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want to know how you can gain access to capital to jumpstart your journey to entrepreneurial success for entrepreneurs who are just starting out or those who have been in business for years minority business access is your podcast welcome to our show where we will guide you in avoiding the pitfalls and thriving in your chosen business now on to the show with your host solomon ali kevin kevin it is so so exciting to be here with you on minority business access and i'm so glad to have you as a guest on minority business access can you just tell the audience a little bit about you kevin first solomon i've known you for a while thank you for having me on i really appreciate it um the privilege is all mine [Laughter] well there's many facets of me but on the business side i'm a lawyer and my particular expertise is in the lawsuit protection and privacy planning we have lots of actors and ball players that want privacy is usually the drive and lawsuit protection is good for them too we have business owners that come to us and say you know i need lawsuit protection and then lowering profile and other things are concerns of their family so i do offshore trusts domestic trusts privacy companies my firm about 28 people we've got litigation team we've got cut three tax attorneys we do charitable trusts foundations all the normal wills and trusts you know normal estate planning and then there's my department bridget burns is the head of the lawsuit protection and privacy department and i've got one partner uh elizabeth tress okay now kevin you're the number one leading expert attorney in trust law what does that actually mean well i my i know what it means for me yes my firm is probably in the two top in the country and that assessment is really i came in at the very highest level right after the hague convention was signed by the u.s where u.s citizens could establish trusts under other countries law and it would be the law of the land and recognized in the u.s so essentially we could do things with international trusts that would not have been otherwise legal under u.s law and treaties conventions presidential or decrees they're higher than federal law yeah the only thing that's above that is the u.s constitution then we started having copycat trusts i wrote a bunch of books in the early 90s right after the peg convention was signed and i'd love to say i was particularly brilliant but uh me and arnold goldstein had another had a book there were a couple of other experts they didn't get books out before the practice guides are now out there on it but we became the speakers in the continuing ed arena all over the nation kev let me ask this trust you stated was higher than almost everything except the constitution oh the hague convention on trust okay that the u.s government signed so you've got municipal law superseded by state law that's supersited by federal law and then there are these treaties and conventions above that than the u.s constitution so under a very other than the constitution very high law is that just irrevocable trust that we're talking about not just irrevocable but if you're going to have a revocable trust you don't get much privacy you don't have privacy because your name kevin day trustee of the day family trust um but with irrevocable trusts you're essentially under u.s law removing u.s court jurisdiction right so by us you know signing that and all 50 states recognize it the the you know irs everybody recognizes it so it's not just a black box hey trust me i'm a lawyer okay so let me see if i understand this and if i can somewhat regurgitate what you said under trust law or under u.s state and federal law a irrevocable trust is removed from the courts if it's settled under an another different countries law and that was the first time until 1987 you could not if you wanted to lawsuit proof something and you put it into the trust you could not be the trustee or the beneficiary so you had to give up all ownership and control that's fine if you're giant estate you're giving it to your heirs and your charities but if you're saying i still might want to spend a bunch of millions on me you know uh after i retire i want to spend a million dollars a year in europe and you know i don't want to give it all away um so that will that it was not the law in the united states until the head convention and you could at that time only do it if you did an isle of man trust a bahamas trust a cook island trust where their country said you have a lawsuit proof trust even though you name yourself as a beneficiary so legally you can say i don't own all that stuff in the trust it's usually but you get it all i have an irrevocable trust i have one that's georgia and then i have one that you guys set up for us actually we have a few of them um and everything so i don't own the trust i didn't say that no attorney client privilege was given by me okay so let let's go if someone had a trust yes that was irrevocable it was set up do they have any ownership of the trust they have beneficial ownership okay and the trust is lawsuit proof because in the isle of man or in cook islands or in montserrat the irrevocability still allows you to before in the us you had to give up both types of ownership the legal title ownership and the beneficial use of all the assets right so these other countries have evolved business owners have a right to lawsuit protect their assets so they can still name themselves the beneficiary and have all the use of it but they need to put it into this trust and so it is you for it's still your estate it's still all yours to use but if you get sued and somebody says hey you haven't written me a check yet and they say you know under penalty of perjury you need to