I am Rich Yet Own NOTHING, Here’s What The Government Won’t Tell You About Wealth

Here's why the rich owe nothing and you should too. Here's why the rich owe nothing. I'll tell you. So I have a buddy that was in California and he was driving down the road and he's taken his girlfriend and her two daughters to Disneyland. And unfortunately he ran a red light and hit somebody right in the middle of this intersection. It was obviously a bad. And so what happens is the insurance policy kicks in and most people buy insurance for their car only because they say, okay, I'm going to need this to fix my car. And if I get hit or I get another accident, but what was happening is we had the, what was called, I think was called the personal injuries and the damages of, of the, of the passengers. And so what happened was the insurance, they blew right through it. And then all these other things started kicking in. And so the attorneys then go to look for the individual because now that they blow through the insurance and the insurance has done its thing, it wasn't enough. And so they start to go after him personally for all the other things. And so then what does he have? Well, he had a home, he had some investments, you know, he had a car, obviously he had a car and he had a rental property. The problem is that the attorneys now had to go after him personally. So there's not enough money in the insurance policy. So they have to look at what else he owns because now they're starting to get into some bigger damages, uh, loss of work. And some of them were injured, some of them potentially even injured permanently. So these are big numbers outside of the insurance that would just be to cover the car. And so they started to go after him personally. And unfortunately he did not have any of these assets protected. And that's why the rich, when they buy assets, whether they're investments or cars or vehicles or even rental properties, they go first after the person and then they start to look at what he owns and where they're held. This is why the rich own nothing because the way this should have been set up is that this individual, no matter who it is, should not own one thing in their personal name and everything that they have that some kind of entity that's protected from creditors. Here are some strategies that can protect you. Whether you have assets or you don't have any assets. So in one person that keeps me out of a lot of hot water is Mauricio Raul, Ken McElroy.com legal advisor. So this is a scenario that most people get in, right? I love that you brought this example because it illustrates a couple of points that, that I'm, it's really one of my pet peeves. So number one, insurance, always your first line of defense, but it's, it's not the end all be all. A lot of people just say, Oh, just get insurance, get as much insurance as you can. As you can see here, one of the issues with insurance is you might be on an underinsured, meaning you think you've got enough money to cover the claim, but once something does happen, it's catastrophic. Your million dollar policy, $500,000 policy may not be enough. And so insurance is always your first line of defense, but you want to rely on entity structuring like Ken mentioned as your backstop just in case insurance wasn't enough. So for your friend over here, had he had some backstop with entities, he would have been able to prevent this. And real quick, before we jump off, I just want to point out most of us, even me have a history of getting the lowest price. Like that's how we shop for insurance. And we're buying up from commission salespeople. That's the other issue too. It's like, who are you buying your insurance from? Because some insurance agents work for the insurance company. So they actually have different responsibilities and different obligations towards you. Their, their, their main responsibility is to make sure that the insurance company gets the best deal. So always be careful who's the one selling you the policy. And a lot of the ads that you guys see out there about, I could save you this going to this insurance company. I won't mention any names, but there is, they don't talk about coverage, right? So you could reduce your premium, but you're also potentially reducing your coverage. And that's, that's the problem. I think most of the people driving around have minimal insurance because they're paying the least amount. Right. And then a lot of people have a false sense of security because they get a sort of a homeowner's policy or an umbrella policy to cover on top of that. But those policies don't always cover you, especially if it's a business issue, right? This was obviously a personal injury, a personal car accident, but sometimes people think that those policies cover everything. And there's always exclusions in these insurance policies. It's very, very important for you to understand where the holes are and make sure you plug them. If you are not comfortable with them, the way your friend protects should have protected himself is that once this happens, there's going to be a judgment against him, right? So there's going to be a judgment against this individual and the judgment over here is going to be for whatever amount of money it is. And what we want to do is we want to create this barrier. Karen, you