Transcription
Do you want to learn how to hide your assets, make it to where they're invisible, people can't come and find them? Well, I'm going to go over the top five legal strategies that you can use.
So first off, my name's Toby Mathis, and I've been doing this for 27 years. I'm an avid real estate investor with over 300 properties. And what I found out after going through a number of bump your head and figure out what doesn't work is that there's actually a methodology that'll make it to where nobody's going to mess with you. I've had trees fall on houses, I've had houses actually burn to the ground, and I've avoided massive lawsuits as a reason of the way that I structure things with my partners and using these legal tools. And I'm going to tell you the one secret that nobody really talks about that is actually probably the most effective tool that you could have, which is anonymity.
If you can make it to where people can't see what you own and they cannot tie properties to you, you're going to avoid most of the major issues in your life, and let me explain why. So let's say that we have a case, and a lawyer, one of the billboard lawyers, you know, the hammer, you see these guys up on the billboards and they're always marketing for people, and you walk in there and you say like, I have a claim, maybe I'm a tenant, and here's my claim. And they look at your case. The way they are going to value your case is as follows. They're going to look at your level of damages and they're going to compare it to settlements and jury verdicts in that area to determine approximate amount that if they can prove your case by a preponderance of the evidence, what they believe a jury or a judge will give you or a settlement will generate, and they write down that figure. And so let's just say, for our purposes, it's a hundred thousand dollars. Now they're going to say, what is our chance of winning? Do you have a really good case? Are you in that 75% or greater chance of recovery? Okay, now let's calculate that in. So they have a very good chance of winning some money against somebody. Now, this is where most people think the analysis ends. This is not where it ends. Usually, this is where they're going after insurance, that's all they really care about. That's what we want them to only care about because this is the secret sauce. If they see a whole bunch of other assets, now they're saying this individual has something to lose, and if I could jam that case value up, if I can make add claims to it or even threaten larger amounts, what we call frivolous lawsuits or shakedowns, they are at such a risk of loss that they're going to settle with me for a much larger amount. So remember, they looked at it and said, a hundred thousand dollars, 75% chance of winning, that means that case is worth $75,000. But then you have to multiply it, multiply it by your chance of recovery. In other words, what are my chances of actually recovering against this individual? And again, put on your lawyer hat and chances are you are getting paid what's called a contingency fee, which means I only get paid if I can collect against this party. So now I'm looking at, again, I have, I'm looking at this case. I say, oh, here's somebody who's been aggrieved. Maybe they had a, maybe, you know, a beam fell in a house or they tripped down the stairs or something and we can tie it to the landlord. We want to go after that landlord. What you want is to make your target as small as possible. And what that means is by giving them one thing to go after, that property, and there's a methodology and a way to do it. A lot of people think just get insurance and get an umbrella. Uh-uh. Now you're starting to make that, you're making it bigger. I'm not telling you not getting insurance, but I'm going to say that, by itself, makes it, there's the target and then you, here's all your assets. Hey, you live in Huntington Beach. (lips flapping) Hey, I live in a, you know, a nice area. I drive a nice car. (lips flapping) Hey, I can see that I have a bunch of LLCs and other properties. (lips flapping) Better yet, I have everything in my own name. I have my house in my name, I have three rental properties, and I have a business. (lips flapping) You're a huge target and people are going to want to take a shot at you. So you want to make it as small as possible. In fact, we want to make it to where you're invisible in the public record so that it's a question mark. You want it to be cases worth a hundred thousand, 75% chance question mark chances of recovery. 'Cause if that gets low enough, you have no lawsuit. This is how you stop frivolous lawsuits. In other words, somebody comes in and says, this guy is really bothering me. I want to sue, and then you got a shake down specialist, they're going to look to see if there's anything to recover, whether there's going to be a nuisance value to that case. And they're looking at it going, this guy doesn't own anything. There's no value to it. We don't even have insurance to go after, right? So you want it to be where there's a legitimate case, you're keeping that target as small as possible. In real estate, if you're a landlord, you want it to be limited to the policy. In other words, you want them to read your insurance policy and only request things that are covered by that policy. If I see a bigger target, then this is what lawyers do, it's called being the master of pleadings. I get to choose what I sue you for, right? If I have a landlord and I could allege things that are outside the scope of the insurance, I could start alleging things that clearly the insurance covers, the company is going to say, I may have a duty to defend you, but I'm not going to cover you for this. Now your other assets are in play, then now I can make my case worth a lot more, now you have more risk. We want to prevent that from happening, and the way we do it is as follows.