list everything that you own you say okay this is what i own because the law says an irrevocable trust is an ultimate owner okay and so just having a beneficial interest isn't enough ownership for you to say that you own this company and that company in that bank account ah i see so i would not have that ownership no wow so you do have the ownership to go let's say to a bank for financing kevin i want to know a little bit about the minimizing the risk for companies and families what is the true benefit and how do you minimize that risk for companies yeah well the whole process of lawsuit protection minimizing well it's not necessary you think of minimizing risk as do you have a good policy and procedure are you following that's all the normal stuff but that can't control a lawsuit or the outcome if you do get a lawsuit wow and that's the arena that we work in and the basics that people have to understand about lawsuit protection it boils down to if you own it it can be taken even if it's a deferred right somebody owes you some money it doesn't start for five years that judge is still going to go to that person instead of making it to kevin day you make it to you know mr miss plaintiff here really um they can do judicial foreclosures and all the rest of it so a lot of business owners and this is logical it's good they just didn't have all the good strategies and structures available to them they go wow my wife and i you know we own these different businesses we own this real estate and we're going to be the lightning rods so let's put the cash and portfolio and something else that's high value in our children's name and they have a lower lawsuit profile but what happens if they get in the free car accident or they get a divorce and now what they considered part of their the parents thought were part of their estate is now being taken they did the best that they could do okay because you go into a lawyer a corporate lawyer real estate lawyer or trust lawyer and you say i want lawsuit protection what do they do you've heard it a million times oh you have this many items you need eight llc's and that way if this boiler blows up they can't take your home or the other investments yes but if you get sued personally they're coming down and taking off even if the boiler blows up here and it doesn't get out of that box you're still losing that apartment building or that rental our strategies of creating a separate legal owner recognized as a third party owner under the law trust give back the control to the client with an underlying privacy company in nevada or wyoming and then put senior liens on the equity you can get a lawsuit because there's a horrible fire and you will still have that home so when you say senior lanes kevin are you talking about ucc ones what are we talking about yes there's two instruments to put senior liens on and one is a mortgage or deed for real property and ucc ones for everything else so computers uh freight trucks uh warehouse stuff okay uh cash it was ucc ones and our legal system the first in time to the public record not the contract so if i'm carrying back a note uh from you and then you get sued or you go to the bank and get financing and then i go whoa we had signed a contract a year before but i didn't tell the world that i had that right so whoever puts the lien in the public record first it will get every dime that there's have a secure interest so this is just a friendly lien you don't want to just throw a lien on you can it's a smoke screen but we have to presume that the other side knows everything we know i need to presume that i have to tell a judge everything i've done and still work so we create and work with the client to create the proper consideration which is a legal term to make sure that it is a proper deal that this company even though it's this company in this company even though both are part of your estate they have enough legal independence that they are entitled and actually the law the irs code and the corporation code says they have to have as formal a relationship as me and bank of america and i'm not going to get any money from bank of america unless they get a lien so your little privacy piggy bank company or intellectual property company said i'm not going to give you this uh contact list or you know whatever it is unless this is worth three million dollars and i'm not going to give it to you unless you give me three million dollars of collateral wow so you you take something that you already have you just put it in your left pocket and the law requires you and gives you all these rights well now let me ask this kevin does the trustee have to disclose that i'm the beneficiary or they could under extreme circumstances but what we found in real life where our clients were under duress that 80 percent of the time the other side doesn't even ask the right questions okay they take it at face value that oh you know you went to the bank you went to this bank you went to this maybe hard money money lender or a private lender and uh they don't even think to ask they don't even bark up that tree okay some have barked up that tree because they go hmm you know they just have been a few places well of course if you have good money and interest from a particular finance source why aren't you going again of course to that same trough and but so they might ask well do you own this company you can say it's tactical um we should be able to say hey this is what we did we did it five years ago you can't touch it but i've not met a litigator that says oh i've seen this a hundred times i can bust through this and you haven't seen this once buddy or gal and they can't but they spend their client you know spends fifty thousand dollars in trying to dig it out and then you have to spend