The Anonymous LLC Is a Myth - Here's What Privacy Actually Looks Like

Mark Pierce 0:00 So if somebody comes along and says we're going to give you complete anonymity, they're liars. I know that people get out and they push the Cook Islands, they push Nevis, and they push all these places as though they're a panacea to all your problems. They're not.

Maggie Pierce 0:12 This is Keep What You Built. Every week I sit down with my dad, attorney Mark Pierce, and we break down the asset protection strategies nobody talks about publicly. If you're an entrepreneur and you've ever been concerned about your privacy, we are recording this episode for you. When we talk about privacy and asset protection, what do we actually mean and what information are we trying to keep private and preventable?

Mark Pierce 0:38 Right. That's a great question, Maggie. Privacy, you're entitled to privacy as a U.S. citizen. You're not entitled to anonymity. So let's talk about what anonymity is. Nobody knows who's doing what to whom anywhere. That's just not realistic in a commercial context or a family business context. So let's dispel this notion of anonymity. If you get privacy, it basically says, look, people do not know who you are, what businesses you're in, or who represents you at the end of the day, other than the people you choose to work with. So when you talk about privacy, you go in and you make your life private. So it's away from the prying eyes of the public. Now let's talk about who it's not away from. If you go in to get a bank account, you're gonna have to have a relationship with a banker. The banker isn't going to allow you, because of the know your customer rule under the Federal Reserve System, that banker's not gonna allow you to open up a bank account that's anonymous. In other words, the banker has to know who you are. It doesn't mean that the public gets to know who you are. But in order to get that, the banker has to do a background search on you to make sure you're the type of person who can open an account with that bank. Second thing, you need a tax ID number. In order to get that tax ID number, if you open a bank account in your personal name, you need a Social Security number. You have a Social Security number, then the Social Security Administration and the IRS knows who you are. That should come as no shock to you. If you open up an account in the name of a limited liability company or a corporation, you're gonna need a tax ID number. When you file for a tax ID number under Form SS4 with the Internal Revenue Service, they give you a number that identifies your LLC in one of four ways. It's either taxed as a sole proprietorship, a partnership, a C corporation, or an S corporation. But that you have to make that election, and that is your election to make. So you disclose to the IRS who the responsible party is within that organization for purposes of taxes. Now you can ask your attorney to say, hey, I'm the responsible party, but no attorney in his or her right mind is ever going to say, yeah, I'll be the responsible party for your business with the IRS in the event that you make mistakes and they come looking for you. So get used to the idea that you're gonna have to disclose yourself to the Internal Revenue Service. If you're not willing to do that, then you're gonna find very few people who are willing to represent you because you're not standing up for the validity of your business. So there you got it. That's what you have to disclose. Now, if you open a bank account and you begin signing checks and you begin establishing trade relations with individuals or corporations, for instance, with your local ACE hardware dealer or with the city county and attorney who's collecting property taxes on behalf of real estate that you own, you want to have that registered in the name of the entity that you own the real estate in. So to be able to do that, you have to file a form with the municipality. How do you file the form? Typically, what you end up doing is you file the form with the municipality and either you sign it or you have a nominee sign it. And this is the critical aspect of it. When you drive by somebody's business and they look in the window, can they see who owns the business? And the answer is typically no, they have no idea. Nor are they entitled to know who owns the business unless they begin establishing a personal relationship with that person. So now let's get into an account receivable. You're in a business, you want to buy some things from someone, you want them to ship it to you, and then you want them to bill you for it. That's a personal relationship. You're gonna have to disclose who you are and accept responsibility for that transaction. That doesn't mean you have to disclose who you are to the public. You have a personal relationship with that person who's providing you whatever goods and services that you're providing. That's okay. That's an ongoing aspect of business. But somebody who drives by your business and looks in the window and says, Look, I could sue this person because I slipped and I fell on their concrete, you don't want those people to know who you are. So at the end of the day, you may maintain the privacy through your public filing. So let's say you have a corporation or an unlimited liability company and you file articles or whatnot of organization with the Secretary of State, typically with us, the Wyoming Secretary of State. You want to do so on a private basis. So you have your attorney or some other individual file those documents for you, and they are the responsible party for the filing of those documents. It doesn't mean that they answer for the debts of that business. It just means that they formed the business. And there's a specific statute in most jurisdictions, most states, that says the individual who's filing those articles of organization does not accept liability for having formed the organization. There's something doing it as an administrative function. A point that seems to be lost on a lot of attorneys because they don't take the time to read the statutes. So you form that organization and you're not public. And you file your annual report and you file your annual report through a nominee, and guess what? You are not public. You are not anonymous, the banker who knows who you are, the IRS knows who you are, your trade relations know who you are, but the public doesn't know who you are. And that's the distinction between privacy and anonymity. Anonymity is something that is never going to occur in the United States in a legitimate business. Privacy is something that you should always absolutely have on your side. Now let's get to one of the biggest single determinants of ways people find their way into knowing who's behind a business. Real estate deed transfers.

