ROSS BRANNON

Can you give us an overview of what you do?

HILLEL PRESSER

We have a nationwide law practice that focuses solely on asset protection, both domestically and internationally. Asset protection is the legal process of titling both your personal and business assets, to put them beyond the reach of future potential threats, creditors and liabilities, while simultaneously still enjoying those assets. In layman's terms, we want to make it so difficult and expensive, if not impossible, for anybody to collect against you, that they don't want to sue you in the first place. If they do sue you, we want to be able to settle your case for as little as five cents on the dollar. People work hard to live a better life, give their kids the things they didn’t have, and have a good retirement. In doing so, they’re thinking about growing their wealth. But you also have to focus on conservation of wealth, because unfortunately, one lawsuit, one divorce, one car accident, one slip and fall, one breach of contract can literally take away everything you’ve worked your entire life to build. So, while it’s important to make money, it’s even more important to keep it.

A lot of people think asset protection is only for the ultra-wealthy. No, everybody needs it, although obviously not to the same degree. We've represented dozens of professional athletes and celebrities. If an NFL player who signs a contract for $40 million gets sued for $5 million, they're not happy, but they still have $35 million left. Compare that to the average person who saves up a couple hundred thousand dollars over their lifetime. If they get sued for a million dollars, it's catastrophic. They're totally wiped out. So, I can even argue that the less you have, the more important that protection becomes.

ROSS BRANNON

What are the basics of asset protection? No matter who you are or where you live, what should you be doing?

HILLEL PRESSER

Assets protected by state law are called exemptions. Knowing what’s protected in your state is important, and every state is different. For example, in Florida, your retirement accounts and life insurance and house and annuities are protected. In California, your retirement accounts are only protected to the extent that the court deems they're necessary and reasonable for support. In Georgia, your life insurance is not protected. Again, every state is different. We have all this on our website. You can plug in your state and see exactly what is protected, what's not, and to what extent.

ROSS BRANNON

What are some basic things that everybody should do, whether or not they think they need to?

HILLEL PRESSER

There are a lot of different things you could do. I break it up into three main categories. Number one is you can transfer your assets to a protective entity: own nothing, control everything. If you have money in your name, and you get sued, you can lose it. If you have real estate in your name and you get sued, you can lose it. But if you transfer those assets to a protective entity, whether that be an LLC, a limited partnership, a trust, etc., there are ways to set it up so if you get sued, you can't lose them.

Number two of three is what we talked about: exemptions, looking to see what's protected in your state. If you live in Florida, buy a big expensive house because the house is protected. If you live in a state where your retirement accounts are protected, put a lot of money into your retirement accounts. If you live in a state where insurance and annuities are protected, invested in surety, insurance and annuities. Know the exemptions for your state and invest in those areas because those are protected assets. Lastly, equity strip. Poverty is power. What is a $100,000 Mercedes worth if you owe $95,000? What is a million-dollar house worth if you owe $950,000? There are legal and ethical enforceable ways to put liens, mortgages, and encumbrances on your property, so if you get sued there's no equity for the creditor to take.

ROSS BRANNON

Now, in Florida, obviously, a single member LLC doesn't have liability protections.

HILLEL PRESSER

In June 2010, there was a Supreme Court case called Olmstead, which was followed up by a case called Barber, which essentially states if you have a single member LLC, and you own the LLC 100% there's no protection. However, if you have a multi-member LLC, that is protected, even if you own 99% and somebody else owns 1%.

We need to be 10 or 15 years ahead of our time. We need to figure out what the creditors are going to try to do to get to our clients’ assets. It’s my belief that there will probably be another case in the future that talks about how much someone must own to make it a multi-member. Is it 5%? 1%? Half a percent? On top of that, can it be a family member or a friend? How close can they be? I don't think the case law is over, I think it will continue to evolve as we go on.

ROSS BRANNON

Let’s talk about trusts and how they work

HILLEL PRESSER

First of all, people need to know there are really two types of trusts: revocable trusts and irrevocable trusts. Almost every trust will boil down to one of those.

ROSS BRANNON

Is the only purpose of a revocable trust to avoid probate?

HILLEL PRESSER

You are correct. It's probably the biggest misconception I see on a daily basis. People who come into my office have a revocable living trust, and they think they're protected. But it gives them zero percent asset protection. Anything in your revocable trust is no different than being in your personal name. A revocable trust is great, because when you die, you can avoid probate, your assets can go where you want them to go quicker, hopefully with less legal fees and taxes, but it gives you no asset protection.