fifty thousand dollars explaining to the court and the other lawyer what the law is on these trusts and these guys were never trust lawyers litigators they didn't come from this field they don't know it but because it's a separate legal owner under the law nobody owns a trust just like nobody owns a human nobody owns you or me so this trust is standalone so what you're saying kevin and if i'm the beneficiary i don't own the assets and the trust do i control them you can't control it at the trust level because then you became a trustee and you also have beneficial ownership so you've merged the two that make it lawsuit proof okay so but you can manage the underlying company so 99 of the time we're creating irrevocable trusts that are dormant trust an active trust is like a carnation grandchild or a kennedy grandchild has to go to the trustee new york you know bank new york bank of new york trust department and say i need you know a business ticket for me and two of my close friends you know please pay for it i want a new house in you know portland or whatever it is i gotta ask this that's an active trust our president president trump peter um several different types of trust and the state of new york kind of broke or pierced their veil what what happened there why wasn't he protected that was already out in the the public world he he kind of uh uh flouted it or you know known so people knew about it some very high profile things that were related to him also had the trust on it so they presumed that they were related so we're not going to name it you know the kevin day trust it's going to be the pine tree trust or the golden mountain trust and going back to that question of control every entrepreneur no matter how much stuff they go they do you know how much manage it management that they may release to competent employees they should never let the checkbook go in my opinion i've never seen an entrepreneur well that's why 99 are these dormant trusts where the piece of paper of ownership is into the trust but no bank accounts no nothing's up there it's down in underlying privacy company like delaware nevada wyoming nevada is the best they adopted delaware law but delaware is so focused on the public company and public companies have their uses but for a personal piggy bank you want it in nevada in my opinion and you have privacy so your name isn't in the public record you are the manager you can buy and sell just like you normally would but it's going to be in uh you know northridge enterprises or golden mountain financial and the law is very clear i've had attorneys that were not partners they had no ownership that were signatories on my bank account they had no ownership even though they had access right so being a manager having the checkbook imputes no ownership so it does not make you a trustee so you here you can control it the trustees have a piece of paper so if you get sued you have a perfect position that it's going to be lawsuit protected but you still can buy and sell just now kevin you've been in business as long as you have been practicing law i know you have many horror stories can you just share one or two with us yeah recently in not naming names but it was recently a real estate owner bought an existing apartment complex i think it was like 18 days or 18 doors and he came on the scenes and the tenants said hey we want some lights in the back because our kids can't play because of the change and it's dark when they get home at night so he went he granted them that but he went beyond that and had the office manager make a little you know a basketball court not a whole just a half court a hoop and some cement and he was great he was good guy nice guy nice gal doesn't mean anything in a lawsuit unfortunately the manager hired a unlicensed normal handyman around the place and a 10-year 12-year-old kid grabbed hold of the chain-link fence and got electrocuted to death wow so here was a good guy being a good landlord going out of his way to be better for his tenants and big lawsuit and a lot of equity loss didn't have to happen and a lot of us you know we all drive he didn't have the irrevocable no he had been talking to us about it and he never got off the dime or like some people they you know it got some of the structure but they didn't connect all the dots it reminds me of years ago when i lost my nursing home businesses and everything and it was like i kept saying i kept saying it and over and over i said okay i gotta finish this i gotta tie it and transfer the ownership and i kept procrastinating and i never did i found a new building i need to pay attention to that buy another one it was like and when all of a sudden i had regulatory problems and everything and i aid oh my god oh my god and what i remember being told that if i had done everything i was supposed to do and finish that process because i own the buildings no i'm sorry i didn't own the bills because the buildings would have been transferred over to the trust the trust could have continued to collect rents on the buildings and things of that nature from whoever might have owned it or operated and so it was tragic because i was like at a point in my life because i lost 118 million yeah we had over 500 employees and everything we had 13 nursing homes eight assisted living facilities and it was crazy and so i was like okay and i was gonna kill myself do all kinds of things i was like 180 million is pretty tough to swallow it's a lot and i think a guy like me coming from where i came from that i would ever make that kind of money back yeah and i knew it was my fault i couldn't blame anyone else because i knew that i should have finished it and not procrastinate and placed everything in that trust and if i would have done that i would have