Maggie Pierce 6:20 So that's actually uh I wanted to cover a bit more about the basics of privacy before we got into real estate, if that's okay. Um, because I do I do have that later on in the episode. I think I just wanted to talk a little bit more. I think we've clearly established that anonymity is not possible under US law, but it is so as long as you're running your business legitimately and legally. But a lot of marketing in the trust space and LLC space focuses around anonymity and people talk about anonymity a lot online. I guess do you have any comments on that, or what do you think of the firms that sell anonymity, and do you have any advice for people in dealing with that or how they should think about that sort of marketing?

Mark Pierce 7:06 My feeling is that if a company is selling you anonymity, they're selling you a pig and a poke because they cannot give you anonymity. If you want to open a bank account, the bank has to know who you are. If you want to get a tax ID number so you can file taxes and get a checking account, the IRS needs to know who you are. If you go to get a loan extension of credit from your trade creditors, those trade creditors need to know who you are. If you open an account with a brokerage firm to put cash and securities into that, into that firm, then that firm needs to know who you are. So there's no such thing as anonymity in your trade relations. There's no such thing as anonymity in your relationship vis-a-vis the U.S. government. That just doesn't happen. So if somebody comes along and says we're going to give you complete anonymity, they're liars. What they can give you and what they should give you is privacy. So let's talk about the state of Wyoming and privacy. And this is one of the great things that comes out of the state is that my family's business is nobody else's damn business. So if you want to find out about my business, you better take a better tack than what you're going to get from the state of Wyoming because they believe in privacy. You can't drive down the street and say, look, I need to know who who owns that building, because it's simply not disclosed to you unless you disclose it. So you have to get a firm that's going to file your organizational documents with the Secretary of State on an anonymous basis, meaning that you're not disclosed to the public. But it's not anonymity because you got to go bank accounts and you got to get a tax ID number, and you need trade creditors, and you need real estate taxes, you need personal property, you need all those things. The question is, how are you going to file them moving forward? So you disclose yourself to your bank, you disclose yourself to your attorney, you disclose yourself to uh the IRS, but you don't disclose yourself to anyone else. And how do you do that? You've signed through a nominee. Now, if you open trade relationships with another entity, let's say that you're buying, I don't know, Snickers bars from Mars Candy Company, I bet that's who manufactures them, you're going to file a trade application that someone has to sign on behalf of that entity. Why wouldn't you have us do that through a nominee agreement signing on behalf of your behalf? So your trade relationships are signed on your behalf. Would you like to get into the transfer of deeds at this point?

Maggie Pierce 9:35 Before we get into the deeds, I want to talk more about state privacy laws when it comes to LLCs. So we talked a bit about Wyoming already, going a bit further back to some of the basics of LLC formation. What information is typically available to the public when you file an LLC? And how does that differ from state to state?

Mark Pierce 9:54 If you organize an LLC, a corporation, a partnership, a limited partnership, you have to make a filing with that state's Secretary of State or whatever the term is in that particular state. So you have to file an entity election, let's say you want to do a limited liability company, and then it goes down from there and it says, okay, do you want to disclose who the members are? And so the answer is, I don't want to disclose them, but some states require you to disclose who the members are. Do you want to disclose who the managers are? No, I don't want to disclose that, but some states require you to disclose that. And you have to give names, addresses, and telephone numbers. Now, do you think that's a good idea to make yourself a publicly available registrar of that business? Absolutely not. Wyoming doesn't require any of that. In addition to that, on your annual report, Wyoming does not require you to inform them as to who's behind the company. And this is held up through legislature after legislature in Wyoming for one reason. Wyoming believes in privacy. The banks in Wyoming know who you are. The Secretary of State can find out through a subpoena who you are, because the registered agent was required to keep that information, but you can't get them on a walkthrough through the website. And that's key importance. Because at the end of the day, why do you want to publish yourself to everybody who would like to get information about every other limited liability company or corporation out there and you make it readily available to them on a public filing, and then you go into someone's database and now you're hacked. So, you know, that's what Wyoming's not about, because Wyoming believes that your business is private. You can choose who to disclose that business to. And that's the benefit of filing in Wyoming with the Wyoming LLC. If you go to an online organizational website such as Wyoming LLC Attorney or LLCAttorney.com, then what you're going to find is that that entity provides you with an organizer. That organizer is not responsible for anything that goes on in your LLC, and that organizer is not otherwise related to you in any way. The organizer simply formed the business. That way you're not disclosed to the public.

