Scott Smith is the founder and CEO of Royal Legal Solutions out of Austin, TX. He graduated from Albany Law School and began his career in high-stakes corporate litigation. As a real estate investor and asset protection attorney, he has spent the last 8 years of his career working with thousands of clients all over the US and Canada to protect and grow their hard-earned assets.
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3 Value Bombs
1) There’s no cap on losses. People can sue you for as much as they want.
2) If you own a property in your own name, that’s the absolute worst way of possibly owning a property. That means that if anything happens in your life, they take everything that you own.
3) What you always have to do as a business or as an individual is to separate all of your assets from all of the operations.
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**Click the time stamp to jump directly to that point in the episode.
Today’s Audio MASTERCLASS: Flexing Legal Strength For Profits with Scott Smith
[02:04] – Scott shares something about himself that most people don’t know.
[04:02] – How to use a Series LLC to hold your assets and scale for free.
- There’s no cap on losses. People can sue you for as much as they want.
- Rich people don’t own things. They have companies that own things.
- It’s pretty cool when you can walk around the world and have a sense of security in your business.
[05:55] – There’s Sole Proprietorship, C-Corp, S-Corp, LLC (Limited Liability Corporation), etc. Scott breaks down the differences between those classifications and why LLC is the way to go.
- If you own a property in your own name, that’s the absolute worst way of possibly owning a property. That means that if anything happens in your life, they take everything that you own.
- Scott personally likes to use a Series LLC because it’s a structure that you can establish in 13 different states right now.
[08:06] – If you want your business to become an LLC, is it too late if you’ve already started, or can you go back at any point and work with somebody and have all of that taken cared of?
- Most people are pretty far into things before they realize they’re at risk. Then there are others who are proactive and who want to build the right foundation for their future.
- Your website, your intellectual property, your trademark(s) – all of these things are assets that are owned by your company, but they need to be held in a separate asset holding company like a Series LLC.
- All of your operations should be through a completely separate shell operating company that doesn’t own anything, but manages all of your affairs.
[10:21] – The difference between a Series LLC and a Shell LLC and how we can isolate the risks into the shell.
- What you always have to do as a business or as an individual is to separate all of your assets from all of the operations.
- As entrepreneurs, it’s too expensive to be 100% good.
- You’ve got to be able to move fast as an entrepreneur. You’ve got to have that first move advantage.
- Even if you’re going to try to do everything right, there are things that aren’t being done correctly. Who knows what people are going to come at you with? There are trolls out there looking for anything that they can do to wedge in there and figure out how they can take you down.
[15:36] – What does “piercing the corporate veil” mean?
- Most problems people have when it comes to piercing the corporate veil are that they didn’t keep accounting records correctly.
- In a shell LLC, if you’re going to get sued, and then the lawyer or the person paying for the legal fees realize that there’s nobody home in that shell corporation, even if they win at the highest level, they’re winning literally nothing.
- Go to Royal Legal Solutions to download your free report!
[22:05] – Use a Solo 401k that can maximize at least an extra $50,000 a year tax free.
- You can loan yourself half of the value of that 401k tax-free and take the other half and make tax-free investments with it.
[26:05] – Scott’s opinion about organizing your life so you can really take care of all the people you love.
- The number one thing to keep in mind when you’re looking at planning how you’re gonna pass on wealth to your family or the people that you care about is you have to have a structure in place, otherwise, the state will make those decisions for you.
- When you’re protecting yourself, running a business, or taking care of the people that you love, you’ve got to set aside time, energy, bandwidth, effort, and money to make things happen, otherwise, it’s like a house of cards.
[28:29] – Scott’s parting piece of guidance
- These are building blocks. Take it one step at a time. A couple of these small steps can get you to 80% savings and having the protection you need.
- Visit Royal Legal Solutions for your free report: MAXIMIZING Your IRA – Information You MUST Know To Get ALL The Benefits And Avoid ALL The Pitfalls!
