Wealth Protection Secrets of a Millionaire Real Estate Investor :
William Bronchick
www.legalwiz.com is his site.
He explains Torts, which are wrongful acts, including negligence. Infliction of emotional distress is another.
Breach of contract, which can't be covered by insurance, as it is intentional.
Strict Liability which is usually statutory.
Vicarious liability, where you are liable for the act of an agent of yours.
Appear broke.
Control but don't own thru LLCs, corporations and LPs.
Joint ownership is bad, eg. real estate, bank accounts.
In community property states (CA, LA, TX, WI, ID, AZ, NV, NM, WA) the marital property is vulnerable to creditor attack regardless of titling. So a quit claim by one spouse to another may not offer protection. He says that it may be desirable to convert community property in writing to "separate property", then divide (it) up between the spouses according to their risk of being sued. Assets could also be placed into a non-revocable trust to protect them.
They could then prove which property is the separate property of the nondebtor spouse.
Other states call property acquired after marriage equitable distribution, but the effect is similar to community property.
Divorce
He also gives advice on divorce, prenuptial agreements, credit and liability on mortgages after a divorce.
Personal Property Trust
This is a nominee type trust which can hold title to non real estate, personal assets such as cars and bank accounts, or mortgage. It can also own your interest in a corporation or LLC.
Strategies for Appearing Broke
Mortgage your assets beyond their value.
If you have a first and second mortgage on a property, a judgment creditor would have to file the judgment lien, force a sale, pay off the mortgages and hope to get the money from what is left.
On the public record, the creditor doesn't know if the HELOC is for the full amount or only $1.
You could also sign a mortgage held by a friend or corporation, which shows the property to be fully financed. The mortgage is recorded, but not the promissory note. This would act as a deterrent, but not as a impossible obstacle to a judgment creditor. I looked into this option, see the Overencumbered Mortgage Property page.
Personal assets can also be encumbered.
It may be illegal to file a false document in a public place.
Your property can also be devalued, e.g. by granting an easement to a friend. Keep a signed quitclaim deed from the friend as insurance in case there is a falling out or you need to clear title quickly.
In most states most wages are exempt from garnishment. So give yourself a raise if you are self employed.
In most states insurance policies are protected, as are pensions and 401Ks. State law protection of IRAs use to be found at http://www.ici.org/99_state_ira_bnkrptcy.html
Fractionalize ownership. Have a 40% share of a family business. Very hard to resell for the creditor.
Business Entities
A revocable trust can be created for a pet. The trust is not for asset protection, but for estate planning. Land trusts are for privacy only.
Once assets are in a irrevocable trust, you can't get them out. It can distribute income, but it can also withhold it, and thus also withhold it from creditors.
Offshore trusts have favorable fraudulent conveyance laws, e.g. must be shown beyond a reasonable doubt. The trustee may also refuse to remove the assets.
An American judge can void a transaction if it is located in his or her jurisdiction.
With a LP, a creditor cannot take the place of the partner, and is only entitled to attach the income of the partner. If the limited partner's income is charged, the general partner can choose not to distribute income to the partners. But the creditor will have to pay the tax on the distributive share!
William Bronchick Wealth Protection Secrets (continued)
