PILF 66 | Asset Protection

66. Make The Most Of Your Assets: Understanding Asset Protection With Brian Bradley

PILF 66 | Asset Protection


You can have as many assets as you want, but they won’t do you any good if they aren’t protected. In this episode, Brian T. Bradley, Esq. breaks down asset protection and why it’s important to have a comprehensive plan. Brian is the Senior Managing Partner at Bradley Legal Corp, an Advisory Board Member of the Asset Protection Counsel, and is a leading educator and nationally recognized asset protection attorney for high-risk professionals, entrepreneurs, real estate investors, and ultra-high net worth families. With insights from his presentation “Understanding Asset Protection,” he gives business owners and investors valuable and practical tips to guide them on keeping their assets secure, saving on taxes, and avoiding lawsuits. There’s a lot to learn in this episode with host Jim Pfeifer, so grab your pen and get ready to take some notes!

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Make The Most Of Your Assets: Understanding Asset Protection With Brian Bradley

I’m pleased to have Brian Bradley with us. He is the Senior Managing Member at Bradley Legal Corporation, and is a leading educator and nationally recognized asset protection attorney for high-risk professionals, business owners, real estate investors, and ultra-high net worth families. Welcome to the show.

Thanks for having me on. It’s going to be an important topic. I’m not going to try to be too legally dense and I’m going to try to keep the topic fun. I’m not anyone’s attorney or legal guru here. We’re just going to be talking in generalities. We’re going to learn a lot from this episode. I hope that the concepts we’re going to talk about help you and your audience understand asset protection, asset protection trust, and how we protect our assets and keep them from lawsuits and danger. I love this area of law because I like investing myself. I like investing more passively through lending money and in underperforming notes. I like to practice what I preach.

I’m looking forward to this because this is always something that goes on the back burner. It’s something important, but it’s not always given the importance that it needs. The way I usually like to start out is you can tell us your journey, how you got to be where you are, and how you got to be an asset protection attorney. You mentioned a little bit about your passive investing. You can include that as well.

I got into practicing law, I was an injured college athlete, and I needed to find another outlet for my competitiveness. I was good with logic, philosophy and words. My mom was like, “You should consider going to law school,” so I decided to go to law school. I was working as a prosecutor for a little bit and then the economy tanked. I had to move into civil practice because there were no more jobs and money from the states in ‘08, ‘09, and ‘10 when the economy tanked in those times.

Being the new young guy, I was the first one that was let go. For about three years, I ended up doing trial work for free and knocking on other state agencies’ doors saying, “You have all these cases. You need someone to represent you. I’ll do it for free. Just cover the costs.” I built up an insane amount of trial experience and a good reputation. I then realized so many people were getting sued and completely cleaned out by these completely bogus lawsuits.

Most of the time, lawsuits are completely radical judgments that were gross in the amount. You have people losing their entire retirement legacies. I thought to myself, “There has to be a better way to help these people before all of this happens,” I got into asset protection not from a lot of people from the estate planning side, but from the litigation and trial side of the law, and having clients being sued and their lives being completely turned upside down from this out of control legal system and nirvana that we live in.

What I did was I reached out to a bunch of the top asset protection firms in the nation at the time and was like, “Let’s try to find a way to work together.” As we started building our practices up together, I realized that this is what I wanted to commit my practice towards. I shifted myself from doing a little bit of trial work and I cherry-picked the trials I want to do to 100% asset protection and focus on high-end asset protection for more high net worth and ultra-high net worth families with a lot of risks. You could be a doctor investing in real estate, so you have a high-risk profession on top of it. I’m trying to make sure you keep what you got.

[bctt tweet=”Even within the realm of your profession, there are going to be different layers and amounts of risk. ” via=”no”]

You mentioned high-risk professionals. What is a high-risk professional?

It’s not like you’re working in Walmart or something like that, because everybody has negligence of their normal daily life. You’re driving your car or walking down the street, so you’re going to have general negligence of your life. If you’re a W-2 employee, a lot of the time, you’re going to have coverage as long as you stay within the scope of your employment. If you’re just a W-2 employee, generally, there’s going to be some indemnification and insurance coverage on you messing up on the job and someone getting hurt. What happens if you’re a business owner? Generally, high-risk professions are business owners, doctors, CPAs, lawyers, or entrepreneurs. The risk comes onto you. Certain professions are going to have more risks than others even within the scope of those employments.

Some doctors don’t have much medical malpractice at risk. Some of them have an insane amount, like OB-GYNs and surgeons. Even within the realm of what your profession is, there are going to be different layers of risk and amounts of risk. What I’m doing when we’re practicing asset protection is I’m doing a risk profile of your entire life. It’s not just, “I own this piece of real estate in Tennessee,” but what’s your day job? What’s your wife’s day job? Do you own a business? What assets are you investing in? What type of class are you investing in? Are you active? Are you passive? We’re trying to create an entire asset protection plan to protect the whole scope of your life holistically.