Maggie Pierce 12:04 Then we touched on this a little bit earlier with you talking about nominee services, but I wanted to ask about how much the way the LLC is run day-to-day affects whether or not the owners of that LLC maintain their privacy. Could elaborate on that a little bit, explain what a nominee is, how you find someone to act as a nominee, and then anything else that's relevant to day-to-day operations and privacy.

Mark Pierce 12:30 One of the key ways in which you maintain the privacy of your organization is to file public documents through a nominee. Nominees have been recognized in the United States. In fact, there was a Supreme Court decision back in 1929 that recognized the efficacy of nominees. So nominees have been around a lot longer than 1929. They're a legitimate way of doing business in the United States and preserving privacy. And one case comes to mind in particular, that's when Disney decided to expand to Disney World outside of Orlando. They began picking up land in the Orlando area using nominees on their behalf to make land acquisitions. So once it was that they got the parcels put together, some of the individuals who had sold those properties sued Disney, saying we would never have sold to them if we'd known that they're going to make Disney World out of it, and we lost a lot of money as a result of that. And the court looked at them and said, What? And threw the cases out. So it's a legitimate way to do business. So when you're buying and selling real estate, you're going to file a deed, a public deed that's available for anyone these days to go online and find a copy of that deed. And if it's bought by your LLC or your corporation, they find out who signed the deed. And then they connect you with that entity, and the next thing you know, everything they know about you and the company is published, and you've got an association. If you want to avoid that, you hire a nominee. So you can hire someone within your company, not the best idea, because that also associates them with you. Or you're hiring a law firm. Or you can go to Wyoming LLC attorney and you can hire them, and they've signed the deed and send it to the filing entity, and that gets filed. And Wyoming LLC attorney gets thousands of emails a month from people soliciting business because they've signed these deeds on behalf of people. And I review some of them. They're funny. Everybody just assumes that Wyoming LC attorney is the owner of this property when we're clearly listed as the nominee. So in my mind, you're avoiding a lot of hassle by signing your deeds through a nominee.

Maggie Pierce 14:38 Yeah, if beyond just caring about privacy for lawsuit reasons, it also really matters for reducing the amount of spam messages you receive.

Mark Pierce 14:48 Let me add something. So using a nominee reduces the amount of spam that you're going to get, both on your phone and on your email at the end of the day. But let's go one step further with that. Several years ago, just after the COVID imbroglio managed to start resolving itself, we got a call from a gentleman who had leased a real estate space in Denver to a great chef. And they had invested in this restaurant through the build-out, anticipating a 10-year lease. And then COVID hit and everything fell apart. And there was a substantial amount of money that was owned by this entity and by that restaurateur. So they wanted to know what the probabilities of success would be if they initiated a suit against that restaurant and against the entrepreneur. So we went in there and we looked. Who owns the LLC? Because the entrepreneur had not guaranteed the lease, but who owns the LLC? Can we break through that LLC? Can we get to the next level of ownership to find someone with the money that would be able to satisfy the amount of rents that we're doing? It was significant, millions of dollars. So we got in there, we took a look around, we found out after a period of time and initiating some litigation and doing some discovery that that LLC was owned by another LLC. We then put discovery in on the second LLC and it was quash. The judges basically said, you have an established liability getting from the first LLC to the second, let alone getting from that LLC probably into the next LLC or a trust. So our client came to us and said, What we can do? What can we do? We said, look, we put these things together for a living. This is how they're structured. This is how they work. This is how the cash flows. And just to be honest with you, you entered into a good faith contract with somebody. It fell apart as a result of COVID. I don't think they defrauded you. They just couldn't pay. And now at the end of the day, that restaurateur still has all of his or her assets. They're making money again, but they don't owe you any money and you have no ability to break through those entities. And that real estate developer looked at us and went, Oh my goodness, let's put one of those together for me then, because it isolates liability away from the owner so that you're always at risk for what you put into the LLC. If the LLC fails, it fails. But they can't come back against the membership interest holders or the managers of it. In fact, they usually don't even know who they are. And so it begins to be very difficult to disclose that information, particularly in Wyoming. And you can serve subpoenas, you can do what you want to do. We get them quashed all the time. In fact, there's one attorney in Sheridan that uh we use for quite a lot of these things, and I think he makes a living out of quashing subpoenas.

