Legal Asset Protection Tools

Today’s guest Douglass Lodmell is Managing Partner of Lodmell & Lodmell, P.C., one of the nation’s leading Asset protection Law Firms. Originally from Geneva, Switzerland, Douglass stood out at an early age as one of the brightest minds of his generation. Douglass’ law firm is responsible for protecting over $4 Billion in client assets. Douglass spends much of his time teaching, speaking, and leading thousands of business owners, corporate executives, investors, and other professionals who have often worked most of their lives to accumulate a wealth of various types, including real estate and securities.

Asset Protection works by removing the economic incentive for a person, and that person’s attorney to pursue you in a court of law. The best way to protect your assets is to take legal steps to make you unattractive to potential predators. Since 1997, Lodmell & Lodmell has helped to protect and preserve the assets and wealth of thousands of clients nationwide.

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In this episode, we’re discussing…

  •        [2:09] What they focus on and what the firm primary does to help people

  •        [4:33] Understanding where asset protection came from

  •        [7:30] When you can start thinking about asset protection

  •        [9:21] Tools that can be used and different types of trust

  •        [13:10] What asset management is, how it works, and the advantages

  •        [15:43] What can you put in your assets?


  •        [19:20] What about personal assets? How they are protected in a trust and how all these works

  •        [22:12] What is the bridge trust and how does it work

  •        [25: 07] Offshore protection

  •        [35: 47] When to change the LLC into a holding company

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Douglass Top Tip’s

  •        “The trust is still a major component, it's still the biggest component of an asset protection plan, from their things like corporations, and eventually limited, limited partnerships first, and then eventually limited liability companies came along. And we started using those to augment and to bolster the concept of a trust”

  •        “LLC really is a great place to start. I was just on the phone with some clients. They're just starting out there. It's two partners, they're going to buy a house together, to rent an Airbnb and so forth. They're both going to put $50,000 down. What they need is an LLC, this protects them from each other, it protects their creditors from the house. And it's an opportunity to make a really clear agreement about what happens if one dies, etc.

  •        “A holding company sits on top of the LLC and can have as many LLC underneath it as the client needs. And a holding company can be either another LLC, or I actually prefer us using something called a limited partnership. A limited partnership has the exact same statutory protection as an LLC, meaning that a creditor can't go in and foreclose on the underlying assets. But it has a distinction between the general partnership interest and the limited partnership interest”

 

  •        “There's a principal law, you always want to use something statutorily if you can, and then if you can't, you draft it. So, when we get to the third tool, which is that asset protection trust, the limited partnership is ideal. And that's really why I like it, is because, if you're starting at where you're going to end up, which is with an asset protection trust at the top, then the holding company being a limited partnership is better, in my opinion, it works better”

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  •        “An asset management, a limited partnership. But it can be used exactly like a Family Limited Partnership, which is the FLP. So, it does double duty, it protects assets, and you can add your children in there, you can start to do gifting in there. Certainly, if you have $20 million assets, we definitely want to be talking about gifting and adding family members, the asset protection trust is absolutely appropriate”


  •        “I'm actually a fan of simplicity as few LLCs as we need one holding company unless we need a second one, and that's rarely done we need a second one, and then straight to the asset protection trust. Focus on having the strongest tool at the top and get that in there sooner rather than later. Your CPA will thank you because we're talking about, just one tax return. Because if you make an LLC, a single member, and that single member is the holding company, that LLC is disregarded for tax purposes, and doesn't have to file its own tax return”

  •        “Anything risky will be in an LLC before it goes into the holding company. But once it's in that LLC, then it's free to go into the holding company. The cash stocks, bonds, investments, coins, cryptocurrency, none of that is risky. And it can go directly into the holding company, the limited partnership, that asset management limited partnership”

 

  •        “So, what you end up with, pretty simple, the holding company is holding all the safe stuff directly. And then it's holding all the membership interest in the risky LLC. We keep it simple, but we've got everything protected, and also isolated. If you got a property and has a mold claim, and it starts to explode, it LLC, we can cut it off and it doesn't affect the rest of the assets”

  •        “I tell clients, they need to budget at least $10,000 a year to maintain a fully foreign trust. And ideally, you'd set up an offshore bank account and you'd have at least some if not most of your assets offshore. So that's kind of the one side of the equation. The other side is this domestic asset protection trust that it's now available in 19 US states. The advantage of that is that it's domestic. It's doesn't have the foreign trust compliance requirements”

  •        “And so, for most of my clients, I'd say 95%, the bridge trust, when they hit that million-dollar mark of net equity, is the right choice. And then for about 5%, they meet those other two criteria, they're either wanting to nest a good amount of money, or their risk profile is so high that we want to just go straight offshore”

 

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  •        “Where we put the bridge trust is as the majority limited partner, which would be above and owning the majority, like 98%, of that limited partnership Holding Company of that asset management, limited partnership Holding Company, which is holding all your assets, all your liquid assets, all your safe assets directly. And then it's also holding all the LLC interest that you have for all the risky assets. So basically, all your assets are in the holding company, and then, in turn, all in the trust. So, we've got the protection”

Resources from Douglass

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ABOUT DOUGLASS LODMELL


DOUGLASS LODMELL is Managing Partner of Lodmell & Lodmell, P.C., one of the nation’s leading Asset Protection Law Firms. Originally from Geneva, Switzerland, Douglass stood out at an early age as one of the brightest minds of his generation. His capacity to make the complex simple allowed him to excel during law school, receiving the Jacobs Burns Medal, an award given to the single student with the highest GPA. He completed his Legal Master’s (LL.M.) in taxation at the nation’s leading tax program, New York University School of Law. Today, Douglass’ law firm is responsible for protecting over $4 Billion in client assets. Douglass spends much of his time teaching, speaking, and leading thousands of business owners, corporate executives, investors, and other professionals who have often worked most of their lives to accumulate a wealth of various types, including real estate and securities. Douglass is also the author of the book The Lawsuit Lottery: The Hijacking of Justice in America.




Nichole Stohler