Number one, we're going to use trusts. Why do we use trust? What do you think? The reason we're using a trust is to get your name off of a property. So if you're a landlord and, or even a business owner, we don't want to have a trail right to you leading straight to your doorstep on a property. If I own a property in my individual name, let's say I own three properties, something happens on property one, they take all three. I don't want that. I want to make it to where they can't even see my name. They only see the property. And the way you do that is through using something called a land trust. Now, I've done videos on the superpowers of land trust before, you can look on my site, you can review it, but I'm just going to put it like this. A land trust is a fancy way of saying holding title in the name of trust. And I know all you guys out there that have experience are immediately going to jump up and say, but what about the trustee? You have to disclose the trustee. Yes, we're going to use an LLC as a trustee in a state that does not require the disclosure of the members or managers. So there will be no name tied to the trust in which the property is held. So we have ABC Main Street in the name of the trust. So it's the ABC Main Street trust dated whatever the date is by its trustee, DEF LLC, whatever it is, right? We could have an anonymous LLC acting as the trustee or you could hire an attorney to do it, like we have an attorney here, Carter Clint, my partner's son, who likes to do that sometimes too. But realistically, the most effective vehicle is to make it where it's just dead ends. They cannot see who owns it. They cannot tell. That way, slip and fall on that property, they look at that property, the only property that is held by that particular land trust is that one property. So you have a land trust per property. Let's say we have three properties. I use the addresses. So 123 Main Street trust. You never put land trust in it. You just put trust, 123 Main Street trust, or you can name 'em whatever you want. You call it the white trust, the green trust, the black trust, whatever it is, pick whatever the name you want. I tend to use addresses 'cause otherwise I have hundreds of properties, it gets confusing. So I want to make sure that I know exactly what this property is. Boom, now my name is off the public record with that property. Now, I know a bunch of guys are going to be like what? But if there's financing, if there's this, if there's that. When I am looking at that property as an attorney and I'm saying, who's the responsible party? I know a big question mark is sitting at the end of that, and that is what devalues the case, period, right? You could argue with me, well, the Corporate Transparency Act. That's not a public record, that's the treasury, the same place your tax returns go. I can't search your tax return, I can't go pull up your tax return and see what you make and what you have. The same thing as the Corporate Transparency Act. No, I can create a scenario, and I'll go through this in a second, where somebody cannot see what I have, and it works like a charm. How do I know? Tens of thousands of investors, over 60,000 real estate investors. We see how this stuff works. I've been doing it for 27 years. I own hundreds of pieces of property. I see how it works, and I've had issues on properties. Again, I've had a tree fall on 'em, I've had three burned down. We've had all sorts of fun stuff that comes with real estate. It's a great asset class, but it comes with risk, but you can minimize that risk. And what happens is almost no lawsuits, zero. Like you're going to get the occasional, hey, you did something wrong, and they sue and they want the insurance. Fantastic. There they go. And here's how we limit it. 'Cause some of you guys are going to correctly point out, but I didn't think a land trust, it's just for title. Correct, to get your name off. Trusts are for privacy. So number one. And that's such an effective tool, just doing that gets you out of most of the hot water.