John Lee Dumas: Boom, shake the room, Fire Nation. JLD here. And I have an audio masterclass that you’d better believe that I’m going to be taking notes on. And you’re about to find out why. This audio masterclass is Flexing Legal Strength for Profit. Now, I’m bringing Scott Smith on the show here because he’s going to be breaking down how we can use a series LLC to hold our assets and scale for free. We’re going to talk about how to isolate all your risk into a shell LLC. We’re going to talk about how using a solo 401k can maximize an extra $50,000 a year tax free. And how to organize your life so you can take care of those you love when you die. Now, I know that might sound a little morbid at the end there.
And I know that some of these things might be like, “Really, John? Like, really? Do we need to talk about this stuff?” And the answer is, “Absolutely, yes.” Because so many people work so gosh darn hard and they generate revenue, you make money. You do all these different things. And then you just didn’t set this type of stuff up right one time and you’re not protected. And something happens and it all comes crashing down. I’ve seen it happen over, and over, and over again. So, you need to listen to this episode to protect yourself and your family, Fire Nation. So, who is Scott? Well, he’s the founder and CEO of Royal Legal Solutions out of Austin, Texas.
He graduated from Albany Law School and began his career in high-stakes corporate litigation as a real estate investor and asset protection attorney. He’s spent the last eight years of his career working with thousands of clients all over the U.S. and Canada to protect and grow their hard-earned assets. And Fire Nation, you want to protect your hard-earned assets. You want to grow your hard-earned assets. So, don’t you go anywhere because we’re going to dive in when we get back from thanking our sponsor.
[Break in Audio]
John Lee Dumas: So, Scott, say, “What’s up?” to Fire Nation. And share something interesting about yourself that most people don’t know.
Scott Smith: Yeah, what’s up, fellas? I’m Scott Royal Smith. And I just climbed Kilimanjaro a few months ago back in March. I’m competing competitively in jiu-jitsu still at 33 years of age. And I just hit $1 million per year in passive income. So, thank you very much.
John Lee Dumas: Wow. Those are all things I didn’t know. I did not know your middle name was Royal. But now, Royal Legal Solutions makes a lot more sense for your business name. And Kilimanjaro, awesome stuff. That’s definitely on my bucket list. And $1 million – did you say a month or for the year for passive income?
Scott Smith: Oh, I wish it was $1 million a month. Bro, I’m not at that level yet.
John Lee Dumas: That’s a goal for both of us then. A goal for both of us is to get to $1 million a month in passive income. So, that’s cool. And listen, we have a killer audio masterclass. I’ve already teased Fire Nation a little bit about it in the intro. But Fire Nation, this is all about flexing legal strength for profits. And of course, we have Scott Royal Smith with us here today. So, Scott, just in a couple seconds here, give us a little teaser about what we’re going to talk about. Then we’re going to dive right in.
Scott Smith: Yeah. So, today, we’re going to be talking about how to use series LLCs and trusts to give you the maximum protections and hold all of your assets in your company anonymously. It’s the same system I use for solve with investing in over ten different states right now and protecting over $1.2 billion in assets for my clients.
John Lee Dumas: I told you this in the beginning, Scott. But Fire Nation, I haven’t mentioned this yet. I literally have a notepad right here. Because I’m taking notes. Because I recognize how important doing these things right in your business – preferably, as soon as possible when you’re starting – can really save you from just collapsing like a house of cards from one little oversight down the road. So, I’ve got my pen and paper ready. And I was really interested about this. Because I get the whole LLC thing. But how you phrase it about using a series LLC to actually hold your assets and how to scale for free with that, I don’t really know what that means. So, I’d love for you to kind of expound upon that and really break it down.
Scott Smith: The basics of asset protection really come down to help you avoid what happened to a friend of mine. Where he owned $3 million in assets and he thought his insurance was enough to protect him. Had everything in his personal name. He ended up getting sued from another unrelated lawsuit. And they ended up taking over $3 million from him. Right? So that was the story that anchored for me that says, “Holy smokes. That can happen.” You know? Out of nowhere, you get sued. And there’s no cap on lawsuits, right? They can sue you for as much as they want. And that’s essentially what got me excited about asset protection is saying, “Well, I don’t know about you. But I can’t afford to take those kinds of steps back or I just choose not to.”