still had income and everything and that night it wouldn't have to start all over exactly brought yourself back up and so how many people do that what i did out of either procrastination or um just ignorance um let's say in let's say out of a hundred people there there's probably i hate to say it there's probably about 20 of them out of 100. that's a lot i think when they've spent good money they've done little parts but didn't get one last piece that we needed back to do a document and we we hound we we really pester entrepreneurs they're entrepreneurs because they like the next thing and they're balancing yeah hey yeah i can balance 10 bucks so focus on these millions of dollars coming in and coming in and it was like i'll get to that i'll get to that that's and even in mba i've got an mba they never teach you about structuring they presume you're going to have one company and it's going to do everything and you're going to have employees and it's going to own a building they don't even talk about you have to learn hard knocks other mentors oh no you have the building over here and you lease it to where the employees and the end users and the consumer or the product user is you never put that building in there you know this can blow up too easily um and your own your your your own tenant so you're not gonna sue yourself but uh but when you have apartments or you have rentals you know you never you know you the the tenants never know what you went through and what you sacrificed to build that when i started my firm i literally started with five hundred dollars in my bank account and um a fugent suite uh you know office and within a year i was still eating you know law school student you know steamed rice collect a couple dollars so i could eat at mcdonald's but within six months i had four attorneys coming that had offices and employees coming to me to pick up work they started working for me and i had a vision and it worked out so but going back nobody teaches it's all about how to make money and reach more people and make a better widget and and come up with a formula that's going to make you and other people satisfied nobody talks about hey let's pay attention to keep and what you worked how many years to build yes you know and what i've found with everybody if you get up to about three three and a half million dollars most of your creature comforts are taken care of now you have disposable income then so many people have come to me and said wow and i've benched that out where people have come to me below that or during that or after that and there's enough money that starts making the money they're not pushing the ball so hard for every single dollar right they've made just enough so once they feel that that money can make money for them instead of them pushing the ball they go i never want to start over well kevin when is the best time for entrepreneur to start this is it after the business is going before when when is the actual best time the best time to do it before you get sued okay but we don't have a mystic crystal ball that we can figure that stuff out so um the the academic answer is you do it kind of simultaneously is when you start your business okay the whole thing early the only way to attack an irrevocable structure is to allege prove fraudulent commands that you had known existing creditors already and you were setting this up to not have to pay them or whatever but if you enter into a contract with somebody you know three months later that's impossible to be fraudulent commands if you meet somebody in the crosswalk you know a week later and they're paraplegic and you they got a three million there was a single well let let me cut you off yeah because for my audience you know what there is i want to go back and just recap that so the best time to establish the trust and to protect their assets is at the time that they start their business yes wow so that's when they need to call you really and it's hard and we understand that because entrepreneurs usually scrape all this money together for this new project and they need that money they need to buy new business cards they have to buy a new logo website and all that stuff so what's lawsuit protection i i can't afford it so we can do we we call it road mapping is to to try to see what is the perfect structure that if money was no object what would we put in place okay and now let's get economically real what should we start to do first instead of being just an entrepreneur and say oh i need a new company here there and there and you you formed four more companies than you needed you should have created this one first and so like all of our friends and you have said uh know where you're going you'll get there straighter and easier and faster right so you want to know where you're going and then you can start budgeting for it and unfortunately the trust which is the most solid lawsuit protection aspect that you can have in this country or in europe is not entrepreneurial friendly you have to have an underlying company so if somebody is road mapping you're not going to nobody wants to go ask trustee for stuff nobody's going to put the checkbook in their name so we start with the privacy company okay and then when we can budget for it we want to make sure a company that doesn't have the the people's name on it it can start licensing uh intellectual property or or loaning back you know it's just money from your right pocket and left pocket but if you're using legal constructs that's what you need to do they're separate legal people the defect in that which is just tactical is if somebody barks up that tree you're in that 20 percent and they say you know do you own golden mountain funding that has liens against all this and has a prior right on income on this