Think of it as a pie chart. There are generally three areas. It’s the things that I know, the things that I don’t know, and the things that I don’t know that I don’t know. If I know something, I don’t need to ask you about it. If I don’t know something but I know you know the answer, I’m going to ask you that question and I’ll get the answer from it. Most people run and operate their lives on things in the latter part, or the I-don’t-know-what-I-don’t-know portion of it. That’s where all the risk comes from.

The idea is we need to shrink that portion of the pie as much as possible but also protect ourselves from that as much as possible. Where you fall within that landscape with the protection needed depends on your profile. Maybe you’re starting out, so we’ll start base layer LLCs and insurance. As you scale, layer, and grow, your asset protection plan needs to scale, layer, and grow with you. You can maybe add a second layer management company. Maybe then you can add that third layer asset protection trust. You have to realize where your start is not going to be where you finish and you need to have your protection plan grow with you.

You mentioned people getting wiped out by lawsuits. Before we get to asset protection because I want to dig deep into that, can you talk about what are these lawsuits? What are people getting sued for? What are the exposures to everyday people? I know we talked a little bit about the high-risk professionals getting sued for what they’re doing at work, but what’s the other stuff? I imagine there are auto accidents and other things, but what are the common things that we’re protecting against?

I have three clients. For some reason, people were hitting people with cars, but not in a good way. It was like, “I lent my car to my grandpa who was not insured, and then hit a motorcycle driver with my car.” It was things like that. It could also be you went out on date night, had one glass of wine or beer, and you were on your way home when some person decides to walk in front of your car. Even if it’s not your fault that you hit them, what’s going to happen? You’re going to get sued big time.

PILF 66 | Asset Protection
Asset Protection: ECCC: Effectiveness, Control, Costs, and Compliance


Also, maybe you’re not getting a DUI, but you had alcohol in your system. If you were like, “I have insurance and insurance coverage,” do you think they’re going to cover you because you hit someone with alcohol in your body? No. You are claimed intentionally wrong. You also had alcohol in your system so your insurance is going to walk away from you. It’s general basic negligence of life. You’re renting a property out to somebody.

I have a client who’s a doctor in California. He was renting out a property in Jersey. He didn’t know he was renting it out to a gangbanger. The gang member had a party and a fight broke out. Everybody was drunk, guns got pulled, and someone got shot and killed. Who got sued? It was the doctor for wrongful death. There are also mold issues in properties. There are so many ways life can go sideways on you. You can be a perfect angel and say like, “I’m a great landlord. I’m a great human being. I take in street dogs and cats.” You can be the best person in the world, but that doesn’t mean that you’re not going to have negligent incidents happen in your life.

How do I protect myself? You talk about an asset protection plan. Who needs it? What is it?

What is asset protection? It’s not traditional estate planning. It is modern estate planning. What we’re doing is simply placing a legal barrier between your assets and your potential creditor. It means that the person suing you is trying to take your money before it’s needed. If something happens afterward and you come to me after the fact, it’s too late. It’s like trying to go get insurance after you hit somebody with your car or after your house burns down. You’re not going to get it. Asset protection is a barrier like a safe for your gold, guns, or valuables. Anything of value, you want to put behind the legal barriers and out of your personal name so that it’s not easily attached with a lien or reach.

I love the Tony Robbins saying, “Success leaves clues.” The rich don’t own things in their personal name. Their businesses and their trusts do. They get the beneficial use and enjoyment out of them and separating out that legal liability. The type of tools that we have vary. The main three that we generally use are the base layer LLCs, or Limited Liability Companies with insurance, the limited partnerships, and then asset protection trust.

The way to think about it is to think about winter. I come from cold weather. I grew up in Lake Tahoe. There are tons of snow there. I lived in Michigan where it was frozen tundra. I’m also in Oregon where it’s constantly damp and cold. What we do is we learn how to dress in layers. That first entry layer is your base layer. It sits on your skin. This is an LLC in insurance. This is when you’re starting out investing and you have 0 to 3 units or properties and your net worth is probably generally around $250,000 or less.

As you grow and add more assets and hit around that four-unit mark, or you’re investing in multiple states, or you have multiple syndication deals and you have around $500,000 and $700,000 net, or you own your personal home with some good amount of equity in there, or you have personal stock accounts, you want to mid-layer, which is usually a little bit thicker. It’s generally going to be made out of Merino wool or a cardigan. This is a management company. We use limited partnerships for this mid-layer, which if we have time, I can break down why later on.

[bctt tweet=”Anonymity works as a privacy mechanism.” via=”no”]

When you hit around that $1 million net worth mark, you want an outer shell waterproof layer. This keeps you nice, dry, and warm when the weather’s bad. This is your doomsday lawsuit protection layer. This is your asset protection trust. Specifically, I like to use bridge trust because you’re combining an offshore and onshore component all in one.

While you’re shopping around looking for an asset protection plan, I want you to remember and think of this acronym, ECCC, Effectiveness, Control, Costs, and Compliance. As a client, when you call me, I know that you want these four things. 1) You want an effective plan, 2) You want to control your plan. You want to be able to manage your assets, 3) You want a reasonable and sustainable cost. If it’s too much for you to afford, you’re not going to do anything. You’re going to keep everything in your own personal name, and then 4) You want a plan that’s easy to maintain compliance with the IRS. If it’s too expensive for you to pay your CPA every year to do it or it’s eating the cost, or your CPA is too confused on how to maintain the tax filings on this, after two years, you’re going to give up on it and it’s not going to work anymore. While you’re shopping around, think about effectiveness, control, costs, and compliance.