Maggie Pierce 17:28 Good. Um speaking of real estate, you touched on that a little bit there, and that is my next question, because real estate obviously is extra complicated because the deeds are public. So, what are options for holding property so that the owner's name isn't the one on the record? And how do you handle that for real estate investors specifically?

Mark Pierce 17:50 That's a good question. Real estate in the United States has become one of the clear mechanisms towards the aggregation of wealth for most families. And I can give you some specific examples of clients of ours who, quite frankly, have made tens of millions of dollars because they bought real estate in Denver in 1985 when it was at the bottom of the market. And by 2000, they're wit rich. By 2025, they're filthy rich. So, you know, good for them. They made the right moves at the time. But you would never buy a real estate asset in your personal name. You'd always put it into a limited liability company or a corporation or some sort of entity that gives you protection, anyone other than your individual creditors. So if that real estate entity fell apart and it didn't pay its taxes, you're not responsible for the payment of those taxes. That LLC is. So you lose the property, you lose your investment in the property, but you don't lose your home. You don't lose your wife's checking account, you don't lose your kids' college education, you isolate it within that LLC. And people said, you know, that doesn't sound right to me. At the end of the day, you should be responsible for that. My answer to that is, well, that's how the that's how the investment system works in the United States. And it started with the Hudson's Bay Company in England in the 1600s. How do you amass capital to pursue a business objective and protect the passive investors from liability if that objective falls apart? That's all it is. And that's what allows us to raise massive sums of money to go out and do really beneficial things for our economy and our people, because you limit the liability of the investors to the amount of money that they've got in the deal, and that's it. So that's, you know, that's one of the chief benefits that you have from the formation of these LLCs. And it's a legitimate way of doing business. That being said, typically what you run into is that if an LLC runs into financial troubles and are unable to pay their bills, if you have a creditor who's a real stickler, they go after the LLC, and then guess what? They can't get their money and they were defrauded. My goodness, this is terrible. I would never have done this deal if. And then they make up a suit, their attorney makes up a series of excuses as to why they should be able to break through this LLC. Well, in Wyoming, it's almost impossible to break through an LLC. In addition to that, if you subpoena the names of the individuals who own that LLC, they're not going to give them to you. So you can't even put them in the suit. So if you get into the LLC and prove that you should break through the LLC, then you have to go find the LLC membership interest holders. That's not a foregone conclusion there either. So that's one of the real principal benefits of having an LLC in Wyoming. The best way to buy a piece of real estate is to form a limited liability company, form it so that it is private and your name isn't disclosed on the public register, and then go to a bank, take out a loan. The loan's in the name of the LLC, you as an owner guarantee that loan. That guarantee is not a public document, it's a document between you and the bank. So you haven't disclosed your identity to anyone other than the bank, which is a personal transaction, and of course you have to disclose that. Now the LLC owns this piece of property. How do you transfer the property into the name of the LLC? Somebody has to sign that deed on behalf of the LLC. So you hire a nominee such as your attorney or Wyoming LLC attorney or LLC Attorney.com to sign that deed on your behalf, paying a small fee for it. That's what maintains the privacy within that LLC as to that piece of property.

Maggie Pierce 21:21 Okay. How does that change depending on which state the property is in?

Mark Pierce 21:26 It's my understanding that almost every state allows nominee agreements for the transfer of property into an LLC. The question is whether or not that LLC and its filings with that state has to disclose who its members and its managers are. There are a few states that require that disclosure, not all states. Wyoming is not one of the states that requires it. So what you end up doing at the end of the day is that you require nominee agreements to disclose who the manager is as a nominee on behalf of the LLC. So the managers aren't signing the nominees signing on behalf of the LLC.

