How to Protect Your Assets as an Entrepreneur

Sometimes you can just create a business and the business fails, right? Entrepreneurs, I see what people complain about, but I see solutions. And then it's a matter of what connections do I have where I can solve the problem?

Welcome to the High Voltage Business Builders Podcast, a show where we interview high voltage entrepreneurs growing and scaling through e-commerce, real estate, and other wealth without Wall Street ventures, showing you the path to making your first or next Million.

All right, folks, welcome back to the High Voltage Business Builders Podcast. As always, like, comment, share, engage, help me beat big tech. And even if it's stupid comments, as I always tell you, I don't care. Leave something in the comment to help me on YouTube or Instagram or other channels where they like to engage so this podcast can get out to more people.

Why?

Because if you're talking about asset protection in business, your personal life, or even using life insurance as a tool in business, then you're going to want to pay attention to this episode. My guest knows a lot about this, so I'm going to bring him in to speak about how those things apply in your life and business. Brian, give us some insights into your experience with this, your background, and help us know a little bit more about who you are.

Yeah, absolutely. Thanks, Neil, for having me on. And most people that have heard me talk have probably listened to me on advanced asset protection planning from my law firm and the legal side of things with our hybrid trust, the Bridge Trust. But I've added to my law practice and partnered up with some of the top financial specialists that correlates really well with my law firm, and that's adding in some financial planning with various life insurance products that help business owners and individuals. And to kind of go off of your question here about me, I got into asset protection from the litigation side of the law, which is different. Like a lot of people start in the estate planning, and I was actually a trial lawyer for a long time, and I just got tired of seeing clients being sued and their lives just turned completely upside down with a false sense of security. And getting really bad advice on what to do from attorneys that were practicing law way outside their specialty. So as an investor myself, about 10 years ago, I started doing a deep dive into the world of asset protection and started affiliating and working with the top 2 asset protection firms in the nation to educate myself. And I just fell in love with it. And I had my insurance license a while back, and I also love and geek out on finances and taxes and investing. And I just found the 2 really correlated very well together. And it's kind of merged very well with my firm on not just like how to protect your assets from lawsuits, but then how do we protect ourselves financially by combining both like asset protection trusts for the law side of it, as well as different life insurance products for the business side of things.

Yeah, dude, that's a great summary. So let's define what an asset and a liability is, because I think what happens is a lot of people think they understand what assets are, but then they don't understand it in terms of like what wealth building, wealth creation actually means in a business as an asset. Or what that means in terms of asset and liabilities. Can you unpack that just a little bit for us and dig in here? Because it's important for people to get their fundamentals.

Yeah. An asset is something that essentially is like tangible value to it. Your home, rental properties, your business has equity interests in it. Life insurance has, depending on what it is, cash value to it. Crypto, stocks accounts, right? These are assets that we accumulate. They have some cash value to it. And then the realms of we have to evaluate then risk, right? Some assets have risk. Businesses have risk.

We're contracting with people.

People can And, you know, get hurt on the job. We have harassment, discrimination claims that can happen. So as we're, you know, creating assets, investing real estate, very risky asset, but then that real estate has intangible risk to it. So we got to start dividing out the risk and separating those risks out into other entities. So a best example would be investing in real estate, right? So we have some real estate properties instead of having them in your personal name. What do we do? Well, let's separate it out and put it into like a simple LLC, carry the risk in there. And then depending on how much we grow what you have, we just start adding more additional layers to it. Different things we can do from the business side of things, right? Like we can start adding life insurance to the business side of things, and that can really help. You know, we can break that down in more detail later on, but these are things that we can start adding to our practices to help alleviate that risk.

Yeah. And thanks for doing that because I think a lot of people confuse, again, what they consider to be some, in some ways, an asset liability. A home may be an asset for an individual who's purchased it or maybe spent the 30 years gaining its value. However, until they sell it, that asset's not realized, right? There are recognized and unrecognized assets, I think, to understand in the terms of business building and where millionaires and billionaires have their assets and then where kind of average Joes and people keep their assets and what the difference between those two is. Because as we're talking about making your first million or gaining your first million today, it's very clear to understand where the different asset classes change. Maybe we can unpack that a little bit. I know there's something from Visual Capitalist I put out recently on my newsletter that kind of went over this.