You talked about LLCs, LPs, and asset protection trusts. Can we dig in a little bit deeper for those? I know that for passive investors, we’re all LPs in certain deals. A lot of us have our own LLCs, but can you talk about what each one of those is and what their purpose would be?

We all know what LLCs are. That’s the first layer, asset protection 101, or the entry-level base layer. They’re going to be holding risky assets, like active real estate investments. If you’re investing on a passive level, I wouldn’t be putting passive syndication shares into an LLC because that’s what I’ll use a management company for. If you’re not ready for a management company, then you can put them into an LLC. That’s fine. It’s where you’re at in the stage of your life, but generally, I would be using a limited partnership as a management company and putting those passive investments directly into that management company and then using LLCs for risky assets, like rental properties, yachts, airplanes, or any of those types of assets.

What I do want to mention is the importance of why you layer up. There are three big misconceptions and downfalls of LLCs. One, they tell you the name straight up. They don’t hide the fact. They tell you the first word or first letter. They’re limited. They’re not a silver bullet. A werewolf slayer is what a silver bullet kills. They’re very limited in what they do, and there are lots of ways to pierce the corporate veil in every state. They are disregarded entities. What being disregarded means is it’s great for taxes, but it’s bad for asset protection, because for tax purposes that pass directly through to you, so does that liability. It passes directly through to you as well.

What you want is for those disregarded LLCs to not be managed and owned by you, but to be connected to a management company because then, those K-1s will flow directly into that management company and you’re getting the protection from the management company while separating out the risky assets. You’re still going to have one tax filing. I can have 50 LLCs that are all disregarded, owned, and managed by my management company, but I don’t have to file 50 different K-1s. I’m only filing one K-1 at the end of the day with a one-page attachment called 1065. It cleans up your life a lot better to manage all of your different assets.

The second big problem here with LLC is called charging order of chasing. Where do we set these things up? What state are we going to go to? You generally hear people running off to Wyoming, Delaware, Texas, and Nevada. It comes down to an issue of what are you holding and where are you holding it at. Attorneys and CPAs convolute this, especially if they don’t specifically work in the world exclusively of asset protection. CPAs only care about mitigating your taxes. They don’t work in the realm of liability and law, so they should not be giving you legal advice because that’s not their job. If they do that, then they’re practicing law without a license.

PILF 66 | Asset Protection
Asset Protection: Limited Partnerships (LLPs) are like LLCs, so they also have some charging order protection. They have a very distinct delineation between the managing partner, called the general partner, and the minority partner.


Most lawyers aren’t taught asset protection. It’s not something we’re taught in law school. It’s not on our bar exams. There’s not that much continuing legal education coursework up there. Unless you’re working with a specialist, they’re not going to know all the finite details that a specialist would know in that area of law.

The problem when you’re chasing state jurisdictions, like saying, “Let’s put everything in a Wyoming LLC,” is unless you have a jurisdictional connection to that state, for example, you live or have an asset in Wyoming, then you’re not going to be able to buy another state’s beneficial laws and take them to California if you’re a California resident owning California assets.

When you’re getting sued in California, it’s going to be California law that applies. California injury law, whatever damage laws, or whatever the issue that you’re getting sued in, it’s going to be that state’s laws that apply. You can’t say, “I’m going to stick everything in Wyoming and force California to bring Wyoming law to California.” The judges are going to laugh you out of court. It doesn’t work that way.

One of the big misconceptions when it comes to investing is we use Wyoming LLCs when we’re creating businesses. We’re like, “Let’s go create a business and sell widgets. We can create a Wyoming LLC for our widget selling company.” That’s an actual business. Most of the time, we’re using LLCs as holding companies. There’s no business that’s going on in there. That’s an extension of you. That’s the problem when we’re using other states out of court LLCs for assets that aren’t in those states. There is no jurisdictional connection.

The third big one is everyone’s falling in love with the word, anonymity, but they don’t understand what anonymity even means. For some reason, they’re being sold on this idea that you can create an anonymous Wyoming LLC and ghost a lawsuit like you don’t exist. That’s not what anonymity means. Anonymity is a privacy mechanism.

When you create out-of-state entities, you have to have a personal agent of service. Their sole job is to say, “Congratulations. You got served. Here are your lawsuit service papers. Go get a lawyer and get your butt in the court.” At that point, your anonymity is out the door. The only way it works is when a judge says, “Here’s an asset disclosure list. Tell me what you own.” You either lie under oath and don’t disclose your assets, therefore, committing perjury and going to jail or you disclose your assets. At that point, anonymity is out the door. Anonymity works as a privacy mechanism so people can’t harass you and say, “You’re a horrible landlord. I’m going to go egg your house because now I know where you live.” It’s not a, “I’m going to ghost a lawsuit,” privacy mechanism. That’s not how our legal system works.

