How to Protect Your Assets Before You Lose Everything | Hillel Presser

The MORE Show - Justin Colby, Bleav, Justin Colby

In this episode of The MORE Show, host Justin Colby sits down with Hillel Presser, a renowned asset protection expert who has helped safegua

Key takeaways

The ultra-wealthy protect their assets by owning nothing personally and controlling everything through protective entities like LLCs and trusts.
Revocable living trusts offer no asset protection while alive, despite being commonly misunderstood as protective tools.

Main topics

Asset protection strategies for high-net-worth individuals
The difference between revocable and irrevocable trusts

Notable quotes

"It's not what you make. It's what you keep." – Hillel Presser

"If you own something, a brokerage account, a piece of real estate, shares in a company, well, if you get sued, you can lose it." – Hillel Presser

Conclusion

Hillel Presser underscores the importance of proactive asset protection planning early in one's

Transcript preview

Speaker 1 (0:00) There's over 100 million lawsuits every single year. That number is only growing. You are seven times more likely to face a lawsuit than get into a car accident. And if that doesn't scare you, I don't know what does. One in four chance you in the business get sued in the next 12 months. Average person in business gets sued five times over their lifetime. And there's a 50 % chance of divorce. But I joke when I'm in Miami, I say there's a 99.9 % chance of divorce. Speaker 2 (0:34) What is up, The Moore Show family? We have a great guest for you. And as always, this is brought to you by The Moore Club, where you'll know all things about maximizing opportunities in real estate, but you get access. It's always about having access. And this guest knows how to protect our assets. So you want to pay attention to this episode. All right, we have Hillel Presser here. He has $11 billion in assets protected. He's written six books. You've worked with pretty much every celebrity athlete that we all can think of to protect them because they make a lot of money and they have a lot of assets. That's why we're all here. Let's go make a lot of money. So everyone should know. Hello, Presser. Thank Speaker 1 (1:19) you for having me. It's not what you make. It's what you keep. Speaker 2 (1:23) That's right. Well, and I've had to learn that the hard way in recent years. So let's talk a little bit about that part, right? What is, what do the rich do? when thinking how to protect what they've already built. Speaker 1 (1:36) Sure. So we live, obviously, in a very litigious, frivolous society where one lawsuit, you can work everything you worked your entire life for. And it doesn't even have to be something that you do wrong. Maybe your employee does something wrong. Or maybe your child drives your car and gets in a car accident, and you get sued because you own the car. So what the ultra wealthy are doing is they want to make sure that they become uncollectible and judgment proof. Speaker 2 (2:06) They're Speaker 1 (2:06) taking their chips off the table so they never need to start over. Speaker 2 (2:10) So how do you do that? Let's rewind. Before they're rich and famous, if you have the chance to sit down with them knowing they're going to go get a $100 million contract, whatever the case be, how would you suggest them to set up their business, their life from the beginning? Speaker 1 (2:26) Yeah, so the main thing that they should do is really to own nothing and control everything. Speaker 2 (2:32) So Speaker 1 (2:32) if you own something, a brokerage account, a piece of real estate, shares in a company, well, if you get sued, you can lose it. So you want to own nothing and control everything. But also, it's not just for the wealthy. You know, if you have a half a million dollars saved up and you get sued for a million dollars, that's catastrophic. You know, there's no coming back from that. You know, if you have $40 million and you get sued for $5 million, you know, you're not happy, but, you know, you still have a lot left. Speaker 2 (3:00) Yeah. And so the setup structure of these type of things, whether you're a business owner or just maybe, and I would make an argument, all your famous athletes are business owners, right? They have a huge amount of income coming in. How do you want to set someone up knowing they have a trajectory to do something big? Speaker 1 (3:17) So there's so many different strategies. My favorite strategy is to use protective entities. So protective entities are things like LLCs, limited partnerships, different types of trusts. And just like you and I are different people with different social security numbers, if I get sued, they can't come after you. If you get sued, they can't come after me. Well, if you have a protective entity like an LLC, that LLC has a tax ID number. And if you get sued, they can't come after your LLC. And if the LLC gets sued, they can't come after you. So one really great strategy is take all your assets, take them out of your name where they're totally