And that’s part of what we do. We fundamentally ask ourselves, “What am I willing to risk? And what am I not willing to risk?” And one of the things I’m not willing to risk is significant amounts of my net worth at any one particular time. And that’s why I do lawsuit protection. And that’s why every single person inside of the United States should have an asset holding company. And what I like for asset holding companies is a series LLC. Asset holding company means I no longer own anything. John shouldn’t own anything anymore. Scott shouldn’t own anything anymore. But their asset holding company should. Rich people don’t own things. They have companies which own things.
And what that allows you to do is say, “Anybody could sue John. Anybody could sue Scott. And they don’t care.” Because they don’t own anything. There’s nothing there for you to take from them. And I think that’s pretty cool when you can walk around the world and just have that kind of sense of security.
John Lee Dumas: I love that. And just for Fire Nation, breaking it down. LLC stands for Limited Liability Corporation. And not to go too far down this road, but Scott, I know there’s sole proprietor. There’s LLC. There’s C Corp. There’s S Corp. Can you kind of maybe break down what the difference is between a couple of those so that we can understand why you think LLC’s the way to go here?
Scott Smith: If you own a property in your own name or you own it with a partner, that’s the absolute worst way you can possibly own property. In your own name is pretty bad. Because that means if anything happens in your life, they take everything that you own. Right? If you own things that are jointly owned with you and your friend maybe on title to a piece of property together –
John Lee Dumas: Double trouble.
Scott Smith: – if anything happens in either one of your lives, they can take both of your stuff. Right? So, what you need to use is an LLC or an S Corporation in some circumstances. And that has to do with taxation. I personally like to use a series LLC. Because a series LLC is a structure that you can establish in over 13 different states right now. You can establish it in one state and use it in any state. Just like people have been doing with Delaware LLCs way back, right? You file it in Delaware and use it anywhere. Because Delaware has super strong laws. Texas is on par with Delaware for having the strongest laws in the country. There’s no yearly fees in Texas, so it’s cheaper than the other states. Even though I can form anywhere, I choose Texas.
And then you get the security structure. Which the basis of it – and this is the coolest thing ever. Even though it’s been around for 20 years, I don’t know why people don’t know about this. You can form one company. You pay one fee. You have one bank account for it. You keep one set of books, accounting records for it. And then what you can do is create an infinite number of what’s called a child series of that LLC. There’s no additional filing fees or costs to create a child series. But a child series acts just like an LLC. So, essentially, on your desktop after you create one of these series LLCs, you can spit out new LLCs for free. And as many as you want. Which is really cool for holding assets, entering into partnerships, entering into new business deals, or doing anything you want with them.
John Lee Dumas: So, what if you haven’t done this? What if you’re listening right now and you’re like, “Man, I haven’t done this with my house. I haven’t done this with my business yet”? Is it too late since they’ve already started? Or can you go back at any point and work with somebody and have all of that taken care of?
Scott Smith: Oh, listen. I work with over 1,500 investors across the country right now. And that number is ever growing. Right now, we’re growing at a rate of about 20 percent per month because of the number of people that are coming in. And most people are pretty far down the field before they start to realize, “Holy smokes. I’m at risk.” We have some people that are proactive that are saying, “I want the right foundation for my future. And I want to work with somebody that can help set me up with that.” And that’s what we specialize in is both of those types of people. We can either correct what you’ve done that’s been on the wrong course and get you straightened out or what we can do is get you set up to say, “Here’s where I want to go in the next three to five years.”
And we can help chart you out a tax plan as well as a legal structure that’s going to allow you to do that. And that’s not just for the asset holding side. There’s this whole other piece that people – especially entrepreneurs that I work with – don’t know about. Which is you need a separate shell operating company to run your business out of. You know, your website, your intellectual property, and your trademarks. All of those things are assets that are owned by your company. Those all need to be held in a separate asset holding company like a series LLC. But all of your operations where you take in money, where you hire employees, where you’re hiring contractors – that should be through a completely separate shell operating company which doesn’t own anything, but it manages all your affairs.