Number two, we want something that's actually going to limit liability. And that's where our friend, the LLC, comes in, limited liability company. Now, LLCs do not exist for tax purposes. So I don't want to get into a big old, well, it's the tax, you get an extra tax. No, you don't. LLCs, federal tax-wise, we can make them disregarded, we can make them a partnership, we can make them an S corp, we can make them a C corp. For real estate, you're going to either be a disregarded or a partnership. If you're using lending, you're probably going to be a partnership. The reason being is because for underwriting purposes, federally-backed loans use page two of your schedule 8 a hundred percent versus 75% of page one. If you didn't follow that, here's an easy way to think about it. You get more money if you're using that partnership for that LLC, but you can make it to where it doesn't file a tax return and it's ignored. So for those of you guys that are out there saying, hey, I'm hesitant to do an asset protection plan because of all, I think I'm going to have to do a bunch of extra tax returns, you're not, you can actually set these things up where no tax return, no tax return, lots of protection and I've isolated my liability. And the reason we use an LLC is because for inside liability purposes, in other words, things that happen inside of a business, things that happen on a property, if it's in an LLC, it stays in that box. It doesn't come out. So if I have three properties in land trusts, the land trust assigns its beneficial interest to three different LLCs. And I have major catastrophic, you know, occurrence, and I'm like, oh my gosh, I'm going to lose that property. Correct, you will lose one property up to that one property, and it's actually the equity, right? So like if you have a loan against it, that, again, you're getting smaller and smaller, they're looking at insurance. We make the target really tiny, and that's what you want to do. You want to make the target on you extremely small.
Now, LLCs are great in home states, right? So when we talk about inside liability, liability that it comes from owning the real estate, that's one thing. But what about your liability? What about if one of my kids causes a car accident? What about if I cause a car accident? What if I get sued? What if I have debts and somebody's coming after me? Or what if, you know, whatever, maybe in my profession, maybe I'm a doctor or surgeon and someone's coming after me. I want to make it to where nobody can take away my assets as well. In other words, that's called outside liability. I want to cover that too, and we do. We use Wyoming, or you could use Nevada. Right now, I'm using Wyoming 'cause it's cheaper, it's just as effective, they have similar statutes. But what happens here is something called a charging order protection, which means a creditor of me cannot take away my LLC, period. They can't take it away. They can get a lien against it, that's the maximum they can get. And so what we do is we have, in your state, we'll have an LLC. At a state, we'll have an LLC that owns your state LLC. So let me draw it up real quick. I might have a Wyoming LLC that is going to hold my three LLCs in my home state. You know, and that could be three different states. Like if I have, I'll just use me as an example. I might have Nevada, I might have North Carolina, I might have Indiana, right? So I might have three different types of LLCs, three different states. They're all owned by one Wyoming LLC, which means if something happens to me out here and they come after this, they're stocked, they can't take my properties. Something happens in a property, I have a major catastrophic occurrence, I still keep, I'm still safe. That's what an asset protection plan looks like. This little guy works like a charm too. We make it to where they can't see it, they don't know that I own it, because in Wyoming, you don't have to disclose the manager or the member, so I can keep my name off of a public record. So if you guys wanted to go and look around and say, okay, what's, where's Toby's LLC? Good luck, right? You're never going to find the one that's the holding because it's not in a public record for you to search tied to my name, never going to happen. Same for you. I could set that up for anybody. And now, nobody can see what you owned.
Now, some of you guys are smart and you're thinking, okay, for real estate, I get it. But couldn't I do that with like stocks and brokerage account? Couldn't I even take my private company, let's say I have a private corporation and I don't have protection for my shares in my state. Let's say I'm in a state where I have no statutory protections, which is every state other than Nevada for corporations, right? I could take my corporate shares and put them in a LLC for holding purposes. Now, I would create a separate Wyoming LLC for your brokerage account for cash, things that are going to generate interest. The reason I do that is because I don't want the possibility of liability coming up if I get a piercing ever. You ever heard of pierce the veil? Let's just say I was, I forgot to renew something or somebody was arguing, I don't want them getting up here. So we're going to keep that separate because they are non-risk assets. Owning shares in Microsoft is not going to get me sued. Owning a property could get me sued if somebody falls or a tenant decides that they're going to try to shake me down, right? I've seen way too many weird cases. What you want to do is again, make the target on you extremely small, and this is how we do it.