unprotected, and title them all to protective entities. Speaker 2 (3:59) Now, I know you're not a lender. But the first thing when you say that that goes through my head is, let's say my home goes into a trust. And I'm like, oh, well, I have a million dollars in equity. I want to pull a HELOC. How do you then go to a bank? Do you know that answer? Sure. Yeah. So how do you go to a bank and pull a million out of your home now that it's in a trust and not on me? Speaker 1 (4:19) Yeah, it's easy. It's no problem at all. You just need to educate the bank. So in your example, if you take your house and put it in a trust and you have a million in equity, when you go to that bank, you just have to be very clear to them and let them know, look, my home is titled to the trust. So what a smart bank will do is a smart bank will say, listen, I want you to sign a personal guarantee. But I also want the trust to sign the guarantee. And if the trust signs the guarantee, the bank's not in any worse position. Speaker 2 (4:46) Yeah, it's all the same. Because like you said, the trust would have a social security number and I have a social, right? So same idea. Speaker 1 (4:54) Yeah, and you have to be careful with trusts. I say that because probably the biggest misconception that I see every single day, not a day goes by where I don't see it, is someone will walk into my office and they will have a revocable living trust. And if you don't know what type of trust you have, it's probably a revocable living trust. 98 % of the trusts that people have are revocable living trusts. And those trusts give you zero asset protection. So they don't do one thing for you while you're alive. They're great tools to have. I think everybody should have them because when you die, they provide a lot of benefit. but they give you no protection while you're alive. And for some reason, I don't know if the attorneys don't explain them properly or the clients misunderstand them, but a client thinks when they have this revocable living trust that they're protected, but they're not protected even 1%. So Speaker 2 (5:45) let's just go into that. What's the difference between an irrevocable trust and a revocable trust? Speaker 1 (5:51) Sure. So with the revocable trust, it's pretty straightforward. If you put an asset in, you can take it out at any time. So if you put money or real estate or a business in a revocable trust and you get sued, because you have the ability to take it out, the judge orders you to take it out and you lose everything. Speaker 2 (6:08) So Speaker 1 (6:08) the revocable living trust gives you zero asset protection. The irrevocable trust, on the other hand, gives you tons of asset protection. But think about why. It gives you asset protection because you're irrevocably giving something away. Speaker 2 (6:23) So Speaker 1 (6:23) of course you're protected because it's not yours anymore. And I remember the story. I had a husband and wife come into my office. And 10, 20 years ago, they'd given everything they had to an irrevocable trust for their kids. They were worth maybe $30, $40 million. Well, the husband and wife ran out of money. They asked the kids for a loan. And the kids told them to screw off. So yeah, it was protected. But it's irrevocable. And you're not getting that back. So I love irrevocable trusts. I tell my wife if I was a jeweler, she'd have a lot of jewelry. I'm a lawyer, so she has a lot of paper. I have about 13 trusts. But just be careful what you put in an irrevocable trust. Speaker 2 (7:02) What would be something you wouldn't want to put in an irrevocable trust? Speaker 1 (7:05) Anything that you would potentially need to live on. So if you have lots of money or lots of assets and you want to irrevocably give something away to the kids or the grandkids, no problem. Do it. But just understand whatever you put in there, you're not getting back. Now, with that being said, there's always ways around it. So one strategy that you could do if you still want to utilize revocable trusts is take a couple that's worth $10 million and you can pick any number. Well, the husband can set up an irrevocable trust for the wife and put $5 million in there for the benefit of the wife followed by the kids. The wife can then take the other $5 million in assets, put it in an irrevocable trust for the husband followed by the kids. Now you have two irrevocable trusts that are totally asset protected and that will grow totally estate tax free, but the husband can access $5 million, the wife can access $5 million, and together they can access the full amount. So you can use irrevocable trusts without losing control. Again, now if you have a prenup or a postnup, you may not want to do that, but definitely something to consider. Speaker 2 (8:11) Would you ever want to put a business in an irrevocable trust? Speaker 1 (8:15) You know the lawyer's favorite answer, which is it depends. There's a lot of great things about putting a business in an irrevocable trust. It'll be asset protected. And more importantly, it can grow a state tax free. So I love