ROSS BRANNON

Can you speak to domestic asset protection trusts?

HILLEL PRESSER

I don't personally love them. This trust started in about five states, and now they’re probably in more than 20. I'm not saying they're not better than nothing. We all have different tools that we choose to use on a daily basis.

I don’t like this one for a few reasons. Number one, I don't like that they're new. I like established law. I don't ever want my client to be a guinea pig. We're learning how some of those trusts may not be working, and I don't want that to happen to one of my clients.

Number two is the fact that it’s not in every state. Let’s pretend that Wyoming has a DAPT law. If you live in Wyoming, you work in Wyoming, and you own real estate in Wyoming, it may work for you. But what happens if you live in Florida, you own real estate in New York, and you work in Georgia, but you set up a Wyoming trust? Which law applies? Is it where you live? Is it where the asset is? Is that where you set up the trust? I bet if you get those three or four judges in a room, they'll beg to differ.

Also, the DAPT law is state law. Most people know that federal law trumps state law, and there's a federal law called the full faith and credit clause. That means if somebody gets a judgment against you in one state, it's good in all the other states. If somebody sues you, and gets a judgment against you in Florida, they can then go domesticate that judgment in New York. The DAPT law is a state law, and I would argue if somebody can remove the case to federal court, you may have issues.

If you're a dentist and you have a Wyoming LLC, and you operate in a dental office in Florida, you're supposed to license that Wyoming LLC in Florida, and then you're subject to the laws of Florida anyway. You might as well just have a Florida LLC.

ROSS BRANNON

Is there a net worth or income range for the type of person who should be talking to an asset protection attorney?

HILLEL PRESSER

We work with clients at any size, whether it's someone who has $30,000 in the bank or does a billion dollars a year. I don't care how rich or poor you are, or how much or little you have, it always ends up being worse if you lose the little that you do have. The majority of our clients are business owners, because they're in the spotlight every day, but a husband and wife can just as easily get in a car accident, or have someone slip and fall on their property, or God forbid drown in their pool. You name the lawsuit, I've seen it. Every single person needs asset protection, obviously not to the same degree. Someone who has $40,000 in their account, may just use a very simple asset protection LLC, while someone who has $40 million is using comprehensive limited partnerships, that own LLCs, that are owned by international trust, and we've stripped all the equity out of the assets, and so on. Everybody needs it, but to different degrees.

ROSS BRANNON

What should people be preparing for when it comes to asset protection?

HILLEL PRESSER

First of all, let’s be clear on the differences between asset protection and estate planning. Asset protection deals with life, estate planning deals with death. Asset protection is how to protect what you have, from everyone, every time, while you're alive. Estate planning deals with how you get the assets to go where you want them to go when you pass, quickly, privately, and with the least amount of lawyer fees and taxes that are legally and ethically possible.

In my opinion, a lot of estate planning attorneys are not giving good advice, because they're saying, “You don't need to do something because you're below the exemption.” Well, we don't know what the exemption will be in five years, or 10 years, or 15 years or whenever we die. We don’t know when we’re going to die and we don’t know how much we’re going to have then. I tell my clients, hope for the best but prepare for the worst. Nobody knows what the future will hold.

ROSS BRANNON

What I've seen from a boilerplate estate planning standpoint is a typical testamentary trust set up for the kids. I’ve always had a problem with giving the kids the money versus having a trustee of their trust to protect it from divorce and creditors, from an asset protection standpoint.

HILLEL PRESSER

I love what you're saying, because no trust, with the exception of some income from tax laws that you have to do, should ever have a mandatory distribution. If someone is supposed to get a third when they're 30, what if they're going through a divorce then? If someone gets a third when they're 40, what happens if they've been sued for a car accident? In all my trusts, I’ve never had any mandatory distributions. I always use the words “shall consider,” as in “shall consider giving them a third at 30, etc.” If they want to, they can, but they don't have to.

No matter what you want to give them, it should never go to them outright, it should go into some trust or entity for them, not into their personal name, or it's unprotected. That’s the integration.