There seems to be a lot of misconceptions then about LLCs and how they operate. I’m still not fully understanding what the management company, or the LPI, assumes. All the LLCs report to this management company. What kind of structure does that management company have? How does that work? Does that management company then file its own tax return that issues a K-1 to me personally? Can you talk about how that works?

[bctt tweet=”The problem with Series LLCs is not every state recognizes them.” via=”no”]

That’s exactly what happen. Limited partnerships are like LLCs. They also have some charging order protection. I like them better because they have a very distinct delineation between the managing partner called the general partner and the minority partner who does not. Think of it as a split personality. We like having both a GP and an LP interest, and we use the asset management, like limited partnerships, as the starting point for clients at that holding company level. It’s better than going to the next stage of a Wyoming LLC as the management company because there are things you cannot do with an LLC that you statutorily can do with limited partnerships.

Some of these benefits are you have charging order protection in Arizona exclusively. I like to use Arizona limited partnerships because it’s the only remedy for creditors of a partnership. They’re charging order protection exclusively. That’s it. You have an actual statutory distinction between the GP and the LP side by statute. This is better than LLCs because LLCs can only do this by an operating agreement, and then that court has to interpret that operating agreement. You’re leaving it up to a judge to decide if he’s going to agree on what your operating agreement says or not. You’re like, “Did he like his breakfast today? I don’t know.”

We have ARS section 29-333, which is where the magic comes into play. This specifically allows for a limited partnership to make what’s called a unilateral withdraw and demand from all the assets in the limited partnership from the trust. During a doomsday lawsuit, the trust can demand all the assets that it owns in that limited partnership and then disconnect from that management company by statute. You can’t do this at all with LLCs without exposing you to a claim of fraudulent transfers. That’s all already a big list of good advantages of why LLPs at that management company layer is better.

Another one is limited partners are perpetual whereas other states have annual reporting and filing fees that you have to file every year for the LLCs. Limited partnerships, by nature, are completely private by statute. You are already also getting built-in privacy, which is what you want. Remember that your privacy doesn’t mean ghosting lawsuits. It means privacy from harassment.

For tax filing purposes, your limited partnership cannot be a disregarded entity, but LLCs with just one member are automatically considered a disregarded entity, and that’s not good for liability issues and lawsuits. When you’re creating all these LLCs underneath that limited partnership, they’re all going to be disregarded and float up into that management company. All those tax filings that need to get done are going to be included in your limited partnership’s tax filing with a one-page attachment called 1065. You’re only filing one tax return through that limited partnership versus however many LLCs that you have.

I have several LLCs and they’re all passed through entities. I still only file one tax return under my name. Does this mean I could change where I file a tax return with my limited partnership and it issues me a K-1 personally for my own tax return?

That’s correct. What you’re doing is adding another layer of protection.

PILF 66 | Asset Protection
Asset Protection: [ARS Section 29-333] During a doomsday lawsuit, the trust can demand all its assets in that limited partnership and then disconnect from that management company by statute.
Who are the GP and the LP on the limited partnership structure? We’re familiar with syndications where we’re always the LPs and then the management companies are the GPs. Is it the same? If I have my own limited partnership, who is the limited partner, and who is the general partner?

If your protection plan stops there and you don’t have an asset protection trust, you’re both. You’re the managing member and the limited partnership, so you’re managing it and owning it. Ideally, what you eventually want is to add that third layer or that asset protection trust to where you’re just the GP side or a managing member, and then your asset protection trust owns that limited partnership and you’re the beneficiary and creator of your trust. That’s where the magic comes into play of how you combine and use the limited partnership with the asset protection trust.

I want to talk about the asset protection trust next. We’ve talked to other attorneys and this is the first time I’m hearing about this type of structure, so that’s great. It’s different. We were talking to someone about series LLCs and how you use a series and everything that reports up to that. That would be taking the place of your LP structure. Can you tell me what you think of that?

The problem with series LLCs is not every state recognizes them. I only use them if two criteria are met, and even then, I don’t like to use them. One, you live in a state that has some series LLC statutes and regulations and the asset you own does as well. Let’s say you live in California or a substantial majority of every state in the country that doesn’t recognize the series LLC structure. Florida doesn’t even recognize them. If you get sued in that state, a judge is going to say, “We don’t recognize them here, so we’re going to consider your series LLC as one LLC.”

The big downfall is depending on what state you live in and what state the asset is in, you’re not going to get the benefit that you think you paid for because not every state recognizes them. Also, there’s no case law on them. As a trial lawyer, if I have to go in and argue a case and say, “Your honor, there’s no case law for me to cite on this,” I would not want to walk in and make that argument and be the Guinea pig for my client, because then most likely, I’m going to be sued. The lack of case law and the lack of fact that most states don’t recognize the series structure and the trial series is not just ineffective. It’s bad planning. It’s scary and I’m not going to risk that for a client.

The other problem is states will still require you, like California, to pay the franchise tax on each trial series that you create. Although you have a parent series at the top, you’re still going to have to pay and maintain each trial sub-series that you have. Otherwise, it’s going to completely fall apart because you’re not paying the taxes you’re supposed to pay on it. You’re not saving anything.