Maggie Pierce 22:00 We were talking earlier about certain states requiring you to listen to the members of the LC on the Secretary of State website. How do you handle that situation when that's required? But they have to form the LLC in that state because the real estate is in that state. What do you do then?

Mark Pierce 22:20 Okay. If you're required to form an LLC in a state that forces you to uh submit to that state information concerning the members or the managers, then the easiest way to get around that is you form a Wyoming LLC to own the LLC in the state that requires a disclosure. So that who's the member? Oh, it's XYZ LLC in Wyoming. Who are the managers? Oh, the managers are these nominees on behalf of this entity. That way you've disclosed none of the officers, none of the directors, none of the membership interest holders. That's the easiest way around that requirement.

Maggie Pierce 22:53 My final question on real estate is about people's personal homes if they own the home that they're living in and they're not planning on renting it out or anything like that. Is there anything you recommend to people in that situation where their concern isn't so much liability, where they would necessarily need an L fee, but they're just concerned about people finding out where they live for whatever reason? Like if I know, for example, it's like you would know if somebody where somebody lives if you follow them around, but I'm assuming like that some people aren't necessarily celebrities, but if somebody knows them by name and is trying to find them out, how do you make that more difficult to find out where somebody resides? Or do you is that just a lost cause and you don't recommend people do anything with that?

Mark Pierce 23:48 One of the difficulties that you have in maintaining the anonymity of a private residence is that you go in and in and out of it all the time. You, your spouse, your kids, your friends, relatives, somebody goes and sits outside the house and at the end of the weekend they know exactly who all your friends are, and they saw you going in and out and they look at your how how your car is registered, right, at the end of the day. So I think it's very difficult to maintain anonymity, but what you can't maintain privacy there. But what you can do is that in respect of how you buy the house and who signs the deed, you can maintain the anonymity that way. So it makes it much more different for some of the much more difficult for someone to sue you. Our alternative typically is with respect to a personal residence, is you have a certain exemption amount in a state in in Florida, I think is what, five, 10 million, Wyoming is $40,000, you can't even get into a mobile home there. But you know, a lot of states have varying degrees of your homestead exemption. But my my thing was at the end of the day, why would you not go out and do equity stripping? So what you would do is you say, okay, I bought this house for a million dollars, and I have paid up $500,000, I have $500,000 of equity there. Let's say your homestead exemption in a state's $50,000. So you're $450,000 at risk if something were to happen. So what do you do? You go put a HELOC in place with a bank for $500,000. If anything happens, you hit the HELOC, the money comes out of the house, and they're left with nothing to t to attach. So that's the best way to get around that is to maintain the privacy and the filing of the D so people don't know exactly who owns it, even though they know you're going in and out, and then put a HELOC against it in the event that they try to break through that and you can strip the equity out in another way.

Maggie Pierce 25:35 That was my last question on real estate that I had prepared. Is there anything else that we didn't cover before we move on to trust privacy?

Mark Pierce 25:45 Yeah, one of the interesting things about real estates is that you can own it completely privately for the most part. People have a very difficult time breaking into who actually owns those, owns those entities or owns the property within it. So what you do is you put in place a series of LLCs that own the real estate, and then when excess working capital accumulates within that LLC, you flush it up to holding companies. Those holding companies are Damaso and Wyoming, and they have bank accounts in Wyoming so that all your excess cash flows up into those accounts. That way, if somebody sues you, they can't attach those accounts anywhere other than going into Wyoming and attaching the accounts there. That beats privacy and anonymity if I can tell you this. It beats privacy and anonymity hands down because if there's no cash involved and the equity stripped out of each one of those LLCs as they should be over time, then there's nothing for creditors to attach. And at that point you've got something that's completely negotiable because you've got the cash in one place to negotiate settlements in the other. So, you know, let's say that you're a million dollars to the goods, somebody sues you for a million, and they've got a legitimate claim for doing it. Okay, let's say it's not a false claim. So you defend it, but they're still gonna get a judgment against something for a million dollars, but they have all these hoops to jump through. It's gonna take them years, and at the end of the day, they're not gonna end up with anything, or probably won't end up with anything. What do you think you can sell that suit for? So if you have a million dollars in liability and you sell it for 50,000 and 50,000 of attorney's fees, you're $900,000 ahead of where you would be if you had not engaged in these structures.

