Ok, first and foremost this thread isn't about defrauding people, running shady ops, or scamming people and getting away with it.
This is about keeping what you own. People get sued ALL THE TIME, as you can see Here
Now, most people are completely clueless and blissfully ignorant about the chances of getting sued and how to respond. Upwards of 90% of all cases against consumers result in default judgments. Now while some of this is due to people not being served, a good number is due to simple fear or not knowing how to respond. Although how to respond to a suit is worthy of another thread, but if you ARE going to be ignorant about how to defend yourself, the least you can do is NOT MAKE YOURSELF A TARGET AND SET UP PROTECTIONS NOW.
People only worry about this when they have been sued or it appears that it might soon happen. Bad idea. There is something called a fraudulent transfer, that you must be aware of. If you are sued, and then transfer your 100M in cash to another entity or you "gift" it to your wife/kids, these transactions can be unwound by a court if the judge deems it to be an attempt to hide assets from creditors. Now, if you have all this set up BEFORE the fact, these assets aren't likely to be discovered, and even if they are, it isn't a fraudulent transfer. It is all about the timing of the transaction.
Just as retirement planning should be done before you retire, asset protection should be done BEFORE YOU ARE SUED.
Key points in keeping your assets safe:
#1 Privacy! Get yourself some pretty good privacy. This doesn't mean living in a cave or a shack in Montana. You can hide in plain sight and live, work, play and lead a very normal life without putting your entire business out in the street.
All it takes are a few modifications to your current situation and behavior, and you will be significantly more private than most people.
Keep in mind, if you have a government agency or someone with a lot of time/money on their hands, chances are that absent of living in a cave, you WILL be more than likely discovered at some point. The whole point of this exercise is to make the search expensive and time consuming, as opposed to a quick look through the phone book. Further still, if you can't be found, you can't be sued. Even if they fabricate the service documents, which happens more than you know, and they sue you and win, they STILL can't do anything if they can't find you. They can't haul you in for a debtor's hearing, and they can't attach/seize assets they can't find.
Many people think technology has created all sorts of ways to find people, and to an extent it has, but for every door they close, another opens up.
#1 Phones: Get a VOIP phone. Ditch the landline if you are still messing around with one of those. I know MCI and SBC insist on pulling a credit report, assuming you give them your SSN, and besides that absurdity, VOIP is cheaper and offers more features than your typical phone service.
Best of all, you can get a number or two numbers from any area code you want. Live in NYC? Get that Cali number. From Alabama? How about a michigan number. Many of these VOIP services also have features where you can automatically block "Private" numbers as well, so you don't have to worry about unwanted calls from people that don't want to identify themselves.
Speaking of phone numbers, don't call 800 numbers, since they can caputre your phone number. If you have VOIP it is generally unlimited anyway.
Lastly, don't leave your phone number on your credit reports, and don't give it out freely. Just get a free voicemail service that emails you when you have a call.
If you MUST call an 800 number or someone you don't want to trace you, just go to WalMart and buy a phone card.
#2 Address: Get a PO BOX.
They are cheap, MUCH more secure than regular mail sitting in a mailbox or items being left on your front door, and they offer a primary layer of security. Granted, your are supposed to list your address, but this is spotty at best. Some places check this, and some don't. Just find a post office where it isn't a big deal and get a PO Box.
Imagine on your credit reports nothing but a list of PO boxes instead of addresses where you have lived.
Granted, a judgment creditor CAN obtain your information from the post office using the appropriate form, but just remember what was true when you signed up may later change.
The primary rule of thumb is: Never allow your place of residency to be connected with your name. This includes the DMV, IRS, and other government agencies. Pay your taxes, but they should only have your PO BOX as your address.
#3 Credit reports: Ask me no questions, and I'll tell no lies.
Credit reports are the Hallmark for disinformation if you choose. At a minimum, there are several things you DO NOT want on them: Driver's license number, phone number (or at least your REAL phone number), and employment. None of these things are related to credit, credit scoring, etc...
If you apply for some credit, just let the potential creditor know these things, NOT the credit bureaus.
