this. Shoot me in the head, please.

Double, double, Double, Yeah.

Who wants to. You don't want to read an insurance policy, let alone an umbrella insurance policy. But I was talked into it and I fell for it and I was in. But I kind of got excited because I'm like, to be honest with Lottie, I'm going to be honest here, here on the show. I hadn't read an umbrella insurance policy start to finish, I don't think ever. And I mean, I'd read provisions and this and that, but I thought, you know what, I'm going to do this. And I pulled out a yellow, yellow highlighter and a red pen. I said, I'm going to read this thing. Now. It was actually only about six pages, double sided, size 10 font, but double column. But anyway, I was able to, you know, the first parts are all the whereases and wherefores and all that crap. But anyway, when I got to it, this client was going to spend around two to three grand. It was about 2,500. It was an umbrella policy for business, a boat and a home. And I thought, okay. And what was interesting, it was just clear as day, is it said, we cover after your current insurance policy agrees to pay and pays out policy limits. And then there's an excess amount owing. Only in that event do we even pay. So if your regular insurance doesn't choose to cover it or they cover whatever's needed and there's nothing else left, we don't, oh, we have nothing. We don't do anything. And so we come to find out this client had enough insurance on their home, enough insurance in the business, and chose to say, you know what, let's just get it on the boat. You know, if some kid gets hurt on the boat, or we run over something or someone, or, you know, some terrible experience on a lake, I'll take the umbrella. And so we, we were able to save close to two grand. The umbrella policy just for the boat was maybe 4 to 500 bucks. Matt, you even said this the other day. You said to someone, just to increase your policy limits on your regular insurance does the same thing.

Yeah, we had. I had a client shopping and was going to get an umbrella. Explain to him what an umbrella was, and he was like, totally floored. First of all, he's like, that is not how the insurance agent explained it to me. That's not going to bode well for their commissions. But what he did was he did want more insurance coverage. So what he did was he just went back to his agent and he upped the coverage in the areas where he had concerns or he felt like his coverage wasn't high enough and it was way cheaper than the umbrella. So when you're considering an umbrella, consider like Mark, well, where's that extra risk? Maybe it's just an additional policy that's actually going to cover something like the boat at the lake that you didn't really have enough coverage for in the first place or any coverage at all. Or look at the policy you have. The client. I had multiple rental properties. Just wanted to throw an umbrella on top of it and figure that would be the easier way. No, it was actually cheaper to just raise the limits on those properties than to buy the umbrella. So consider those alternatives. Know what you're getting and actually buying when you have umbrella. I love it.

I love it. Well, here's my Omaha. Omaha 24, Omaha 3268 Omaha. Okay, that was my audible. Did you get that? Okay, here's what I say we call this show eight to be Great. We've got our level one asset protection. We did eight to Be great. And in our next episode, we'll hit things like when do you set up an entity? Now we need to protect you from your business operations, your rentals. Do you use a domestic asset protection trust or a foreign entity or privacy? That may be level three, but I think in level two, we can certainly get into the entities, maybe series, llc, these COPA entities. What do you think, Matt?

Yeah. What state do you set up the entity in? When do you use corporations versus llc? Okay, we'll talk about what about trusts. I heard I should use a land trust and all these types of. We'll hit those questions. These are the structures that people are using. And we'll tell you what we recommend and what things legit and what's total bs. So we'll break that down. That's really level two. And it's about. Like Mark said, it's protecting you from your business or risks of the of your assets. We want to protect you and all your assets from the risks that you have from operations that you may have in your businesses or in your rental properties. Other assets you might have.

Well, Mr. Sorensen, I think we can call it a wrap. So people, thank you for being here. Thank you for participating in the Main Street Business Podcast. Hopefully you can see our hearts and our minds, our effort. We are all in. We love doing the show. We love being here with you. Going to do level two, level three, probably throw in an open forum show somewhere in the mix. Please like the show, share it, love it, heart it, thumb it up and

if you have negative feedback, you can send that to mark@markjkohler.com of course loves to get those types of emails also.

Yep. Oh, and for our open forum show, we've got a new plugin on our the website Main street business podcast or mainstreetbusiness.com it'll take you to the same spot. Submit a question, click on that. You'll see other questions that have been submitted. You can submit your own heart, maybe some of the other prior messages or questions so we know which ones are important. And we'll see you next week everybody. Thanks so much for listening.