Now, there are two other vehicles that work, and I can use a very horrible example, but I'm going to have to use it, right? The number one is you could have assets hid in plain sight. Number one is if you're like in Texas or Florida, you have an unlimited homestead. These are statutory protections for your equity in your house that nobody can take it. So Florida and Texas, and the bad example I can give you is OJ Simpson, right? Tens of millions of dollars of liability and they can't touch his house, couldn't touch his house in Florida, couldn't touch his equity in his homes underneath the homestead exclusions where he was residing. And what that does is it creates it to where even if somebody can see it, they still can't take it. Now, I can still get your name off your house. Like if you don't want people to know where you live, and I have a lot of clients that are in this boat, especially my doctors who are, you know, have pain clinics or I have a good friend who's a psychologist, a psychiatrist, excuse me, a doctor, and doesn't want the people to know where he lives. Landlords, if somebody knows who you are, like you're going and you're collecting rent checks and stuff, you don't want them to be able to come to your house. So we can get your name off of a home. You still get your homestead, right? We can still set these things up to where they cannot take away your equity. And all states are a little different. Like, your homestead may be really big, may be really small, right? It depends on where you are living, but you have statutory protections that protect that equity. Knowing that allows you to make sure that, A, you don't leave yourself exposed. Like, hey, I'm in a state that's got, you know, a hundred thousand dollars of homestead exclusion and I got a, you know, a million dollar house with no loan against it. You probably want to have a, lease a friendly lien or something that shows up that you don't have all that equity or get your name off it so someone doesn't say, hey, I think I have a claim against that Toby guy. What does he have? And I've literally had this come up in cases where somebody says, I know where your client lives. And I used Huntington Beach as an example, 'cause that's actually what they said. They go, he's got a lot of money, he lives in Huntington Beach. That ain't cheap, right? So you don't want to give them that if you can avoid it by getting your name off it, but you also have the protection that comes along with it.
Now, the other one that also came out of the OJ Simpson case was retirement accounts. And I'm going to say retirement, et cetera, because there's life insurance, there's annuities, there's certain financial vehicles that even if somebody knows it's there, they can't take. So in the case of OJ, he had an NFL player's pension, right? So they always look at it and they say, what are the statutory protections? And ERISA plans, which is what that is, a federal plan, falls underneath the statute, multi employee plan, you cannot take those assets. A creditor cannot take them away from you. There's IRAs and it's going to depend on your state, but there are protections even in bankruptcy. I think it's 1.5 million or something. There are protections for those types of accounts just because of the type of account they are. So even if somebody sees it, like if you have a lot of money in, let's say you're in Texas, you own your house and you have a bunch of money and a 401k, really tough for somebody to take it from you, right? I wouldn't go changing things around drastically there. If you have some rental properties, isolate the rental properties, right? Still do this to make it very, very difficult for someone to see it and to come get it and to take away the incentive for them to try to take it away from you. But if you have these, we don't want to undo them, we don't want to take away those protections. And I've seen people do it. They get some crazy person saying, hey, let's do some offshore, let's do this, let's do some crazy stuff. And they take the money out of a retirement account or they take the money out of a protected account, let's say it was the cash value in a life insurance where it was protected, and they're taking it out and putting it into a realm that's not protected, right? They actually undo their protection. So you always want to be cognizant that there are protections.
So those are five legal protections that you use. It's going to be almost impossible for somebody to take away your stuff. And this is a great way to hide your wealth. I'm just going to call it the five top the legal tools to use for hiding your wealth. And if you like this type of video, please share it. Like and subscribe. If you have any comments, leave them down below.