sales contract um do you own it and you're able to say no because it's in the truth legally say no because it's an irrevocable trust you put it in the trust but if we did the stere the stepping stone fashion they asked the right question for the wrong reason they don't know about this stuff they think that you sold it to your sister for ten dollars last night before the deposition and you're gonna buy it back for ten dollars after the deposition so they ask you do you own it you say no and have you ever owned it you can't perjure yourself that's a felony it's against the court not your adversary and so if you're able to financially do both at the same time when they say do you own it nope have you ever owned it no well can you prove that we'll go talk to that company and then we'll have lawyers representing that company and cpas that come forward and say we're the cpa for this company and we're the lawyer for that company and we know who the owner is turning client coverage we can't tell you who it is but we can tell you that it is not you know sally jones or i know the answer to this but i'm asked this question you know a lot so if i'm the settler yep of the trust is that ownership no a settler means you settled it you pushed it all into motion and you might be creating an irrevocable trust for your children and grandchildren a dynasty trust that will go on for generations where you're not the trustee or the beneficiary you're a settler or you can set up a trust where you're naming yourself as a beneficiary and you're still the settler so being a settler is actually the giving away process and the formation process no ownership no settler is now trust law is so specialized and you're at the top of the field you're the man to go see in the united states about trust law okay why no attorneys know or understand irrevocable trust or if you just go to an attorney and what i'm trying to get at kevin is they can't just go to an attorney or someone that does wills or they say they do a living trust and get a trust they really need to come to a specialist like yourself for this purpose absolutely um and i don't mean it in a derogatory way there are a lot of state planners all i do is wills and trusts and it's important because it drives they do a lot and they drive down the costs and you can avoid probate which just saved your family fifty thousand dollars that was going to go to some lawyer when instead you could have spent two thousand twenty five hundred to have a trust that doesn't need a lawyer to go run the probate it's a no-brainer um and we're talking losing six percent four to six percent of your estate by going through probate that's about four to six percent wow that's a lot that's yeah so that's why a lot of lawyers it's kind of a lost leader oh we'll we'll we'll do your uh uh will for you know 900 bucks it takes more hours than that to interview and do the drafting and do all the notarization and everything they put their name all over it so when you die your heirs go to you oh yeah he has a will we're going to do a probate now okay and then they get bank you know kevin i had a friend she was telling me about a trust that she had but it wasn't a irrevocable trust i think out of um charlotte and i said well that doesn't sound quite right that doesn't sound like what i have and she was like well it's a um trust so i have my house in there and things like that but the attorney told her well in north carolina you don't have to worry about anyone ever taking your home because they can't and i said that really doesn't sound like that's right um everybody has heard of this thing called homestead if my house is homesteaded i get to keep it and in the old days that's what a homestead was you you wouldn't lose your property every state has eroded that really um except for texas and florida o.j simpson sold he had a trust not isle of man that wasn't even touched he had his pensions that were erisa protected and he tried to sell as much as possible and he bought the biggest value that was in the confined space that was fully homesteaded in florida texas had such a big ranches there right home a homestead right yeah you think of the ranch is that's a homestead you don't really use it back in balmer or south carolina um so uh it was so strong you had 100 homestead and a guy that had a skyscraper and i forgot you know 16 stories and he owned the penthouse and everything else was rentals the homestead covered that because his home was on that property wow they changed statutorily they said this is just not what the law was intended but in california what what they do is they still judicially foreclose on your home and the homestead if you have filed it with the court you get you know 67 000 or a hundred thousand dollars just so you're not a ward of the state and you can go pay rent at an apartment they're still taking your home and that's what most all the other compensating except for texas and florida you just get a chunk of money so you don't have to be a ward of the state you have some rental money you're losing house this um attorney yeah i don't want to bash anyone um here said that she didn't need to trust um because the state um if somebody slept and fell on the property they couldn't sue and take her property so that's just incorrect that's because that's what i told her i was like i never heard that that's that's crazy yeah i mean everybody heard even if they even if they've never seen a movie with it everybody knows the term slip and fall yes and if it's on your property your property damaged them if you have a trench for some up on your property and you have no soliciting no trespassing if somebody comes in doesn't see the trench they're dark they put in break and get some weird kind of infection that goes into