Yeah, absolutely. And it's also just a matter of how do you carry your title for everything that you have? Like, at the end of the day, to just like numb it down to its bare concepts, you don't want to own anything in your personal name. I don't care what it is. Like, at the end of the day, rich people own things in business entities. And trust. We're— what we want to do is separate out ownership from management. You want to be managing your assets, not owning your assets. And so like, use your yachts, your planes, your cars, whatever you want. We just want those out of your personal name and into a protection system. Asset protection is simply creating a safe around your assets that separates out ownership from enjoyment. Enjoy them, use them, rent them out, and then separate out the liability aspect of it.

Yeah, it's great that you say it that way because it's important. It took me 17 years to figure that out after being a W-2 employee and moving into the world of business and then finance and then growth and now investment is where you put your assets and how you protect them. There's wealth creation and there's wealth management. And yeah, you pointed out it's where you actually keep it, at what level you liability create it. It's everything down to my name now. Everything is in the business. Everything is structured through the business.

Yeah. And a lot of it comes down to the most important key, I think, on the asset protection side for people to take away is the timing. I get these calls so many times of saying, I'm getting sued now. What can you do for me now? And at that point, you're too far down the rabbit hole.

Careful with open words.

It's too late. Like, that's going to be straight up fraud because you're delaying and hindering an actual known creditor. And so you have to do this stuff beforehand, like before your castle's under attack. We got to build the moats. We got to build the defense systems. It would be like coming up to your insurance agent and saying, hey, my house burnt down. Can I get insurance on my house now to cover the fire? You know, or a car accident. No, you're too late. Same thing when it comes to the asset protection world. We got to set these things up in the systems before we're in danger, beforehand.

100%. And it's very smart what you said. And I want to rephrase this again and just make sure it was very clearly defined. Those who are millionaires and billionaires keep their assets in their business interest, in their real estate holdings, in their managed assets, and then their fixed income assets. Right? Those who don't keep it in maybe 401s, mutual funds, stocks, their cars and their house. In other words, they don't— I now see that as liabilities. I didn't see it before due to the control and due to the ownership and the accessibility of them. But once you place those into those positions, you actually lose a lot of control over the assets, the managed assets, as well as the flexibility of those assets. Keep them in the business, utilize them for business purposes, turn them into an engine that allows that to continue to grow. 80% of all billionaires have all their assets in their business.

Yeah, correct. And then you can always take your dispersiveness when you want. But the thing is, one thing when I do evaluations, I always ask, oh, were you holding certain amounts of cash? Now, so many people are like, oh, I don't have that much. I have $1 million in cash, or I have money in my stock account. And they think that's all perfectly safe and not— it's not an exempt asset, so it's completely exposed.

Right.

You need to realize is, yeah, you have it held in a different type of asset class, but now we have to create the bubble to protect it. So yeah, 401s, IRAs exempt, that's fine. Then you're talking about different investment strategies for more accelerated growth, which I completely agree with. But when it comes to like the personal stock accounts, the cash value in life insurance, things like that, just remember those are fully exposed assets. So it's a matter of where are we keeping those now? Is it in your personal name? Danger. Versus putting it into a management company or a limited partnership, into an asset protection trust. Now we're creating bubbles and spheres of protection around it. Then you just use it how you want and take it out to go buy whatever it is that you want to buy.

Yeah. Track it all, manage it all, reduce the profit, reduce the taxable income, deploy it more back into your business, and continue to create that engine that makes it move. So as somebody, we talk about wins, so win, let's talk about that. Maybe the 3 steps of winning win at this point, because I kind of see 3 in my mind and you're the guy here to talk to us about, but There's when is a good time to start considering asset control and management in my life? And then when would I look at the next step of putting some things together? And then when do I reach my kind of culmination where everything is protected and how do I kind of walk down that road?