And the reason to do that is because now, you’ve bifurcated all of your liability. People will sue the operating company because that’s the one they actually did business with. Little do they know, that operating company doesn’t have anything for them to take. All of your wealth stays protected for your life, and yourself, and your business all inside of an asset holding company. So, even in your business, there are ways to do this that previously were only available to the rich and wealthy and the big corporations. It’s now available and being used by entrepreneurs all over the country. And I help out a ton of people out here in Austin too and use some of these advanced structures.
John Lee Dumas: So, shell LLC, series LLC, and we were talking about a couple of different things here. And when I think shell LLC, I think, “Yeah, like you just mentioned. This is for the big boys. It would cost a lot of money to do that.” But you’re saying it doesn’t have to. So, real quick. Do this for me. Break down the difference between a series LLC and a shell LLC. Because I just want to make sure that we’re clear on that. And then move into how we actually isolate all that risk into the shell. I mean, I know you just mentioned that with how they can sue the shell company and there’s really nothing there because it’s almost more like a pass through. But break that down for us. Let me kind of go over that one more time. The difference between a shell LLC and a series LLC and how you can isolate your risk into that shell.
Scott Smith: From the high level here, what you always need to do as a business or as a person is separate all of your assets from all of the operations of whatever that’s going to be. Separating your assets will go into a series LLC. Because that allows us to compartmentalize every asset into its own individual child series for liability purposes. Right? So, that’s what we use to hold all of our wealth no matter what it could be. It can hold anything, right? Cash, stocks, bonds, whatever else you want to. Because it’s just the ability to create an infinite number of LLCs which makes the series LLC special. Now, on the other side of the coin is where we have all of the operations of your life or your business.
That’s what I’m referring to as a shell LLC. Which is just your traditional LLC. Like one you could even form up on Legal Zoom or something. Right? But all of your business operations – your contracts, your payments – are all going to flow through that shell operating company, that traditional LLC. But the money will then be channeled to the asset holding company. Because that’s the ultimate owner of all of the assets. And then we put in place here an agreement between the two companies that defines their relationship. So, in the real estate sphere, what that looks like is you have an asset holding company which holds all the properties. And then you have a property management company that’s collecting the rents and then otherwise hiring contractors or whatnot.
And then the agreement between those two entities is what you would call a property management agreement. Which is just a contract. But in the entrepreneur field, just generally, what we’ll do is we have the same asset holding company which holds all of your assets – your personal assets, your website assets, your intellectual property, et cetera – that just has a contractual relationship whatever way you want to define that as a subsidiary LLC that will then act on its behalf to be able to conduct the business affairs. And can do the billing and do all the advertising for you, et cetera. Right? So, that way, if somebody says, “Hey, you defrauded me with that advertisement” or “You broke XYZ regulation” or whatever you did, that’s not your asset holding company that has all the money that did that. That’s the shell operating company.
At the end of the day, what you’ve just done once you set up these two different companies – completely separate companies separate and apart from each other – is say, “I don’t have to be 100 percent good on everything. I can be 80 percent sure of what I’m doing here on my operations front and still be okay. Because if I do something wrong, my worst case scenario is that I shut down that LLC, and then I start up a new one.” Because as you know as entrepreneurs, it’s too expensive to be 100 percent good. We need to be 80 percent sure of what it is we’re doing so we can take action, and corner markets, and be able to make the most amount of money that we can do with that.
And that’s the way you do it is you compartmentalize your downside risk by having that act through a shell LLC that you can easily just wind down and start up a new one if things go south. But you haven’t lost all of your capital, and the momentum, and the assets of your company in the process.
John Lee Dumas: So, a couple things about this, Fire Nation. Number one, as Scott mentioned, you’ve got to be able to move fast as an entrepreneur. You’ve got to have that first move or advantage. There’s a land grab in every single opportunity. And if you sit down and you say, “Okay, let’s go slow here. Let’s figure this out,” you’ve already lost the game. So, as entrepreneurs, we’ve got to move fast. And let’s be honest. Even if you were going to try to do everything right, there’s things like GDPR and all these other things that are coming out that who knows what people are going to come at you with? I think there are trolls out there that are looking for anything that they can do to wedge in there and figure out how they can take you down.