that. However, if you really need the cash flow to live off from the business, you got to be careful. And also, you need to make sure who the beneficiary is. I gave a speech the other day, and she was telling me how her business was put in an irrevocable trust. Well, because she set up the irrevocable trust, the beneficiaries were her husband and her kids. You know, she can't access the money. Only her husband and kids can, which is not what she thought she was getting into. So I love it, but just got to cross the T's and dot the I's. Speaker 2 (8:59) Now, is there a way to unwind the irrevocable? Like, so for example, can she come to you and say, hey, can you get me out of this? I need my business to be able to pay me. Can you unwind it? Speaker 1 (9:08) So again, it depends. And I'm not trying to be funny. I mean, that's unfortunately the answer a lot in law. So an irrevocable trust is irrevocable. But that doesn't mean that there aren't things you can change. And it's called decanting. So with an irrevocable trust. I don't Speaker 2 (9:26) need decant wine. Speaker 1 (9:28) Sounds much better, even at this time. But, you know, so with an irrevocable trust, you can change something. So, for example, you may put an apartment building in the irrevocable trust and maybe it's worth a million dollars. Well, maybe you want that apartment building out. Well, you can transfer a million dollars in and take the apartment building out or maybe even a note. So you may be able to switch the assets that are in the trust. But just depending on where you live, because it is, you know, state law and things of that nature, there's some things you could change. There's other things you can't. Speaker 2 (9:58) Yeah. So how does it work? Can you lend into it or take? income out of it? I want to go into the tax side of this whole thing. How do you play the right game with an irrevocable trust, income-wise, taxability, tax savings? What does that look like? Speaker 1 (10:15) So the best things to put in an irrevocable trust are things that you believe will truly appreciate and value. And the reason why they're the best is you can get them outside of your taxable estate. So if you have a million-dollar painting that you think is going to grow to $20 million, well, if that was inside of your taxable estate, That could be $10 million in taxes. But if you put that million dollar painting in the irrevocable trust and then it grows to $20 million, there's zero estate tax. No different with a business. Maybe you buy into a startup that really has no value, but you think it's going to be worth $20 million, $50 million, $200 million. That's a great thing to put into an irrevocable trust because you think it will truly appreciate. So I love putting assets in there that I think are going to truly appreciate. Now, on the other hand, I probably wouldn't put something in there. where I needed the cashflow to survive. Before Speaker 2 (11:07) we dive in, I want to talk to you about LFS Capital. If you're looking to build passive income through multifamily real estate, LFS gives you access to exclusive apartment investments that aren't available to the public. If you want to diversify beyond stocks and create real cashflow, visit LFSCapital.com to learn more and to get on the investor list. I personally invest with LFS Capital and they have been incredible to work with. Their team is top notch. I get passive cashflow distributions two bank account every month and I'm always in the loop with what's happening with the apartments I'm invested in. The best thing is I don't have to worry about managing tenants or dealing with repairs. The team at Ellevest handles absolutely everything and my income is 100 % passive and that's just the way I like it. So if you want to build wealth and passive income without all the work and additional risk, visit Ellevest.com. Now let's get to the show. Speaker 1 (12:00) because it's tougher to take it out. And it doesn't mean you can't take it out. It just becomes more difficult. Speaker 2 (12:06) What's the one thing the non-rich and famous need to know about a revocable trust or irrevocable at the beginning of their journey? Speaker 1 (12:16) The great thing about a revocable trust, although it doesn't protect your assets while you're alive, in fact, it does nothing while you're alive, it's a great tool for when you die. Because here's what happens. If you die, and let's just say you have a will, but no revocable trust. Well, when you die, it'll take months, if not years, for your assets to get where you want them to go. Everything will be totally public record. Everybody will know exactly what you died with. And the attorneys will take a percentage of what you died with, usually about 4%. So if you die with $10 million, that's a $400,000 legal fee. Now, if you use a revocable trust, now when you pass away, Your assets go exactly where you want them to go very, very quickly, totally private so nobody knows what you died with, and there's no 4 % plus or minus percentage. You may pay lawyers per hour, but it'll never equate