Also, don't send in your driver's license to the credit bureaus or any picture ID or ID's with a signature. I was asked once for ID from the bureaus and they got my SS Card and my Blockbuster card. No sig's, no pictures, and they are proper ID.
#4 Banking
Bank far, far away from where you really live. Never, EVER hold a ton of cash at a local bank or credit union. The first thing a creditor will do is you are sued and lose is blanket the local banks with writs of garnishment. Sure, that can work on a local level, but when you have to pick every state of the union, it is generally cost prohibitive.
As stated in the safe deposit box thread, you probably don't want to keep anything of value in a local CU. Possibly important papers, but stash your rare gold coin collection somewhere else.
You need to be truthful on credit/banking app's, but one easy way to hold money anonymously is to just set up a non-interest bearing account in a small bank outside of your hometown. If they don't pull a credit report, you are set.
#5 Owning property: Own nothing, control everything.
The #1 worst thing you can do is to own a bunch of assets in your name. People get some feeling of security from this, but in reality it is one of the worst things you can do. Assets in your name can be easily found and attached.
Assets in a trust's name are MUCH harder to locate, and assets in a LLC are harder to locate (depending on the corp type and location) and even harder to attach.
Your car, house, and other valuables should all be in the corporate name. This adds a layer of pricacy, as anyone looking for John Smith probably won't be looking for the "Smith family trust" or the "Smith enterprises, LLC", and further won't be able to tie the Smith enterprises LLC to Mr. Smith.
When you put these assets in these various entities, you still retain full control, you can sell them, trade them, whatever, and use them as you normally would in most cases. The only difference is they are much harder to find and attach.
This is just a starter thread. Ideas are welcome. As much as people here at FW talk about making money, some thought might be given to keeping it in a worst case scenario.
I still don't get why I have to have a safe deposit box in another town. I understand they might try to take my money from my bank account but they can't see inside my safe deposit box.
Are you saying if I owe someone money they can get a court order to look inside my safe deposit box to see if there is anything in there they like? But at the same time they can't get a court order to make me list all of my safe deposit boxes?
This is just a theoretical question. I actually am feeling quite good based on your scenarios. I haven't had a land line in at least 5 years. I haven't lived at the same address for more than 8 months at a time (usually not in the same state for more than 8 months at a time, school and job are very far apart). I have a half dozen checking accounts scattered across the country with less than $25 in them (yeah sign up bonuses!). All my real money are in online accounts which have headquarters very far away from me. I don't have a safety desposit box at all. I drive a different way home each day....I put a glass bottle on my doornob in case someone tries to pick it...
I am not a lawyer like you guys...but wouldn't having an umbrella policy be a more practical way to protect yourself rather than ditching your phone line? Or is having an umbrella policy like putting up a sign, "I'm rich, please sue me because I have a fat insurance policy!".
Message edited by: mst3k on 2006-08-27 22:49:23 CDT
jayK said:Don't you think you're being a little extreme? Just get umbrella liability insurance, and you'll be pretty well protected from lawsuits.
I think codename47 forgot to mention "Get a Bunker".
There should be some sort of balance in our lives. I think this is rather extreme, but then again, it is still good advice for those who think that they might get sued one day.
mst3k said:Are you saying if I owe someone money they can get a court order to look inside my safe deposit box to see if there is anything in there they like? But at the same time they can't get a court order to make me list all of my safe deposit boxes?Is a safety deposit box rented by, say, an aunt and paid for by said aunt "your" box? What if your aunt also keeps a substantial amount of material in the box... is it "your" box? I really can't get more in-depth into this without doing a very tiresome legal analysis, this is ONE possible alternative outcome.
tips:
My home address appears NOWHERE on any of my credit reports. I rent a PMB and have consistently and diligently used the PMB address for all my financial transactions. Not only does this afford me an additional layer of privacy, but it will make any attempt to serve me with a summons or otherwise disrupt my personal life much more difficult. I use it on my DL and for virtually all official purposes. Keep in mind, a PMB is different from a PO Box: a PO Box is listed as such... a PMB looks like an apartment address... 123 Sesame Street #227.