Yeah, that's a great question. Like, I look at it through like stages of winter, right? Like, I live in Portland and I grew up in the mountains. And so I always look at asset protection as layers. We're laying out our clothes, right? We have a base layer. Those are like LLCs. We have management companies, which would be like a thick merino wool sweater or a cardigan for you ladies. Then we have our third layer, which are like asset protection trusts, and those are going to be like your heavy winter coat. That's going to protect you from all the like rain and snow coming down. And then we can mix and match as we want. We can take layers off. And so I never say go for the Taj Mahal, right? We don't need all 3 layers all the time. Most of my clients were coming in to do all 3 because they're higher net worth. But just think about it like this. If you're starting a business, the best thing to do is like at least create some sort of business entity or structure that's going to at least give you some shield of protection. You don't want to just start in your own personal name because everything's going to be at risk. Or if you're out investing and buying your first piece of real estate, start with an LLC and insurance, right? And then we just scale and grow as you want. So I look at it as like if you have $0 to maybe $250,000 of exposed equity, You're at baby layer, 101 entry-level layer. You're at LLC or just starting out at a business entry, business organization entry level. You start growing, you're adding more assets. Maybe you got like 4 properties, you're in different states, you have some more different businesses and ventures that you're expanding into. Now we need to start managing those a little bit better. We need a management company. I use limited partnerships for management companies because they're just, they're better how they separate out ownership from management by statute and we can do more with them. And what we're doing at that point in time when you're about like $500,000, $500,000 to $750,000 net worth is we're cleaning up from a tax perspective. So you're just filing one tax return, right? We don't want to be filing 10 different tax returns on 10 different LLCs and making your CPA rich. We want to start cleaning this up for ease of use, flexibility, and scalability. Then we hit that $1 million exposed net worth mark. That's where your asset protection trust or like our hybrid trust comes into play, and that's where the whole system comes in. So it was like $0 to $250,000. Low-level LLCs, up to $700,000 management company, $1 million or more, you really should be considering the asset protection trust. And if you're starting up businesses, like I know from our own experience, my own experience, get some life insurance for like key employees and yourself. It really helps from a business perspective.

Oh, yeah. Key man insurance is good once you reach a certain point.

No, it really is. Like I specifically went through an issue when I just was starting out. practicing law, I was affiliating with this law firm and he was an amazing trial attorney and he ended up having a heart attack and dying. And he didn't have any key employee insurance. He didn't have any insurance on the business itself. And they literally had to close down their doors. And I stay in contact with them today, not them, but like the employees. Some of them are still friends. It just completely devastated the firm and the people's lives. And a lot of them never really recovered from it.

Yeah, no, it's very important. So thank you for answering that. That's important to understand. What else did I not ask you yet? Because we're moving kind of quick. So let's get into some more of this and unpack a little bit in terms of asset protection.

Yeah, I think like someone from the asset protection side of it, there's a lot of misconceptions on the power of LLCs. And I think it started over the last 4 years when people started listening to a lot of investment shows and podcasts and self-educating themselves. And instead of having lawyers come on, and explain what is an LLC. You're having salesmen and promoters come on and they're selling LLCs and talking about them as like one-stop shop Dracula slayers. And they miss first word, first letter, limited. They tell you that straight up in the name. And asset protection was never what their intent was.

Yeah.

It was about avoiding double taxation.

Correct.

And so now all of a sudden people are amazed. Oh my God, my LLC's getting pierced. Why? I thought that I'm perfectly fine getting sued. And they get completely shocked that their LLC didn't hold up to the fight. And it's because that was never what their intent was. And the veils are very easy to be pierced. And we're getting a lot of people running off to do like Delaware, Wyoming, and Nevada, and they're not residents there and they're trying to hold real estate in them, or there's no real finite reason of why we're using that state for the jurisdiction to set it up in.

Yeah.