Do I use them? Yes, but very limited. I would much rather create things with supporting case law and say, “Keep it simple.” As for the LLC and the state the asset is in, have that disregarded and owned by the limited partnership. These are stuff that has been around for decades with actual case law on it, and then we can go in and argue in court because this has been around for many years. As for how we combine them and use them, we have cases that stand up in court. That’s what I look at as what’s effective when it’s time to utilize them in court and they have to hold up to the weight that’s being pressured on.

[bctt tweet=”If you only have one syndication, you may not need a management company. You may just need an LLC. ” via=”no”]

Before we get into asset protection trust, I have one more question on this. As we’ve been talking to other attorneys, we get a lot of different opinions so it’s hard to know which way to go. We’ve been told that if you own syndications, you can own them in your own name because you’re not going to get any liability from the syndication, but then, someone else said you can have personal liability and attach those, so you need those each in LLCs. My question to you is how would you own syndication?

I would own passive syndication in the management company. It depends on where your profile is. If the only thing that you have is one syndication, then you may not need a management company. You may just need an LLC. Putting them in an LLC is fine. Most of my clients come in with lots of assets. I’m going to separate out risky assets and put risky assets in the LLCs to create a separation there, and then I’m going to clean it up by using that management company.

You want to put all those passive, non-risky assets like passive syndication, shares, or your personal brokerage stock account directly into the management company because it’s passive. It means that the asset itself is clean. They’re correct in saying you can get risks in your own personal life. That’s why you want to protect your shares. I can own a 5% interest on something. If I hit somebody with my car, I can lose that 5% interest that I bought on something from the negligence in my life. You want to protect it. What you put it in will depend on your whole makeup profile of you. If you’re starting out, use an LLC. If you have multiple assets and you are scaling up to clean up your system as well, it’s going to go into a management company. If you already have them in existing LLCs, then we would connect that LLC to the management company.

Let’s move on to the asset protection trust. This is interesting because I think you’re going to talk about a bridge trust, which for me, personally, seems so complicated. I like to do simple. I don’t want to get sued and lose all my money either, so there has to be a compromise here. Can you talk about asset protection trust and talk a little bit about who it’s for?

They’re simple. I want to break them down. Feel free to jump in whenever you want to ask questions, but if we do it through a historical context, I’ll break down what is a trust, what’s the difference between offshore and onshore so we understand those principles, then we can talk about how we marry them together. Does that sound good?

Yeah. That’s great.

The asset protection trust is the final layer, the bad weather, the outer shell, or the waterproof layer. It’s the heart and soul of an asset protection system. Trusts have been the longest-lasting entities of all entities for holding assets. When it’s done right, they’re very strong. They can be sculpted to fit how you need them and then they can morph as you need them without dealing with funding issues that you generally get with LLCs and other business entities when we try to argue to pierce the veils.

PILF 66 | Asset Protection
Asset Protection: Asset protection is what’s called a self-settled spendthrift trust. Self-settled means that you are creating it for yourself.


I love trusts. Having the trust at that top of your planning is powerful. This is where creating an asset protection trust, and more importantly, picking the proper jurisdiction comes into play. Think of it like Baskin Robbins. Trusts come in lots of different flavors and types. The standard 101 trust that everybody’s familiar with from the ‘60s is the family revocable living trust, like your family estate plan. Trusts don’t die. When you funded your trust by transferring ownership entitled to it, you don’t have to go through the courts and probate. That changed the landscape of estate planning.

You also have land trusts for real estate that you hold land and connect to LLCs, but land trusts don’t have any protection in and of themselves. They’re only as strong as the LLC that you connect them to. It’s just a privacy mechanism and not a protection mechanism. From there, you have higher levels of trust that are called asset protection trust.

I want to spend time on this and break down the three types. After this, you and your audience will know more than 99% of attorneys out there on trust. These came into play in the early 1980s, specifically in 1984. An asset protection trust is what’s called a self-settled spendthrift trust. Self-settled means that you are creating it for yourself. They are for you and by you as your own beneficiary. They have very strong and important spendthrift provisions in them. This lets you protect your assets while you’re living from creditors not having to relinquish control of your assets. The difference is that they allow you to protect the assets not just for your grandkids, but for yourself, which you weren’t allowed to do in the past.

You’re probably somewhat familiar with one type of self-settled trust, the revocable living trust. Many of you have them. Your family members have them, like your grandparents, parents, aunts, and uncles. They’re the same. They’re self-settled. It means that they were created for you and by you. The difference is that an asset protection version of trust includes that critical provision called spendthrift provisions. What spendthrift provisions are is they are provisions that allow you to protect your assets from creditors. They’re the actual teeth behind it. For those to work, the trust has to be not revocable, meaning that it can be ordered to be changed by a judge, but irrevocable. That’s a big distinction between revocable and irrevocable.

There are very different types of trusts. It’s like chocolate and vanilla. They’re both ice cream, but they are different types and flavors of ice cream. This is where it is important to break down the fundamental difference between the international and domestic size so that you understand the principles and how these things work.