Maggie Pierce 27:23 Awesome. So then moving on to trust privacy. Uh trusts are private documents and you don't file them anywhere. What does that mean in practice for what the outside world is able to see, if anything?

Mark Pierce 27:36 Yeah. Now we're talking about anonymity.

Maggie Pierce 27:40 Okay.

Mark Pierce 27:41 You know, it was anonymity versus privacy at the level of the LLC, but at the trust level, it's anonymity. The only disclosure you have to make as a trust is with the US government and to your bank. That's it. And even then, you may not have a cash account at the trust level. If you don't have a cash account at the trust level, you don't need a tax ID number unless it's a certain depends on the type of trust it is. And you can put together the tax structure that you like that benefits you the best while maintaining the integrity of that trust and the integrity of the trust company that's operating it and the ability of people to break through those LLCs into that trust. But what I recommend to people is to say, look, you're still going to have to go to your bank and you're still going to have to get a cash account in the name of the trust because if you're doing it right, you're taking the money from the LLC level, moving it up to holding companies, and then moving it up to the trust. So you have to have a place to put the money. So you have bank accounts, you have stock accounts, you maintain your liquidity at the trust. Those are, you know, they're not completely anonymous, but they're about as close to anonymous as you're going to get in the United States. And whether you like it or not, the United States is a really good place to keep money at the end of the day. And I know that people get out and they push the Cook Islands, they push Nevis, and they push all these places as though they're a panacea to all your problems. They're not. Because at the end of the day, that judge can throw you in jail to get the answer the judge says that these attorneys are entitled to. And after you sit there for six months, you're probably going to give the information up. Because my experience is that middle class or upper class people don't do really well in county jails. So those are the settlement obligations that you have in those instances, right? You're not going to get over that. So you open the trust, you open the bank account, you file with the IRS and ask to everyone else, you're completely anonymous. Because if they get these liabilities bubbling up from the LLC, they stop at the trust level. Because in Wyoming, if you sue a trust or you sue an individual who's a member of that trust, a beneficiary of the trust, in a court or otherwise, you have to go to chancery court. Those records are sealed. No one has access to them other than the parties and they're sworn to secrecy. If they violate that secrecy, the attorneys lose their license. They're going to remain private. The litigation concerning that issue will take place in a nine-month period. The judge who hears those cases is well-versed and adept as an attorney to come to a good, thorough resolution as to what's gone on within that trust. So if you administer it the right way, they're never going to win a judgment in Wyoming against you, and those funds will be sacrosanct. In addition to that, they're going to sue the individual coming through that is going to say, I need to know the beneficiaries. And the judge is going to say, Why do you need to know the beneficiaries? Because we need to look at their financial statements. The judge is going to say, you haven't proved the liability. So no, we're not going to disclose the names of the beneficiaries to you, nor are we going to have them produce their financial information to you. You're out of luck. You're taking a shot that you're going to get a judgment. And if it's not fulfilled by the trust itself, you're going to be able to get it from these beneficiaries. Now let's move over to the trust. Why do you think the trust owes you money? Because they've been sweeping up excess working capital funds up? What is it that you have against that trust that entitles you to liability for the trust? And the answer, nine times out of ten, if not 99 times out of 100, is I don't have anything. They just have money and I want it. So that dog is not going to hunt, and at the end of the day, those defendants are going to find themselves out in the street. So that's why you put that trust in. That trust is as close to anonymity as you will ever get. And within Wyoming, it is anonymous. I can't hear you.

Maggie Pierce 31:34 I muted myself because someone was making a smoothie, so I don't want you to hear that. That actually raises a question for me when people sue like do people often sue trust? My understanding was that oftentimes when trust gets broken into, it's because rentors or beneficiaries or whoever are respecting the legal difference between them and the trust, using it as their personal picking bank and not keeping the proper records and things like that. Are there legitimate claims people make against the trust ever that allows them to get paid out by the trust other than the example I just gave?