That’s literally their life is trolling out there to try to find out how can they sue you to settle, to make money, to do any of these things. So, you have to do what we’re saying right now. And that phrase that you used, Scott – I wrote it down, because I loved it. It’s very clear, Fire Nation. So, get ready for this. “Separate your assets from your operations.” If you say that sentence to yourself and you understand what that means, you’re down the road to protecting yourself. Separate your assets from your operations. They should not be intermingled. They should not be one and the same. Your assets need to be separate from your operations, period. So that shell company allows your revenue to flow through your traditional LLC to an asset holding company.
So, again, if they come knocking on that shell, no one’s home. No one’s home. Worst case scenario, you’re just going to close that shell down. You’re going to open up another one and have that flow to that same asset holding company. Because you had that opportunity to have that barrier in place. Now, Scott, this is one thing that I have heard the phrase before. But maybe you can give us a little more detail about what this means. Piercing the corporate veil. That, to me, kind of makes me nervous when I hear that. Because I’m like – I’m doing everything right. I have an LLC. But then there are these stories about piercing the corporate veil. What does that mean exactly?
Scott Smith: Yeah. It’s kind of like one of those pieces about piercing the corporate veil that you hear about people that say, “Hey, I’m going to be an entrepreneur and I’m going to start a business.” So, they go out and file an LLC. But they don’t know anything else about how to do a business at all. And you’re like, “Okay, yeah. Way to go. You’re an entrepreneur now. Yeah, you checked a box.” No. It’s more like anybody can real file the LLCS. CPAs can do it all the time. But then there’s a whole other question that says, “How do I operate this thing correctly to make sure that it’s actually going to hold up in court?” Right? And that’s one of the reasons that we – as part of Royal Legal Solutions, what we do is that we don’t just set up company structures for people. We coach them down the path of how they need to be operating the company.
Part of everything we do is a membership with the firm and with the company that allows us to be able to provide unlimited ongoing coaching for everybody as much as they need to. So, they can come directly to a professional and get their questions answered about the steps that they’re going to be doing. Because a lot of times, each transaction can be a little different. So, does this pierce the veil or not? I can tell you though that most all problems that people have with the piercing the corporate veil comes down to the fact that they didn’t keep accounting records correctly. Because what most entrepreneurs fail to do is actually do bookkeeping because bookkeeping is super boring. Right? So, who wants to do that?
Because they don’t keep track of their books, then all of a sudden they’ll say, “Well, it’s actually you and the company are both the same.” So, now you’ve pierced the corporate veil because you have been treating this company like it’s your personal piggy bank because you don’t have accounting records. Number one thing is at least jot everything down into Quick Books of what’s going on with the money. All you have to do is have a basic accounting in there. And then when you want to take money out of the company, just make a line item that you’re taking a distribution. And that’s all the books you need to have. If you do that, you’re going to be 99 percent secure from piercing the corporate veil.
For anything that’s an exotic-type transaction, that’s what we’re here for to say, “Hey, okay. Well, we can coach you through that and do that in a way that’s going to be affordable for you.” But I can’t emphasize the level of strength that these types of entity structures – this structure is so strong that I have clients that end up getting sued all the time for essentially what’s fraud, right? That’s always the allegation is it’s always a fraud allegation. Because it’s based usually upon email exchanges and miscommunications that happen through email. But because we have all of the assets compartmentalized, and protected, and hidden away in a safe structure and that my clients are acting through these shell operating companies, the lawsuits get dropped. All the time, they get dropped.
Because what happens is that – you have to understand that litigation and lawsuits themselves are a business. And if you can make it where the people on the other side aren’t going to get paid, the lawsuit doesn’t happen. And that’s essentially what we’re doing. We’re disincentivizing the business of the lawsuits by creating these hurdles which make it extremely difficult to come after anything that’s worth any value. And so then, all of a sudden, the attorney that’s looking to take that case that gets paid on commission – because FYI, all attorneys get paid on commission that are doing this – will just go to sue the next person. That’s an easier case for them to take because it’s easier for them to get paid on. Because attorney’s are inherently lazy.