You have three options. You can establish them domestically here in the US or you can go offshore in another country, like the famous Cook Islands, or you can create a hybrid and try to marry the two together. From the historical context, the offshore came first in 1984 when the Cook Islands created an asset protection trust. I personally like and choose the Cook Islands if in one is applicable because it offers the best home-court advantage, but to be honest, generally, I would say 1% of my clients go purely foreign. You’ll figure out why in a minute, but why it’s the best is because this is what they’re specifically drafted for.

The power is they have what’s called statutory non-recognition of any other jurisdiction court orders in the world, including the United States. What this means is that if you have a judgment against you in the United States and they took it down to the Cook Islands, your US judgment is worthless. It has no value whatsoever. Statutorily, the Cook Islands are prohibited from recognizing it and they have a lot of statutory hurdles that you have to jump through.

[bctt tweet=”Asset protection trusts, when it’s done right, are very strong and can be sculpted to fit how you need them. ” via=”no”]

If somebody wants to sue you or your Cook Islands trust, they’d have to start the case all over from scratch within a one-year statute of limitations. The person suing you is going to have to prove their case beyond a reasonable doubt. That’s the murder standard. It’s the highest legal standard in the world or the 99% sure standard. You can’t get a contingency fee attorney to represent you because they’re not allowed down there. It’s unethical in the Cook Islands like it used to be unethical here in the United States, but that got changed in the 1960s.

The lawsuit is not amendable. What this means is once you get sued, that’s it. You can’t go and change it or amend it after the discovery of litigation takes place and then decide to sue you for something completely different later on as we do here in the US. The person suing you is going to have to front the entire court costs plus flying the judge from New Zealand. They can’t take their US attorneys with them. If you lose, you pay. This is one of the single worst things that we don’t have here in the United States. It’s that the loser does not need to pay the legal fees and costs for the winner.

For example, if it’s a completely frivolous lawsuit and you spend $200,000 defending yourself on legal fees, which is very a low estimate. Finally the court throws a lawsuit out, you’re still going to be out $200,000. The person that sued you is not going to be getting the bill in the mail because, in our old legal system, we don’t want to discourage lawsuits. Our legal system is run by trial lawyers who don’t want to discourage them.

If you remember that four-part test that I mentioned, they were effectiveness, cost, control, and compliance. Effectiveness is the strongest trust in the world, but what about the drawbacks? They’re control, cost, and compliance. On these, it’s all going to fall short. The costs are going to be high. Generally, on average, you’re talking about $45,000 to set them up. I’ve seen them go up to $75,000 to $100,000 depending on the client’s issues.

If you’re purely foreign, you have a lot of IRS reporting compliance and disclosures to file. You’ve got your 3520s and 3520-As, which are full balance sheet disclosure, and sometimes, the entire trust agreement to the IRS. Those forms are not cheap for a CPA to do. You then have a lot of FACTA account disclosures and compliance that you have to do. For these trusts to work, you have to be out of control of that trust. That’s why those trusts work so well. Most of my clients are not comfortable with all of that. While you have the most effective trust in the world by far, it is not something that we’re usually using because of the other three drawbacks, which then brings us to the other option, the domestic side of it.

The domestic trust came into play ten years later. Alaska of all places started it, and then not to get outdone, Wyoming, Delaware, and Nevada were like, “We’re the states that are known for this. We’re going to start doing this as well.” You then have about 19 or 20 states with some domestic asset protection statutes in play. The states are jumping on board seeing their legal system as a threat and that things need to get done to protect your assets.

Asset protection in the United States is valid, so asset protection as a concept is important for you to understand. It’s just how you do it is going to be important. The issue with the purely domestic asset protection trust is that we live in the United States of America. We have a constitution and we have Article 4 Section 1, which is the full faith and credit clause. This clause states that every state must grant full faith and credit to the judicial proceedings of every other state.

PILF 66 | Asset Protection
Asset Protection: Start talking with your attorneys. There are a million ways to skin a cat. Realize with your own self how strong you need your plan to be. Not everybody’s going to need a really strong plan.


We’re going to break this down. What this means is that, for example, Nevada can pass an asset protection statute, which they have, but it can’t ignore California, Washington, Florida, or any other court orders. The Cook Islands can throw a California judgment in the trash, but Nevada cannot do that. Nevada must respect it constitutionally and even litigate it.

The courts are simply ignoring the choice of law clause, like California. They came out and said, “Californians don’t recognize asset protection trusts. We don’t have asset protection trust statutes. We’re not going to recognize you running off to Nevada and creating a Nevada asset protection trust.” They no longer recognize them. They pierce into those trusts, and failure means breach and assets lost. That’s an unacceptable thing to have. That’s where the bridge trust, which has been around for many years, comes into play.

What you’re doing is creating a hybrid. They’re like hybrid cars. You’re taking the best out of both and putting them together. We’re combining the two strong features of an offshore trust with the strength that you need from it, a statutory non-recognition, with the ease and lack of maintenance of a domestic asset trust. It’s a fully registered offshore trust from day one. It is a Cook Islands offshore trust with an offshore trustee on standby from the day we create it in case you need them, but we build the bridge back through the IRS for IRS purposes so that the IRS classifies that trust as a domestic trust. We do this by complying with USC section 7701. It’s called the court test and control test.