Mark Pierce 32:14 You know, there are there the only way that you're going to break into a Wyoming trust and get a distribution on half of a beneficiary is if you sue the trust directly because the trustee and the beneficiaries are not following the terms and conditions within the trust, but then you have to have some have to have some specific evidence that they haven't. And the easiest ways to get at that in Wyoming is that you have to have a discretionary distribution committee that approves all the distributions before they can be made. If you had adhered to that and you haven't taken illegal distributions out of that trust, it's almost impossible to break that trust. Here's the additional thing to remember about beneficial interests. They are not attachable by an individual. Let's say that the beneficiary owes someone a money, that someone comes and gets a judgment against that individual. They can't attach that beneficial interest. They can't force the trust to make a distribution, nor can they sell that beneficial interest. It's just simply not available. So the way that we get around those attachments, and this is interesting, is that you make a distribution on paper to that beneficiary. So you write out, let's say we were distributing $100,000 to XYZ beneficiary, to ABC creditor because of this pass-through. ABC Creditor, you're being assessed the taxes on that $100,000. The IRS is owed 35% of that. You owe them a check for $35,000. And the creditor comes back and says, but wait a minute, we didn't get a distribution. Well, we know that. It's a phantom distribution. We made the allocation of the taxes, but you're going to have to pay the taxes yourself. The trust is not going to pay the tax. And at that point in time, the bank finds themselves owing $35,000 against a $100,000 debt that they thought that now is $135,000 debt, and they wonder how this happened to them. And the reason it happened to them is because the statute allows it. So if you're going to get really aggressive in your trust administration, that's one of the ways to break those creditors' holes on those trusts and to keep them out of that beneficial interest. The other way is that let's say that you've got one of your kids has had issues and they have judgments against them and they want to go do something that will benefit them, like go to college, go to massage school or something. You can make direct distributions to pay their rent, direct distributions to pay their tuition, direct distributions to pay for their food without it going into their account. Those are allowed so you can avoid having to pay for that judgment that's attached to the beneficial interest for them. So those are the two ways you get around it. You break the creditors back financially by having to pay the taxes on it, and you just ignore their order and you make indirect distributions, which you're allowed to do by statute. Now, if they get nasty about that, say they're in Connecticut and they want to run to Wyoming and scream about it, good luck. You can come into our chancery court and you can explain to the judge why it is the Wyoming statutes don't apply to you in Wyoming. One of the best things about the Wyoming Trust, and I have listened to podcasts by other attorneys saying that look, Wyoming statute of limitations is this. If you transfer assets into a trust, your creditors have four years to go after those assets until that trust actually owns them. It's called the Fraudulent Transfer Act or the Uniform Avoidable Preferences Act, whatever's in place in your state, you've got that four-year period. Now the individuals who espouse that view apparently are incapable of opening up the Wyoming statutes and reading what applies to them because there's a takeaway from there. That takeaway is this. If you publish notice as to unknown creditors and send a letter to those who are known, they have four months to object from the date of the publication or the date of the mailing of that letter. They have four months to object. Otherwise, the statute of limitations run and they have to initiate a suit within that four-month period. So the statute of limitations is four years as to the individuals who aren't paying attention, but it's four months to those of us who are. So that, in my mind, is the most beneficial statute of limitations in the United States.

Maggie Pierce 36:20 Got it. Is there do you have any final thoughts on privacy anonymity or anything else that we've covered today?