I love that you brought that up, because most estate planning attorneys just do estate planning, and they don't think about anything else. You need to have what I call an integrated plan. You need to be thinking estate planning, you need to be thinking tax planning, you need to be thinking asset protection planning, you need to be thinking business succession planning, you need to be thinking, financial planning, etc. If you leave any of those out, you're leaving a lot of chips on the table.

ROSS BRANNON

What do dentists stand to lose in unforeseen incidents or accidents, especially when most people believe dentists to be extremely wealthy?

HILLEL PRESSER

First of all, perception is reality. If you're a dentist or a doctor, you’re rich. You may not be, but in everyone else's mind, you are super rich, and there may be an insurance company that won't cover you because the insurance companies will give you about a page or two of what's covered, and then 50 pages of exclusions. My dad used to tell me, “The big print giveth, the small print taketh away.” For example, if you’re in an accident, they’ll check if you were on your phone, talking or texting, because there may be an exclusion for that.

ROSS BRANNON

How urgent is it to have a solid asset protection plan in place if you don’t already?

HILLEL PRESSER

It's urgent and it’s important, and here’s why. This may be a surprise to you. This is one of the biggest lawsuits I see. After somebody sells their business, they think they have no more liability. But the new owner comes in, and doesn’t run it like you did, and income goes down and expenses go up. A couple years later, the buyer turns around and sues you for fraud. I like to call it “renegotiation.” When one of my clients sells a business, I always tell them to put together a comprehensive asset protection plan. Take those chips off the table. If that buyer comes back with buyer's remorse, I want those sales proceeds off the table.

ROSS BRANNON

Would you agree with the notion that every single rental property needs to be in an entity, not in your individual name?

HILLEL PRESSER

Only if you want to keep it. When it comes to real estate, there are two things you want to think about. If the real estate is in your name and you get sued, you can lose it. If the real estate is properly in an entity and you get sued, you can't lose it. Also, if the real estate is in your name, and somebody gets injured on the property, if you own it, you can get sued. If it's owned by the entity, only the entity can get sued. You always want to put real estate in an entity to protect the real estate itself and protect you for being sued if somebody gets injured on the property.

ROSS BRANNON

If someone owns 10 rentals, should they have 10 entities? Or should they have one entity with 10 rentals? Or somewhere in between? What would you recommend?

HILLEL PRESSER

The answer is, it depends. I'm not trying to be vague, but there are factors. If you have 10 pieces of real estate, and they're all worth half a million dollars, I want them in 10 entities. If you have 10 pieces of vacant land, and they're worth $20,000 each, I don't really mind if you put them all in one entity. To me, it’s always a cost-benefit analysis.

ROSS BRANNON

Let’s talk about umbrella policies. Do you have a formula for the appropriate amount of coverage?

HILLEL PRESSER

Again, it depends. What is the asset value? If somebody has $300,000 and has a million-dollar umbrella, that’s probably more than they need. If somebody has $200 million in assets, they probably want a lot more than a $1 million umbrella. However, what I like to look at is if there's a reason why these umbrella policies are so cheap. The statistics of them actually paying off are very low. So, I don't call them umbrella policies. I don't even call them insurance policies. Because in my mind, I have an asset protection plan. I want to be uncollectible, and I want to be judgment proof, no matter what you want to call it.

The word I use for my insurance policy is my “legal defense fund,” because one thing it normally does is pay the attorneys. Depending on what you have, litigation can be $50,000, $100,000, $200,000. I've seen people who have spent $10 million in litigation before they stepped foot in my office. So, at a minimum, you want that umbrella to be able to cover a maximum amount of what the lawyers would charge you. Because if you paid $10 million in lawyer fees, even if you win your case, you've already lost.

ROSS BRANNON

How big of a risk is garnishment of wages?

HILLEL PRESSER

It's always a risk. Federal law says the most someone could ever garnish is 25% of the wages, but there are some exceptions. If you're the head of the household, you're supporting other people, you have dependents and things of that nature. But if someone wants to garnish your wages, there are ways around it. Say I own a consulting company that’s an LLC. If the money gets paid to the LLC instead of me, the money is safe in the LLC. Now, of course, if I take the money out of the LLC, maybe it's in my name, and someone can take it, so maybe you leave the money there and buy assets through the LLC. There are a lot of different tricks of the trade you can use to make sure they don't garnish your wages.

ROSS BRANNON

Thank you for sharing your insights and helping to protect dentists.