REal property: There are many ways to exercise control of real property. Some of them allow you to maintain beneficial or actual ownership of the property while sufficiently attenuating it from your name or your "obviously related" entities. I will not go into this further, but would rather advise you to consult an attorney who can help make the most of this strategy for you. Conventional or foreign trusts are another tool that can be used to achieve your asset protection objectives... and believe it or not they are not expensive to set up... just make sure you have a competent attorney prepare it. Attorneys often execute these types of transactions incorrectly [I see them on a daily basis], so make sure you get referred to an attorney who specializes in these types of transactions. Such an attorney should have contacts in countries who will serve as corporate officers and/or trustees.
Real property: Creating holding corporations for individual [especially income-producing multi-unit residential] properties can compartmentalize liability and keep it from metastisizing into a general lien against all your real/personal property within the County in which you are being sued.
MilesHeighway said:jayK said:Don't you think you're being a little extreme? Just get umbrella liability insurance, and you'll be pretty well protected from lawsuits.
I think codename47 forgot to mention "Get a Bunker".
There should be some sort of balance in our lives. I think this is rather extreme, but then again, it is still good advice for those who think that they might get sued one day.There are certain types of business ventures... any type of healthcare-related business or [large] multi-unit residential properties that will almost guarantee that you will be dragged into litigation... often over some employee's bad act that was completely unexpected.
Also remember that the insurance companies = SATAN. They are not there to protect you... they are in the business of NOT paying out policies. It has been my experience that in litigation, the insurance companies will attempt to exclude a particular act as non-covered. This basically turns into a three-way tug-of-war. Often carriers will impugn some act of yours as being the non-covered proximate or legal cause of the injury. Thoughtful asset protection is in essence a valuable form of self-insurance that can pay off in spades down the line.
Another one. If you give property to a trusted relative with the expectation that it can/will/must be returned to you some day... do you have an ownership interest in said property? Depends on the existence of some secret/semisecret trust... or the nonexistence thereof. The issue can be framed accordingly, especially by a lawyer skilled in this particular field.
This leads me to the primary reason that you should not make it easy to check out your assets: The first thing that any competent lawyer would do when considering you as a potential Defendant is to do an asset search on you. If the asset search does not reveal certain valuable assets of yours, you can be sure that that lawyer will be substantially less inclined to prosecute you. It's the old "blood out of a rock" philosophy: an uncollectable judgment for $1,000,000 is worth exactly $0. Many people live the "asset free" lifestyle, and certain people are definitely very well suited for it.
edit:
I have a client who is an "asset free" evangelist, always tryign to get me to convert. I'll talk with him tomorrow and see if he has any tips that I may have forgotten.
Great thread BTW, OP. Worth its weight in gold.
Message edited by: ArbolLoco on 2006-08-27 22:54:49 CDT
I would also STRONGLY SUGGEST that if you have substantial assets that you are concerned about from a liability standpoint, to consult an attorney. The characterization of certain pieces of property can often hinge on a clever lawyer's positions and representations, and a judge's predisposition towards accepting such positions and representations. This is also an area of law where a specialization is very valuable.
Im curious if you follow your own advice: Do you have no landline, no local bank, use only a PO box and have no real property in your name?
You are correct. I have no landline, VOIP phone, I have a local bank, with all of .53 cents in there (dis-information is a effective as well. Imagine their surprise when they garnish the local bank, figure they've "got" me, then pull out little more than two quarters. Plus, this tips me off well in advance.), I have a PO Box, and I don't have any significant property titled in my name.
The only number I have on my credit reports is a prepaid cell phone. Again, I appreciate any tipoff's/advance warnings I can get. All I need to know is who you are and why you are calling to go into action.
I don't have a phone number anywhere close to where I live. I don't live anywhere close to where my phone numbers are. If you call me, you can blanket the local area with writs of garnishment, you won't find me. If you DO find out where I live, you won't be able to seize anything because you probably won't be able to find it, and absent me telling you, you are pretty much up the proverbial creek. Now, lets talk on MY terms, when and where *I* feel like, IF I feel like it at all.
I'm not trying to negotiate with someone once they have my money.
Don't you think you're being a little extreme? Just get umbrella liability insurance, and you'll be pretty well protected from lawsuits.