did a nice job here of isolating this responsibility. Most people think of asset protection this way, meaning they've got a rental property and somebody slips and falls or boiler explodes or whatever, and they're trying to protect themselves from the property itself. But what most people forget is that you, the individual, the car driver, your buddy is like a liability walking machine. It's like every day you're getting in your car, you're doing some dangerous activities, you're doing business with other people, you're always producing liability. And so what most people forget is what happens if somebody sues you personally, like in the example of a car, you get into a business dispute or you get into a car accident, you want to make sure that if they do sue you, that there's a barrier between you and your assets. And the next level to this is to put your assets, whether it's your home, your rentals, your business, your crypto, your gold, whatever it is that's valuable into their own LLC. So that way you don't actually own the asset, just like the rich don't own their assets, you own an LLC that owns the asset. And that avails you of some protections under the law that will likely prevent them from actually accessing the assets that are inside that LLC. It also helps with privacy, right? That's the other thing guys, because obviously a judgment or an attorney is going to figure out everything you own. But the public, you oftentimes don't want people to know all the stuff that you're holding, right? Yeah. So back in the day, before I went to law school actually, I worked for a plaintiff's lawyer. And the first thing a plaintiff's lawyer does is they do an asset search. They want to make sure that there are actually assets available to collect if they win the judgment. You want to know why? They get paid on contingency, meaning they only get paid if they recover for their clients. So think about this, why would an attorney, no matter how phenomenal the case is, why would an attorney spend the next three years of their lives fighting to get you a judgment if they're not sure that there's going to be something to collect on the other side? They don't want to work for free, right? So the first thing a plaintiff's lawyer will do, will do an asset search. And this is where the concept of privacy really helps a ton because they're going to do a bank search, a bank sweep, a brokerage sweep, a real estate sweep. These are all public records. And if your personal name starts showing up on all these things as somebody who owns a lot of assets, they're going to take the case and they're going to want to go after you. If they do an asset search and they can't find anything, the odds of them settling for insurance limits just goes up exponentially. All right. So how does the average person protect themselves? What does a renter do, let's say, and they don't quite yet have all these assets, but they're trying to? Well, the first thing you want to do with everything is you want to get educated. So there's a lot of free information out there. You can Google some of the stuff, you can buy books. But once you understand the basics, the first thing you want to do is get your insurance. I'm not saying don't get insurance. Insurance is always your first line of defense. But if you own a rental property, for example, create an LLC, set up an LLC, usually in the state where the property is located, and make sure you transfer title. This is a big one. Once you set up an LLC, you want to transfer the title from your personal name into the LLC, because unless you transfer title, setting up an LLC is not going to do anything for you. So make sure you transfer the title so that the end result is you don't actually own the property itself, but you actually have an LLC and you own the LLC. That will protect you. Not only if somebody slips and falls, for example, on your property or a boiler explodes, but also could protect you in a case like your buddy with a car accident. I know we've had some issues inside of our rentals, fire, flood, wind, things that have damaged all kinds of things. And some people have even got hurt. So what happens is they, like they would, they sue the apartment complex or the landlord or whoever they're writing checks to. Yep. So if you have this rental in an LLC, then whatever's inside of the LLC will be exposed. So if you have a bank account with some cash in it, that'll be exposed or the equity in that rental would be exposed, but anything outside of this LLC. So your other rental properties or your personal residence or your personal bank account should be excluded from that because the plaintiff is going to be limited to what's inside the LLC and not get anything outside. So I also heard a lot of people ask the question, like how many rentals should I put one in here? Should I put 10 in here? You know, should I have an individual entity around everything I own? Because it can get crazy. Great question. Yeah, no, it's a great question because there's the legal answer and then there's a practical answer, right? The main thing everyone just needs to understand is that whatever is inside that LLC, the equity and the cash and whatever is going to be exposed. So if you decide to put 10 properties in one LLC, just understand that if something were to happen to