Mark Pierce 36:29 Yeah, one of the great things about the Wyoming Asset Protection Trust, it's a legacy trust. It protects the legacy for your family and it protects them from a variety of issues that arise within the businesses, within the personal life of your family, but most important, it keeps the extraneous creditors out. And I've told people this for years. If you're going to get married and you have one of these trusts in place, that's the most effective prenup you can get. But let's say that you form the trust after you were married and things are fine, you've got kids, you do what you need to do, the kids get married. The spouses come in of those kids, they divorce those kids, which happened on a fairly regular basis from my experience. And that spouse comes in and says, I get a piece of that trust or I get an income distribution out of that trust. Yeah, no, they don't. 36 states have considered the issue. All 36 states came down the same way. That is not a marital asset. That is not something that you can claim as yours not being a part of the family. And even as being a part of the family, it's still not a marital asset, so it doesn't go into divorce court. And I'll give you a specific example of a way this has worked on a couple different occasions. I had a client of mine from New Jersey, he and his wife and his three adult kids entered into a legacy trust. It was structures and asset protection trust. They entered into this legacy trust about seven or eight years ago, and they put all their assets in it, and they were being administered, and they were making good money, and distributions were being made, et cetera. She decided, the wife decided, I'm going to get divorced from this man. Fair enough. They'd been married a long time. It wasn't working out, whatever. They both wanted to get divorced. She came in and said, I want half of what's in that trust. And he came back and said, You signed a contract. This contract says these things apply. That is not an emerital asset, unless you can allege fraud or misrepresentation or whatnot, which she could not do. So she went into a divorce court in New Jersey and said, this just simply is an emerital asset. This is an asset outside the estate of the defendant and the plaintiff, the married parties. And the judge looked up and said, I don't have to rule on the efficacy of the domestic asset protection trust in New Jersey, of a Wyoming trust. What I have to look at is that you entered into a contract that provided for legacy planning for your family. You're subject to it. This trust is enforceable here, and it's not part of that asset. It's not an asset of that divorce estate. And in my mind, that's the ultimate protection, isn't it? You've protected yourself against divorce. You've protected yourself from IRS lanes. You've protected yourself from bad litigation. You've protected yourself from the drug and alcohol addictions of all your kids, because you got five kids you're going to have problems, probably with one, from what I've seen, sometimes more, sometimes none. Gosh, I wish you best of luck on that. But it always seems to be one that comes out. And you protect yourself from. And I had another client who was in an asset protection trust. He had his LLCs underneath him. He was managed it the right way. And he was in Texas. His son came home and decided to go for a joyride in his parents' car. The son was 15 and did not have a driver's license. Took the car, went out, and allowed his friend to drive the car. They crashed the car, killed the friend. And it was a horrific accident. And so the parents came back and went over the policy limitations on the tri on the car that was insured. And it was a question of whether or not the uninsured motorist, this kid wasn't even licensed. So was there adequate supervision? All these issues came into play. They could have been sued for a great deal more than what we finally settled on because they went a little over the policy limits, but they realized they would not get into that trust. And so they accepted a modicum of a settlement. This I think was a four or five million dollar case. They settled for a couple hundred thousand. Now you might say, oh, you know, why didn't you get away with a full amount? Well, I don't know. Pigs get fat and hogs get slaughtered, is what my tax professor used to say. That's not a bad result. When they come after you for $5 million, you settle for $100,000, take it as a win and go home. So those are my those are some real life experiences of how these trusts work. I know that there's a couple of guys who push these offshore trusts, they're the only legitimate trusts for asset protection, et cetera, et cetera. And they cite these cases that are bad law. You know, just I look at those cases and go, really, that's what you're up to? No wonder you were held liable from it. Any idiot at a law school is going to tell you that's not going to work. But you're telling me that I can go to Cook's Islands or Nevis Islands, and somehow this magically reduces your potential liability on your trust assets to zero. Uh-huh. Well, let's say if I've got this straight. You own five apartment complexes in Phoenix, Arizona. They're in LLCs and they're owned by an LLC that's domicile in Wyoming, and your trust is in the Cook Islands. So the judge gets a hold of the individual who is the you know the progenitor of the trust and says, have you been to the Cook Islands? No. If I brought a map in front of you, could you show me where the Cook Islands are? Uh well, maybe. Okay, well, let me ask you, how many people live in the Cook Islands? Oh, I don't know. Well, I'll tell you, the latest census says 17,000. Let me show you a picture. And it looks like an atoll, right? Just a sand spit of an A-toll. So let me see if I've got this straight. You took $6 million and you transferred it to someone you've never met, never shaken hands with, and never spoken to on a salt, on a salt spit of an island in the middle of the Pacific and gave them free reign over that money. How did you get the six million in the first place? Because that's the most idiotic assertion that I've ever seen. And you're telling me I don't have access to that money. Well, here, I'll make it easy for you. You're in contempt of court, go sit in the basement, see how it goes for you, and come back up here on Monday. And if you haven't changed your mind, I'm going to leave you there for six months, and then I'm going to haul you up and I'm going to ask you, have you changed your mind? And you say no. Guess what? It's a new contempt charge, and you get to do that over and over again for six months of a time. So my experience was with middle class and upperclass, middle class, and lower upper class people is that they just don't do very well in the county jails where they have to do their time. And they're not treated with the level of respect that they're uh that they're used to. So, you know, let's lose this idea that the Nevis and Cooks Islands Trust are the only way that you can protect your assets. You can do it legitimately within the United States using the U.S. Constitution and the full faith and credit of that Constitution.

Maggie Pierce 43:00 Thank you for listening to Keep What You've Built. If you're interested in speaking with Mark, you can schedule a meeting with him through the link in the show notes or by visiting WyomingTrustAttorney.com. If you've enjoyed the show, please rate it five stars or give us a like. We'll see you next time.