9 Million California Lawsuits in 2003
Protecting Assets with Irrevocable Trusts and
Learn Why a LLC & Revocable Trust is Not Enough
Lawsuits can arise from many circumstances and situations.
Your under age driver just had a nasty accident. Your wife said she's leaving you and she wants half of everything you have. Your business partner just quit and is taking your largest client with him. Your dog just bit the mailman. Your son just impregnated his girlfriend. Your secretary said she was sexually harassed by her co-worker.
Can you be personally sued? Can it happen to you? Chances are very good. In California, lawsuits are as common as eating, drinking and sleeping. According to superior court records, almost 9,000,000 lawsuits were filed in California during the 2003 -2004 fiscal year. Over 30% of lawsuits were filed in Los Angeles County alone.
Most legal and financial advice is bad or incorrect
90% of legal and financial advisors give the wrong advice. They will tell you that a Limited Liability Company or a Corporation or a Partnership will avoid fraudulent lawsuits and protect your assets. Ignorance is bliss, isn't it? But it can cost you more than just money.
Single shareholder corporations, single shareholder of Sub "S", and single member LLCs can provide the owner with protection against liabilities arising from "the conduct of the LLC" but not the owner of the LLC membership shares. In other words, "if" the LLC does something wrong, the owner is not necessarily responsible.
When the LLC will not protect owner's assets
To reach the owner's personal assets, a plaintiff would have to "pierce the veil" of the entity showing that:
- The LLC, the corporation, or the Sub "S" was undercapitalized for it's intended business purpose,
- Formalities were not followed,
- The owner used the LLC, Corporation or Sub "S" mostly for personal purposes,
- It did not serve a "bona fide" commercial purpose,
- It lacked in economic substance and was merely an alter ego of the owner whose sole intention is to frustrate the creditor(s), etc.
A single member LLC (one owner), Corporation or Sub "S" will not protect the owner's assets because the charging order protection that is much touted is based on protecting the "innocent" non-debtor. Only an irrevocable trust with an independent trustee will protect your assets from a past, present and potential future creditor.
Importance of preparing for a lawsuit
"Preparation, preparation, preparation," I say. Just like when you buy a house � location, location, location. Asset protection is about reducing the risk, not only from outside creditors, but also from inside creditors like your ex-wife or ex-husband or ex-common law, your brother-in-law, damages caused by your minor children, your dog or your business partners.
Type of trust to choose and importance of an independent trustee
A trust, any trust, is not worth the paper it's written on if you have the power to void or amend it. A trust is nothing more than a contract. If you can void any section of the contract, you have the power to void the whole contract.
Most lawyers will tell you, that you can write an irrevocable contract, even if you are at the center of the agreement by electing yourself to be the trustee. It seems these guys just went to law school to warm up the seats. If you run into one of these guys, run, don't walk because their incompetence is going to cost you plenty.
Let me say it clearly and without recourse. The power of a trust contract vests with the power of the independent trustee. The keyword here is "independent". Your trustee must be independent of you. He cannot be related to you by "blood" or "marriage." The more independent your trustee, the stronger your asset protection plan. When you are dragged into court, even by your former spouse, you can look at the judge straight in the eye and calmly state, "Your Honor, I don't have any assets." With so many lawsuits in America, it's in your best monetary interests and health to learn what you can do to reposition your assets and implement a complete roadmap to asset protection, minimize your taxes, stop the probate process and stop the only voluntary estate tax system from reaching you.
Rocco Beatrice, CPA, MST, MBA, Managing Director, Estate Street Partners, LLC.
Mr. Beatrice is an asset protection, award-winning trust and estate planning expert.
| If you are seeking for an Alternative, Uncompromising & Exclusive Estate Planning & Wealth Preservation Chartered Roadmap to Your Accelerated Financial Success then call us now for a completely FREE, no obligation, no sales pressure, 100% total & complete client privacy consultation. Call us now at 508-429-0011! |
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Estate Street Partners, LLC
Uncompromising, Alternative and Exclusive Estate Planning & Wealth Management for an Accelerated Chartered Roadmap to Financial Success
71 Commercial Street #150, Boston, MA 02109
toll-free: 888-93-ULTRA (888-938-5872)
tel: +1.508.429.0011 fax: +1.508.429.3034
Only by appointment: 2235 E. Flamingo Road, Suite 201-G, Las Vegas NV 89119
toll-free: 888-93ULTRA (888-938-5872)
tel: 702.615.7616 fax: 702.796.6694
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