their marrow you are losing that house if you haven't done other lawsuit protection here's another frequent i've got so many horror stories a burglar admitted that they were there to burglarize this home fell in through the skylight that he was he had undone and was coming down to he slipped and fell on a glass um coffee table don't tell me he's sued he sued and won really a couple million dollars like he had the law said that they had a legal obligation to somebody slipping there now if they had somebody doing something so the little thing the criminal wow wow because he got all lacerated up and all that another one was where this guy had um it was friday he's coming home from work and he's realizing the brakes aren't working he uh immediately he goes up and parks it in his driveway he calls uh his mechanic and he said we're kind of closing up right now and we're we're not open on the weekend bringing it on you know monday or we'll come and pick it up on monday and somebody stole it on saturday night he wasn't on the public street it was up in his driveway they get to a light they put on the brakes boom who do you get to sue the driver and the owner wow and the the style of the car didn't have any money got an accident so they went after the deepest pocket yes the owner of the car yeah and one wow you know that is amazing all right i'm going to read another question what can people do at a bare minimum to protect themselves well certainly the regular strategy separating different assets in different companies but you're still going to lose that apartment building if it catches on fire because that's the thing that harmed them um and also if you per you know you don't have to hit a school bus full of children to get into multi-million dollars you can hit a family of four and get way outside of insurance limits there was just a case that my partner found up in orange county or los angeles that one single motorcycle rider got 27 million dollars for his damages that's just one person and so the strong is not necessarily the the simplest but getting a privacy you know nevada or wyoming company where your name isn't on it even if you don't have a trust to put liens on see that's what's so great about these privacy companies that either have ip or other things for proper consideration it's the only instrument that can lawsuit proof your business assets accounts receivable and your home assets most of the other things are either protecting your home or protecting your business or shielding parts of business from other parts this third-party outside interaction an asset is an asset if there isn't any equity in it if i get a judgment against you and i see bank of america has you know fifty percent eighty percent and i go hey take your lien off i have a judgment they say that's why i'm there i get every cent yeah and so if there's no equity there there's nothing to take so kevin i have a lot of clients that i consult now with that i get to buy stocks into the various companies that i invest in and take public and i always tell them look you need to go see kevin his law firm i've always appreciated that he's the best at what he does there's no expert that it's an attorney that can compete with you and the structures and the things that you have shared with me and you know some people say well it's too expensive and i said well i know but try losing everything you have and then you'll find out how inexpensive it truly is and so they do stocks and bonds and promissory notes and things like that and they said well does that work i thought trust were only for was only for real estate and i said well no it's wo king for me so can you speak to that the stocks and the bonds convertible notes that people owe yeah we have so as a lawsuit protection attorney our main thing when we start working with a client is an oversimplification but we say is this high liability but not very valuable is this zero or near zero liability like cash and portfolio and notes there's not much liability there or is this really high value and high risk it makes maybe the main cash flow into the family but it's higher risk so what do we put in the lawsuit protection side what do we put on the standard normal living trust side and if a client is going to get sued anyway they're the lightning rod we're not going to put something high liability with the cash and portfolio or notes anything like that we have people that have gold and silver we have somebody here that has an incredible real art collection like in a museum so we make sure and we do all the documentation so we can show that it's owned by this legally third party part of their estate plan but there's a contract back that they are the one to uh be the custodians of it not put it in you know a closet and get black mold on it and stuff so it's on their walls but they're getting paid to kind of take care of them but if you know a creditor comes in they don't you know they can take furniture and everything else out not just for clothes on the home so well i see everyone at magnify your wealth is starting to come out and i want to thank you for coming in and sitting and sharing your knowledge and your expertise at minority business access so how do everyone reach you our my phone number is 858 755 666 that's 858-755-6672 or kevin kevin at trespay.com that's t r e s p d a y dot com and either one will reach me well kevin thank you so much appreciate it and thank you for all that you've done for me thank you buddy it's always been good with you thank you [Music] you've reached the end of another episode of the minority business access podcast connect with us at solomonrc ali dot info to leave a review and access more resources we hope you enjoyed this show and found great value see you at the next episode you