Think of it like having two passports. You can have your Swiss passport and your US passport. As long as you have your US passport, the US will always consider you a US resident. It’s because of that bridge that we built through the IRS, as long as we have our compliance in place by maintaining you as the main trustee, we stay classified domestically. What this means is that the trust is not going to be cheaper to create. It is going to be more flexible. You have none of all those annoying IRS compliance, IRS tax filings, and disclosures at all because the trust is classified as a domestic US grantor’s trust. It’s very easy to use, but you get that power of the offshore if and when you need it. It’s now in your back pocket. It’s in your toolbox like a contractor who needs his tools to build your house. He’s not going to use all the tools at the same time, but when he needs them, he has them.

During a state of duress, like a doomsday lawsuit, your attorney would declare a state of duress. We would break compliance with the IRS classification by removing you as the main trustee, so we’re not complying anymore with that code section. At that point, your trust is not what it is. It is purely foreign trust. When the lawsuit goes away and settles, we re-instill you back as the trustee and we’re back in compliance being domesticated. You’ve then married the two together and you have a very functional flowing asset protection plan.

That’s a lot, but that’s great. I still have a couple of questions. We’re running towards the end. How do I know which approach is best? I’ve talked to several different attorneys and each one has a different idea of the approach. I’m a passive investor. I also own some other assets. How do I find the right attorney or the right advisor to help me win? Each person I go to is very competent and smart, but they each have a different strategy or plan. They all end up with a bridge trust, but they have different ways of getting there. How do I reconcile that?

I’d say, “Show me the case law.” A lot of attorneys talk stuff, but there’s not much case law supporting it. Ask good questions about what you’re doing and then fall back on that acronym I told you about, Effectiveness, Cost, Control, and Compliance. Remember, there are a million ways to skin a cat. How strongly do you need your plan to be? Not everybody’s going to need a strong plan. We focus on very strong plans because they’re the client profile that we have. Holistically, you need to look at where are all your risks and liability coming from. Are you high-risk? Are you high profile? Are you high net worth? Start looking at the structures from there and realize how effective is it going to be.

[bctt tweet=”If you’re going to hustle, grind, and make more money, then you always need to be on top of your money and protecting it.” via=”no”]

At the end of the day. I don’t care what happens in your life while everything’s peaceful and calm. Honestly, that’s not what these are for. What these are for is we’re in court. There’s a cutthroat attorney who wants to gut you and look at every word, dot, and comma of your agreements that you have because they’re going to try to take you for every penny that you have. That plan you set up needs to uphold that. The only legal way for you to preserve your money at the end of the day, if you’re here in the US, is to eventually have an exit strategy offshore.

The problem of going purely offshore right away is not needed for most people. Ninety nine percent of people don’t need it. For the high-risk profile and high net worth people, we want to build in that offshore exit strategy, but not pay to maintain it until we need it. That’s where the hybrid comes in. For other people, they may not be ready for an asset protection trust, so they’re at the LLC level and the management company level. You need to look at where you fall on the sliding scale and then what’s your 2-year, 5-year, or 10-year investment plan. Realize that you may be adding and stacking up more risks as you go, so you need to know where you’re going.

All these plans can grow with you as your wealth grows. One of the big hurdles, at least for me, is I’ve set up my LLCs. I have my family’s trust. I keep growing and then it feels like I have to go start all over and redo everything. It’s such a heavy lift. How do you help people get around the friction and the problem that this is a big thing to make changes on?

It’s not that big, to be quite honest. It may be a headache because you don’t want to take the time out of your life to do it, then don’t invest and make money. Sometimes, I give people tough love. It’s a good problem to have. I hate paying taxes quarterly. I hate all taxes. My CPA is like, “That’s a good problem to have. It means you’re making money.” I’d be like, “You’re right,” then they’re like, “Stop complaining about it.”

People don’t like distracting their minds from the stuff they want to get done until it’s too late. That’s the problem. People wait until it’s too late. Adjust your mindset and realize if you’re going to hustle and grind and you want to make more money, then you always need to be on top of your money and protecting it. You need to be talking to your CPA and your attorneys in making sure you’re mitigating my taxes always. You need to make sure what you buy is protected for when something does go belly up. I need it in place beforehand. You can’t call me afterward and be like, “I got sued. What can you do for me?” I’m going to exempt the lawsuit. There’s nothing I can do for you now.

This has been fantastic. There’s a lot to go through here. This is probably one episode where I’ll need to read it a couple of times. This is the last question I always ask. I don’t know if you’re a podcast listener or not, but if you are, what’s a great podcast you listen to? If it’s real estate-related, that’s great. If not, that’s fine too.