one property, the equity and the other nine are going to be exposed. So I'm not saying to have nine or 10 in one, but most people will start putting maybe two or three in one LLC, just because from a practical standpoint, obviously these things cost money to maintain. And at some point, if you're spending all this money just for setting up entities, that might erase all of your profits. But I would pay attention, as long as you understand that concept. I think once you understand the concept of everything being exposed, then you can make your own business decision, whether you put two or three properties, or maybe you're comfortable having 10. I'll tell you one quick story. Back in 07, 08, with the last financial crisis, I had clients who had literally 30 properties where they're all underwater. They had negative equity. Well, in that case, you can put all 30 in one LLC because there's nothing there to go after, right? So it's more about the equity in the homes than really the amount of homes that are inside the LLC. And the cash. And the cash, anything else it owns. Yeah, anything else it owns. So one thing I will point out though, having your car in an LLC isn't going to do too much for you. This is why, is because, remember there's two parties that are responsible for that car. So your buddy was driving, right? We won't give away any names. So there's two parties. Number one is the owner of the vehicle will be responsible, right? So Ken, if you lent him your car, that would be problematic for you, but also the driver, right? So even if you have the car under an LLC and maximally protected, all that stuff, at the end of the day, you're the one driving the vehicle. You're going to be personally responsible for any consequences from driving that vehicle. So the only time I even suggest having your vehicle in an LLC is more to protect the vehicle. Like if I have a real, like a supercar, I have some like Ferrari or McLaren or something like that, and I get sued personally, and there might be interested in trying to get that car, then having the car protected by an entity may make sense. But from a liability perspective, it's not going to do anything for you. Right. If you own a business with a lot of collector cars, different issue. Right. Correct. Yeah. It's more about protecting the asset itself versus protecting, having a personal. Let's say you don't have any assets and you get in this accident and then there's a judgment, right? And you don't have anything. I think a lot of people think, oh, I don't have anything. So not a big deal, right? But you corrected me. Yeah. It's one of the biggest mistakes I think people make. Whenever I hear somebody say, well, I don't have anything, I always respond with, you have a job, you have a source of income, and if not today, maybe you're unemployed, but if not today, you have a future source of income. And these judgments, they last for 10 years. So if I get a judgment for you, any monies that you make in the future are going to be fair game. So you may have nothing today, but if in five years you acquire property and it makes a lot of money, you can go after that as well. And then you can renew these judgments for another 10 years in a lot of different states. So just because you don't have any assets, unless you're homeless and you literally are without assets, your future earning power and your current and future earning power is an asset that you want to be aware of. And I think it's important to understand that every time we buy something personally, we create a new entity and we roll it into it immediately upon acquisition, right? It never sits in my personal name ever from the beginning. Yeah. One of the biggest mistakes people make is they create the LLCs, they get all excited, they go out and file and get everything set up. And guess what? They forget to transfer title from their personal name into the name of the LLC. And that has to happen. It's an actual transfer to title that's recorded with their county recorder's office so that the new legal owner is not you, but the LLC itself. So if you like this and you'll love this, which is Verishield's new book. Yeah. I appreciate it. This is something that at your request, actually, I'm really very excited about it. But yeah, we talk a lot about asset protection. It's not just asset protection, it's legal strategies for everyone. But we talk about these strategies in the book. I've got a lot of diagrams about it in the book. And I actually talk about six layers of asset protection. We talked about probably the first three, but there are other layers that keep going on and on because it's different layers for different people, right? If you're just starting out and you just have a W2 job and you're buying your first rental, that's going to look a lot different than if you're a multimillionaire, you've been doing real estate or have a business for many, many years and you have multiple assets, that's going to look a little bit different and your estate's going to be a different size. So six layers of asset protection. We talk about those here in the book. I've been in business for over 35 years, and I've just made the most comprehensive video that I've ever made on the most critical lessons that I've learned in my career. I highly recommend you check that out here.