I may be extreme, but then again, better to be safe than sorry. Why get an umbrella policy when I can just shuffle some paperwork and be as protected if not more?
Truthfully, why not do both? Get an umbrella policy, AND take care of your assets?
Seriously, what have I said that is difficult? Possibly setting up a corp/trust, but really that is a paperwork drill. VOIP is easy and cheap. A PO Box is easy and cheap (I actually prefer it to having just a regular mailbox), banking is easy with online access. You can do 99% of what you can at a regular bank without lines and the hassle. Titling property is again a few sheets of paper and a few bucks in fees.
This could all be done in a weekend or two inbetween your next app o rama.
In the same thread, people may think I am extreme that I own several guns. I hope to never be in a shootout, but if I am, I at least have a fighting chace, and you can't ask for much more than that.
WHen you know you are getting sued move all the money to swiss account?
Because it is a fraudulent transfer, people look for this sort of thing, and you'll probably get caught. The caribbean/swiss bank account connection is largely closed.
The time to take action is before, not after.
I understand they might try to take my money from my bank account but they can't see inside my safe deposit box.
If they get a court order, they certainly can.
Are you saying if I owe someone money they can get a court order to look inside my safe deposit box to see if there is anything in there they like?
Yup.
But at the same time they can't get a court order to make me list all of my safe deposit boxes?
No, they can. That is the whole debtor's exam thing, Arbol was referring to.
I have a half dozen checking accounts scattered across the country with less than $25 in them (yeah sign up bonuses!).
Good, keep it that way. Never hurts to have a checking account you can fall back to...just in case.
Nobody is going to really know if you have an umbrella policy, until you get sued, but you are assuming it is 100% that the policy will pay. Better to not take chances, then to be faced with an "whoops, I guess I wasn't covered..." scenario.
One more thing to add, if you LOOK poor, your chances of getting sued go down probably as well, or the lawyer might go from contingency to hourly after a property and vehicle search turn up nothing.
Needless to say, if you ever ARE called into a debtor's hearing, don't wear your rolex
So how do online banks like ING and ED hold up in asset protection? Easy or more difficult to find?
It is probably much better to have one of these than a local bank. Granted, if they pull a report, IMHO that reduces their attractiveness. No credit pull and an online bank is ideal.
Also, non-transparancy with respect to real property assets can also spare you from having a lis pendens recorded against certain properties of yours. I am going to file one next week, and this is going to put a SERIOUS crimp in any attempt to liquidate, alienate or encumber this property. This can SEVERLY limit your options before a lawsuit is even filed, remember a lis pendens can be filed with zero notice.
Ok, so the whole distance thing is people are agressive enough to blanket the town where I live but they are too lazy to perform a debtor's exam? Or the debtor's exam takes so long to happen that I flee the country by then?
I rent a PMB and have consistently and diligently used the PMB address for all my financial transactions. Not only does this afford me an additional layer of privacy, but it will make any attempt to serve me with a summons or otherwise disrupt my personal life much more difficult.
In California, having a PMB doesn't actually make it hard to serve you at all; it makes it easy. If you list a PMB, all a process server has to do is give the suit/summons to a person in charge at the private mailbox place and mail another copy to the same place. This is called "substitute" service and is considered complete 10 days after the documents are mailed.
I have one tip, if'n you're playing online poker, don't flip it for $20 large (an agreement to go all in preflop like a coinflip without knowing your hole cards) against Mike Matusow. Link to someone losing $20k in a flip against Matusow
Message edited by: ctujackbauer on 2006-08-28 00:15:14 CDT
By the way, the getting VOIP phone thingie is kinda naive. You still need DSL or cable, and some telco or cable company is going to run a cable to your house in some form.
As for getting out-state phone numbers, that's irrelavant, each call can be ultimately trace to where your line ends, be it VOIP or house phone. Think 911. Besides, they just have to look at your house address or PO box address that your DSL/cable bill is being sent to. This is the same thing as having an out-of-state cellphone, which won't protect you if people want to chase you down.
Phone ID blocking features are available on land lines too (if you are paranoid about people tracing your calls via Caller ID, use a phonecard).
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