I’ll give you two. I used to listen to a lot of BiggerPockets.com because I like money and investing. I listen more for the tax stuff, to be honest, and not how to invest money. I’m the weird guy that likes taxes because I don’t want to pay them. That’s a great one I listened to a lot in the past. I also listen to a lot of Tony Robbins.com stuff. I’m always working on myself and my mindset. It’s not always about making money, because if your mind is a mess, you’re going to lose all of your money. If you can manage the toxic dysfunction in your life, find something that helps you personally grow and listen to it every day. Put a little bit of work on yourself a day. You’ll make yourself, your family life, and your family environment better. It’ll be amazing how fast your money grows once you are whole.

That’s great advice. How can our audience get in touch with you if they want to talk about putting together a plan or anything at all?

You can jump on my website, www.BTBLegal.com. I have it set up more as an educational resource. I put a lot of case law on there. I want people to be educated. We break down the cases. I have a lot of educational videos, a huge frequently asked questions section, and blog articles. I want you to go and do the research before you start shopping around so you can ask educated questions and not be sold a bag of goods. The next thing is you can email me at Brian@BTBLegal.com. I do a free one-hour consultation. Whether we work well together or not or you’re the right client profile, I would rather you have a good consultation and then take it from there.

I appreciate you being on the show. This has been informative. I’ll dig into this and figure out the next steps for me because this is something that’s been on my to-do list for a couple of years and I need to move it to the done list. Thank you very much for being on the show. I appreciate it.

Thanks for having me on.

That was definitely an interesting conversation. It’s my second conversation with an asset protection attorney in the last few months. It’s interesting to me how they’re both qualified, smart people and they have drastically different ideas of the best way to go about asset protection. That just shows you that when you have a CPA, a financial advisor, or an attorney, they all learn things in different ways so they all end up with different structures for their processes and how they do things. It accentuates the importance of finding somebody that you know, like, and trust.

I am sure the setups that these attorneys that we’ve had on the show have both found ways to set it up, but both attorneys disagree. As a layperson, I’m not going to know who’s right and who’s wrong. I just have to pick the one that I think will fit my needs the best and trust that they will put me in a situation to be where I’m more protected than I am now and as well protected as I can be.

Some of the other things that he said are that you want to legal barrier between you and someone seeking your assets. That makes sense to me. Someone’s coming after your assets, so you’ll want that legal barrier. He said LLCs are sometimes not enough, so then you have to go to an LP, Limited Partnership, and maybe even an asset protection trust.

I also loved the analogies. When he’s talking about layering your clothes where you need a base layer, a warm layer, and something to keep the weather out, that’s the same thing. You start with an LLC and insurance and move up from there. I like that the plan can grow with you. You need a plan that you start out wherever you are that suits your needs now, but that’s not going to suit your needs 5 or 10 years from now. Having an attorney who can understand that your wealth is going to grow and can protect you as it grows is very important.

They both said to get the assets out of your name. Don’t have all of your assets in your name. That’s hard because most of my assets are out of my name, but there are still some that are in there. It’s so burdensome to go through this process. Brian was clear that it’s not as burdensome as it sounds. You can get this done. It’s not impossible, but what I need to do personally is get it off my to-do list. It’s been there since the last time I went to an attorney, which was a few years ago. I keep putting it off because it’s a lot to tackle.

I’m going to regret it if I don’t have that barrier between me and someone seeking my assets if something happens and I haven’t gone through this process to make sure I’m adequately protected. Things have changed. I’m in a lot more deals, syndications, and all that than I was before. All of us need to do a checkup. I was concerned that maybe having two attorneys within a couple of months of each other was too much, but I think it’s a good reminder that we need to get out there.

Whether it’s Brian or one of the others, we need to find someone who can help us put that barrier in place that we are protected so that all the work that we’re doing to build our wealth doesn’t go away from one mistake, one bad decision, or one lawsuit. I’m definitely going to contemplate getting that hour with Brian to see what he says about my situation, and then we’ll move on from there. We’ll see you next time.


Important Links


About Brian Bradley

PILF 66 | Asset ProtectionBrian T. Bradley, Esq. is the Senior Managing Partner at Bradley Legal Corp, an Advisory Board Member of the Asset Protection Counsel, and is a leading educator and nationally recognized asset protection attorney for high risk professionals, Entrepreneurs, real estate investors and ultra high net worth families. Collectively they are protecting over 5 Billion worth of assets with over 3,000 clients nationally. Brian’s goal is to give you “peace of mind” knowing your assets are safe and they make it difficult for predatory lawyers to target vulnerable people.

Brian was selected to the Best Attorneys of America List 2020, Lawyers of Distinction List 3 years in a row 2018 through 2020, Super Lawyers Rising Star List 2021 and 2015, nominated to America’s Top 100 High Stake Litigators List and the Top 100 in Real Estate.

Brian also writes and teaches on Advanced Estate and Strategic planning, and is a featured speaker at numerous Investment Summits, Real Estate, Cashflow, Finance and Life Coaching shows.



Our sponsor, Tribevest provides the easiest way to form, fund, and manage your Investor Tribe with people you know, like, and trust. Tribevest is the Investor Tribe management platform of choice for Jim Pfeifer and the Left Field Investors’ Community.

Tribevest is a strategic partner and sponsor of Passive Investing from Left Field.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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