And they're just not holding muster. And there was a Supreme Court case, Mallory versus Norfolk, that came out, which now says if you're creating an out-of-state LLC and then you're using it in the state that you're at, it's now going to be those state laws that are going to apply. So you can't just go like jurisdiction shop and say, hey, I'm going to go get a Wyoming LLC and I'm a California resident and I'm going to bring Wyoming law to California. The Supreme Court came down and said, no, this isn't happening anymore. Just basic jurisdiction law 101. So when we're setting up LLCs, just, we need to really pay attention to what is the intent? What are we using them for? If it's for business and internal affairs, like you and I, Neil, right? We're going to go out and create a business. We're going to sell widgets. That's perfectly fine. We can go create a Wyoming LLC, Delaware, and that's going to deal with internal disputes between the business, like you and I trying to dissolve the business or something's going on internally. That's where those come into play. But in the realms of tort liability, injuries, that has nothing to do with internal affairs of the business.

In the state where it's filed and all the other problems coming through.

Yeah, correct.

So that's where state laws come into play. So no one's talking about that. And so when these LLCs are getting pierced or they're not holding up to what they want is because no one's explaining these nuances to them.

Yeah. Which is why, for example, we structure an LLC in an S corp format in Wyoming, set the record of it and the legal record of its billing there, and then set up a separate LLC in a different state for the sub, you know, disregarded entity in which we own that. Therefore, that veil has to be stuck and pierced in the Wyoming state corporation, and that's where it's filed if we run into any trouble. So we already know where our defensibility is.

Yeah.

So it's not just a matter of location, to clarify what you said. It didn't sound like you were saying this, but I'm just Yeah, yeah, sure. But it's not just location, but it's how you structure and indemnify yourself and where you set those protections.

And a great example of this, for people like, all right, gimme an example of this, would say, the easiest one I think is in the medical practice, okay? Like you're a doctor and you have your medical practice, and then let's say you own the building of it. I normally recommend create the S corp like you did, have that as your money coming in, money coming out, stable in the money. Own zero assets in the S corp because for one, S corps have shares can be sold. frozen and seized by a judge. And I can't move assets out of an S corp without you having to pay all the deferred taxation back. And most people just won't have that kind of money sitting around. So the assets just get frozen and stuck. And so if your business depends on those assets for you to operate and then you're getting sued, you can lose not just your business, like the building and all of that, you can lose all the equipment that you need.

Wow.

So I always say, own the equipment and the assets in this separate LLC in the state that you're at, then just lease it back to the S corp and then we can start protecting the actual assets that you need to run your business.

Yeah, we learned that a long year, long time ago in the e-commerce world. So as we're selling on a platform with a business, it has its own LLC per channel. That LLC is a disregarded entity. All business flows through that. The corp pays and moves assets, but it actually contains none of the assets. It is simply just a pass-through and transactional account. So if someone does come after the S corp for some issue, that's where the liability stops. If they come after the LLC disregarded entity that's selling in the platform that is operating within. They can't pierce the veil in reverse. So, uh, there are just dual protections in how you keep those things transitioning, especially when you get to $5, $10 million a year or more in these businesses. Uh, you obviously are going to run into something that most of us understand. The longer you're in business, more likely you're going to get sued. And if you haven't really gotten sued yet, you probably haven't been in business long enough.

No, that's the thing is like, what is it? You know, you made it once you get your first lawsuit.

You get your first summons. Yeah. And it's like, oh, that's awesome. Which is funny where we live in the country because I'm a long ways down for some guy to come back to my house and repair a blower in the middle of the country. But yeah, no, that's good. And so how does that life insurance aspect play into the business as a tool? And how does that become a tool in the business?

Yeah, we touched upon a little bit and some major concerns in business, right? We have to plan for things as business owners, especially when we're starting out. And one is you may want to sell your business eventually, right? So How can you successfully sell your interest in the business during your lifetime, at your death, to a family member, a coworker, or some third party? Right. Like, this is where life insurance can come in and really help. The death benefits can provide funds to purchase your business interest at death. The cash value that will build up acts as a tax-deferred fund for purposes of purchasing your business interest and, you know, during your lifetime. And so life insurance is just very important for Buy-sell agreements. Another one I kind of touched upon before, so we don't need to break down it that much, is just life insurance for key employees. This is really common, but a lot of people forget to do this. And so the question kind of comes around, how can you ensure that the continued success of your business is going to keep going if a key employee leaves or dies? And so we want to make sure that we get key life insurance on key employees, and then that cash value can be used to informally fund an executive benefit plan and try to keep the key employee, or if they were to die in the example that I gave with the owner of the firm, that's going to come into place. And a really big one is for small business owners and those who are self-employed, right? You want to make sure that you have a comfortable retirement. We work hard for a reason. So how can you secure a retirement that is going to be less dependent on the continued success of your business? Well, again, That cash value can provide a potential source of supplemental retirement income so that you and your family aren't so dependent on the business for retirement, or the death benefits can address a shortfall in retirement for your surviving spouse if you were to die prematurely. And a big one that you get even in estate planning is what do you do to provide for the family and how do you treat the children who aren't actually involved in the family business?