John Lee Dumas: I mean, Fire Nation, think about that. You need to think about that realization. If you’re going to get sued or someone is going to come and sue you and then that lawyer and/or that person who is going to be paying for those legal fees realizes that there’s nobody home at that shell corporation, they can’t go. Because even if they win – even if they win at the highest level, they’re winning literally nothing. They’re winning that “shell”. So, Scott, I think it goes without saying that you have incredibly happy clients when that happens. And the lawsuit gets dropped and you’re like, “Yep. That’s exactly why. And that’s exactly how we roll.” Let’s do this.
Before we jump into a quick sponsor break, I want to just let you know, Fire Nation – I know that we’ve been going through a lot of stuff. And for a lot of people, you’re just like, “Oh, my god. I thought it was going to be easy to be an entrepreneur or to run a business.” And of course, no, it’s not. These are things you have to do to protect yourself and protect your family. I want to make sure that you’re heading over to Royal Legal Solutions dot com. That’s a great website that Scott has set up where you can learn a lot more stuff there about everything we’re talking about. You can contact him directly. In fact, Scott, we’ll mention this again at the end of the episode. But I know you have something for Fire Nation over at Royal Legal Solutions dot com slash EO Fire. So, can you kind of break down what’s going to be waiting for our listeners there?
Scott Smith: Yeah. We have all kinds of special offers that are going to be coming down the pipe for you guys. Right now, what I’m really excited about is that we’re going to be airing a raffle. We’re going to be giving away over $5,000 up to $10,000 in legal services. So, these types of structures – a bonafide series LLC with all the anonymity in place to protect and hide everything you own, shell corporations, and ton of Royal Legal Solutions swag, free memberships to our consulting to come through to be able to get your questions answered. And every person that comes through is going to be able to have access and an opportunity to be able to speak to one of our business coaches and legal coaches regarding what their current situation is and what our recommendations would be for them.
So, they can see like, “Okay, does this make sense for me financially? And is this the type of relationship that I want?” To be able to have an attorney as well as a bonafide business end that helps people build their companies, not just provide simple company structures.
John Lee Dumas: So, Fire Nation, that’s Royal Legal Solutions dot com slash EO Fire. Make sure you let them know that we sent you over there. Because you’re going to get a little extra goodie from Scott as well. And again, we’re going to be right back after we thank our sponsor.
[Break in Audio]
John Lee Dumas: So, Scott, we’re back. And as we – actually, you and I did chat about in the pre-interview chat, we both obviously know Josh Bauerle of CPA on Fire. He is my CPA. He has been so for many, many years. And one thing that he did that really helped me out specifically when I was living in California was he helped me set up a 401k and just saved me a ton every year on taxes while I was investing for my retirement and for my future. Of course, now that I’ve moved to Puerto Rico and the land of 4 percent total tax, it’s not as big of a deal for me. But for the 99.9 percent of people that don’t live in Puerto Rico, let’s talk about using a solo 401k that can really maximize at least an extra $50,000 a year tax free. Let’s hear about it.
Scott Smith: Yeah. In the same structure that we were talking about before, we have a series LLC that protects all the assets. And then we have an operating company that takes and handles all of the affairs. What you can do is a two-step process. You would take that LLC that’s your operating company and make it tax as an S Corporation. So, then you get to avoid all of the self-employment tax. So, that 15-plus percent tax that you would get hit for if you just took normal income from it as a disregarded entity. Boom. Tax saving tip number one. Tax saving tip number two with that is that if you’re the sole employee of that operating company, what you can then do is set up what’s called a solo 401k. That’s your own 401k set up through your own company and you as the sole employee.