Right.

I mean, this is just constant squabbling. And so while the death benefit can provide funds to help the kids who aren't actually involved in the family business, and that way all the kids are going to be provided for and they're all going to be treated fairly, whether they're actually involved in the family business or not, it just stops the fighting.

Yeah, no. And it's actually good to, to set that up because if anybody's been around death in the family, you know how bad that can go and how petty it can become and how heartbreaking it can be for people.

Yep.

Yeah. So softball question, or definitely a side ball to what's going on behind you, a curveball, if you will. Yeah. What are the medals that are behind you?

Oh yeah. So my hobby, one of my hobbies is I fight professionally in jiu-jitsu.

Do you?

Yeah. And so these are just like, I won Pans and some other world championships and like EU nationals. And so just—

You feel like that's helped you in business and life, the training, the I actually do.

I've always been very focused and driven, and particularly in like combat sports, no matter how good you are, there's always a humbling day. So you have to— you learn the humility, you learn how to just suck up pain and go through with it and deal with it. And then it's a great outlet for stress and keeping us— our body healthy and aged. So for me, like, I can geek out on jiu-jitsu talk all day long, but that's what the medals and the pictures in my office are for.

Just a little bit more about who you are. That was awesome. Have you always been an Oregon guy? Is that where you grew up or?

No, I grew up in Lake Tahoe. Yeah, I was a mountain kid and then ended up going to college for sports and then decided to go try to be law school, be a lawyer, and ended up like being an entrepreneur who does law.

Oh yeah, I like how you described it. An entrepreneur who does law.

Yeah, yeah. Well, because it's like, I don't want to be stereotyped as just a lawyer. Like, I like creating businesses and helping people.

Yeah.

And I'm always looking at, okay, there's a problem here. How does my mind work to fix it? And then I can always relate like law and financing to something.

So what other kind of businesses are you creating then?

Yeah. So my wife, she works for an energy company and she does a lot of leadership development and executive succession planning and stuff like that. So we created a third business which goes towards business coaching for executive and leadership skill development, and then using Hogan assessments, DiSC assessments, 360 feedback. And then going in and helping not just hire properly, but how to use these assessments to develop the leadership skills that they need and going in and identifying problems and how to communicate better. And so that's another business that we started creating.

Oh, that's excellent.

So you guys do that business together, right?

Yeah, we do that because for a while I was doing employment labor and then labor law. And then she has the credentials and certifications through like Hogan DiSC and 360 feedback and all that. And Yeah, it's a good combination.

Yeah. What would you say you're bullish on this year as we come to the end of 2024? Things are moving pretty fast by the end of this year. What are you bullish on? What are you excited about? What are you concerned about?

Yeah, right now I'm just going to— at least what I see with my clients, people are nervous on spending money right now. It's election season. People just want to see what, like, what's going to happen so they know where to park their money and what to do. So I'm just looking forward for that to be over so that everybody can start having a direction on what to do with their finances. What I'm excited about is with my law firm, I created a third spinoff of it with elder law and Medicaid planning for crisis planning. So I've just been trying to get that running and operating. And I kind of got that squared away to where I at least see the light at the end of the tunnel. Like whenever you implement something into a business, it's a lot of upfront work and until you start getting the marketing stuff squared down.

So interesting question for you. I've never asked a guest this before, but do you consider yourself a business owner or an entrepreneur?

An entrepreneur.

Okay. And how would you define that?

Sometimes you can just create a business and the business fails, right? Entrepreneurs, I see what people complain about, but I see solutions. And then it's a matter of what connections do I have to where I can solve the problem? And then I may not have all the answers right there. I have this part of the peg. Neil has this part of the peg. Uzi has this part of the peg. So all 3 of us can get together, split up the pie, and then we can solve this larger problem and create a business out of it. And that's what I ended up doing and adding an elder law into my law firm because my mother-in-law was talking about how they didn't have enough— they were having an issue getting people to qualify for Medicaid services after it was too late. And they didn't have any attorneys to come in and talk to them. And it's not an area of law that a lot of people practice. And so I started researching. I'm like, well, I have the solution, but I can't do all of the solution right now. But I knew another group, Krause, who was doing the back end of it. So we ended up partnering up on that. And then I went and started talking to the hospitals and them. So I think entrepreneurs look at an issue and say, I can be creative and solve a problem. Business owners, anybody can become a business owner and create a business, but doesn't mean you're going to be successful at it.

Yeah, no, I actually consider it a step in the process. And in my world, I'm asking this question, it's fine, because we may each define it a little bit differently. But I see entrepreneurialism as a step to business ownership. And then business ownership, you create multiple streams of income or verticals within that focus. So when you were explaining, well, I also do car washes and I, you weren't telling me, well, I also do this. I also do that. I have a farm over here. I have this over here. I got, you know, I do land flipping over here. I do this over here, which I would hear some entrepreneurial brains say, because they still haven't focused in on the business.

Yeah.

You've been explaining business verticals to me anyways, in the language that I would use, which is like, I found this, I added it on, I added it on. It's new revenue streams to my existing business. I'm just curious how you define it.

Oh yeah. I try to make sure they correlate. Like, I don't like ups and downs and Every business in the world has cycles and I get really bored during a down cycle. So I say, all right, what correlates well with my firm or my business that then will prop it during a down cycle? So that way I at least have a baseline. And then from there, when both hit, great. If one's down, the other one should be performing. And so I just try to create more buckets that relate to my business.

Yeah, no, it's the right way to do it. I mean, it's 7 streams of income to a normal entrepreneur who can move to business and business into millionaire status. In terms of net worth. So typically finding those verticals within where you're going is an amazing thing to do. And it takes time. How long have you been doing this?

My own practice, about, I'd say 12 years now. And then probably everyone always thinks success comes right away. It takes about 3 years, I think, on average to like say, take a deep breath and say, okay, great. Like I got it nailed down and starting to be profitable. And then I started adding different verticals, like how you're saying. One every like 3, 3 and a half years. Yeah.

Yeah. And that's just growing and finding a need and filling it, right? In the areas in which you get smarter and you see opportunities and you get stronger risk, really, and where it makes sense to move that, create value, right? Out of value comes profit, which is what you're doing. So any questions I didn't bring up or anything I didn't talk about yet that you want to jam?

No, I think just for a general cursory breakdown of those, I think we kind of nailed it.

Right on. Well, look, man, I appreciate you coming on and sharing a good word with me today. Hopefully people have paid some attention to the differences between what I know are assets and you have nowhere assets and try to redefine what they consider liabilities in their life. And one of the biggest things they should be considering is building a business. And in that business, structuring and formatting a protection around that business through insurance and other means, asset trusts, et cetera, to actually protect those liabilities and be able to transfer them correctly in time of death. So you don't have to argue over the family and you can peacefully go knowing that your kids and family aren't tearing each other apart behind you. Anything else you want to add to that? Final thoughts?

No, feel free to jump on my website, www.vtblegal.com. I use it as an educational source. And if you want to learn about the world of asset protection, I wrote the hornbook on it. It's number one bestselling book, Overexposed, and that'll break down the world for you.

Guys, go get that, check it out, get your asset in gear and come back here again. If you like the podcast, you'll love it. Leave us a comment, leave us a snide remark, leave us a review. And one way or another, go check out what Brian is doing and definitely get your assets in order. Thanks a lot for coming on, brother.

Thank you so much.

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