What that allows you to do is take up to $50,000 or a little more than that, actually, into your own 401k tax free. You can then loan yourself half of the value of that 401k tax free. And then take that other half and make tax free investments with it. Right? So, the coolest part about that is if you’re an entrepreneur and you’re setting all these things – setting up your business. And you say, “Hey, I’m only really making $50,000 or $60,000 a year while I’m trying to get this up off the ground.” Don’t pay taxes on it. Set up a company structure. Set up your solo 401k. It’ll cost you a couple thousand, but you’re going to make that back in your taxes immediately. Inside of year one, you’ll be able to pay yourself back just on those two pieces alone.
John Lee Dumas: So, Fire Nation, let’s kind of go over that two-step process again. Make sure that you’re being taxed as an S Corp so you can avoid that big chunk of change that Scott was talking about that gets taxed. And then also, your solo 401k. You can put over $50,000. I actually think for me, at one point, it was $55,000 I was able to put into my solo 401k that was, by the way, tax free. Then you could loan yourself half. You can invest that tax free. So, there’s a lot of ways that you can do that. And like Scott said, if you’re only making $50,000 or $55,000, make it tax free. And that’s an opportunity to do just that. So, some great, great things along those lines. And anything else you want to mention about that, Scott, before we move on?
Scott Smith: Yeah. In terms of next-level service and the types of advice that we give people, that other half that we said that you can invest tax free, under that it could also be invested, say, in your friend’s business. Right? And your friend could also make an investment out of your business. So, essentially, if you had another – you and another friend that are both in the same position, you can start loaning each other money tax free. Hypothetically, you have to pay all of that money back by the time that you retire. But that’s like 30 years down the road. Right? So, let’s cross that bridge when we come to it. In the meantime, your immediate needs of saying, “How do I actually maximize the amount of cash that I have to get this off the ground?” is going to be your first concern going up.
So, there’s actually some more advanced strategies which are totally legal, by the way. There’s nothing shady about that at all. That’s just using the law to the maximum extent. If we’re talking about how do you flex the law for your maximum profits as a business, that’s what it is. You protect everything you have from lawsuits just like you have to from the government.
John Lee Dumas: Fire Nation, I just want to reiterate. This is exactly what he’s talking about. Using the law to its maximum extent. This is legal strategies. And it takes people like Scott who know this stuff to make sure that you are taking the most advantage of them. Because like you said, you need to keep the lights on now. You need to keep the inventory up now. You need to keep your business running now. Thirty or 40 years from now, yeah, guess what? If your business is as successful as you want it to be, paying back that $25,000 loan is probably going to be pretty doable for you at that point. So, cross that bridge when you get there. And Scott, this is just overall talking about organizing your life so that you can take care of yourself, your business, those you love.
And again, not to be too morbid. But let’s be honest. We’re all going to die. And you want to be able to take care of those you love when you die as well. So, kind of talk about that and some things you go through with your clients about organizing your life so that we can really take care of all those people we love.
Scott Smith: Yeah, John. The number one thing to keep in mind here when you’re looking about planning for how you’re going to pass on wealth to your family or to the people that you care about – you have to have some type of structure in place. Otherwise, the state makes those decisions for you with what happens to your wealth. And the best way to do that is to use a combination of what’s known as a living trust and a pour over well. What a living trust does is it will be the ultimate owner of everything in your life. What I like to do – and I think is the best way to do this – is that you structure the ultimate owner of all of your corporations to be the living trust. So that way, it passes seamlessly to your heirs inside of a protected structure.
All of the transactions in your life are going to be going in and out at the corporate level. Right? So, everything that’s involving what the living trust is going to do stays exactly the same way. Because the living trust only divides up what’s happening at the corporate level. You completely avoid this probate process that happens with the court normally when you die. Where then the court has to go ahead and make all of these approvals and go through the whole rigmarole there. Everything bypasses the whole legal system for that purpose. And it passes directly to your heirs immediately by using that living trust advantage structure.
John Lee Dumas: And Fire Nation, again, we’re not going to expect you to just be going out and taking 100 percent action on all the things that we’re talking about today. There’s a lot of stuff. But again, this is what it means when you’re protecting yourself. When you’re running a business. When you want to make sure that you’re taking care of those people that you love. You’ve got to set aside time, energy, bandwidth, effort, and money to make this stuff happen. Otherwise, it can be like a house of cards. And it can fall on top of you. Believe me. I’ve interviewed over 2,000 successful entrepreneurs. And for most of those people, I ask them what their worst entrepreneurial moment is.
And way too many of their worst moment was because they didn’t do things like this to protect themselves. And they got blindsided. They got attacked. And before they knew it, they just couldn’t keep the lights on. And it was all over. And they had to start 100 percent from scratch. Don’t let that be you when there are a few things you can do very reasonably, very affordably to make sure that everything you’re building right now is going to withstand whatever may come. Whatever category five hurricane is heading towards your poor little islands, you will be protected, Fire Nation. So, Scott, let’s give kind of a wrap up of a couple things that you want to make sure that Fire Nation really gets from this entire audio masterclass that you’ve been giving us today.
Scott Smith: The main thing that I’d like to end on today would just be – to comment also for people that are inside of California as well. People in California really get hammered, as you know, with franchise taxes at $800 per year for each LLC. What everybody in California should be doing and a piece that we specialize in as well is use of a Delaware Statutory Trust. That works exactly like a series LLC for high-level asset protection. Just like a series LLC or any LLC structure would. It allows for the compartmentalization of all the assets in a series structure just like a series LLC. But it’s a trust formed in the state of Delaware that actually provides asset protection. The cool part about it is because it’s a trust, it’s exempt from the franchise taxes in California.
So, every investor in California that’s paying out the nose for franchise taxes every year, you can thank John for having this amazing podcast for me to inform you of the fact that there is light at the end of the tunnel here to be able to save yourself a ton in taxes that are just merely due for that purpose. And ending on that, one of the things that we focus on at Royal Legal Solutions is the asset protection. How do we structure these businesses out? I just want to let everybody know too that all of these pieces are all building blocks. So, you don’t have to start with the Cadillac of what the best in the world happens to be on all of these pieces. You can start with something that’s affordable that’s an initial block that gets you one step further down the road.
I can tell you just like everything else in life, your biggest gains are at least doing something. Right? It’s usually the one action that gets you up to the 80 percent mark. And then the other 20 percent that you need takes a lot to do. Right? And we can help consult you on what that exactly is going to be and have that make sense for you wherever you’re at. For most people, I find that the tax saving strategy we do helps pay for all of the other additional benefits that we have in terms of the coaching and the asset protection to really round out your life and be able to offload all of the legal concerns onto somebody else instead of just ignoring that they’re actually there.
John Lee Dumas: Fire Nation, I want to reiterate exactly what Scott said. These are building blocks. These are building blocks. Take it one step at a time. A couple of these simple small steps can get you to 80 percent. Eighty percent of the savings that you could have. Eighty percent of the protection that you need. And then, and only when the time is right, then you can take the next step to get you to 85. The next step to get you to 92. The next step to get you to 99 on your timeline. So, listen. Building blocks. And Fire Nation, you’re the average of the five people you spend the most time with. And you have been hanging out with SS and JLD today. So keep up the heat. And I want you to head over to Royal Legal Solutions dot com slash EO Fire. Make sure you take Scott up on all these great gifts that he has for you, all these different promotions and all these great deals overall. Because you, Fire Nation, want to at least be armed and dangerous with this information. And Scott, anything to say before we wrap it up here?
Scott Smith: No, man. I just want to say everybody, we’re really giving away up to $10,000 to you guys of all of these advance structures. So if you head over there and you sign up for it, there’s a really good chance that you’re coming through that you can win something that’s going to be a bonafide, highest-level asset protection and consultation step that you can actually get anywhere in the United States today.
John Lee Dumas: Fire Nation, worst case scenario, just go over there. Enter your name in. Who knows what’s going to happen? You could really be winning some pretty awesome – you could be winning some really awesome stuff that’s going to benefit you, and your family, and your business. Royal Legal Solutions dot com slash EO Fire. Scott, thank you, brother, for sharing your truth with Fire Nation today. And for that, we salute you. And we’ll catch you on the flip side.
Scott Smith: Thanks, John. Great to be here.
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