By Lee R. Phillips

I sent out an email a couple weeks ago about the Florida Supreme Court setting aside the “charging order” protection an LLC is supposed to offer.  I now apparently have a lot of students that have “sliced their wrists” and are bleeding to death.  (I faint at the sight of blood – not really – but please don’t do the wrist thing.)

Take a deep breath and step back from the edge.

The “charging order protection” protects the assets of the company from your personal liabilities and creditors.  If you have an accident on the street, the kid breaks his neck on your trampoline, or you get divorced, your personal assets are at risk.  The stock in your corporation and the membership interests in your LLC are personal assets.

If you have a corporation and your creditor gets the judgment against you, he will get the stock in your corporation.  Once he has the stock, he elects new officers and directors and controls the assets of the corporation.  He has your corporation and can sell the assets or do whatever he wants.

If you have an LLC, when your creditor gets the judgment against you, he will get the membership interests of your LLC.  BUT, the LLC is different.  The law says he can’t affect the management of the LLC, take the assets or do anything to disturb the LLC.  All the creditor can do is get a charging order, which is basically a lien against your membership shares.

If and when your LLC makes a distribution (pays a dividend), the creditor with the lien will get the dividend.  He will keep getting the distributions until his lien amount is paid off. (more…)

By Lee R. Phillips

Michael Douglas revealed Tuesday that he had stage 4 throat cancer.  Stage 4 means that the cancer has spread far beyond the original tumor and is usually very difficult to cure. Douglas said he has at least an 80 percent chance of recovery. “And with certain hospitals and everything, it does improve.”

News sources quoted his wife, Catherine Zeta-Jones, as being upset because they had been to several doctors over the last year about his sore throat and the cancer had not been found sooner.  It is difficult to be understanding when a professional lets you down, and you are hurt by their negligence.

As my over 100,000 students know, I have also had a serious bout with cancer.  Mine put me in the hospital in an isolation room for over 5 months straight, and I was out of work for three years.  It changed the course of my life.  I wasn’t supposed to be a tax and asset protection lawyer.  I was supposed to be a patent attorney.

While I was sick, the legal system took us to the cleaners, and I was an attorney.  My wife became infuriated.  She said, “I will never trust them again.”  (She overreacted.  She became an attorney also.)  You don’t have to be an attorney, but you can’t afford to walk in off the street and blindly trust your doctor, CPA, attorney, or anyone else.

We learned that lesson – that you don’t blindly trust anyone – the hard way, in the streets of hard knocks.  By the way, if you are learning your lessons in the streets of hard knocks, you are paying too much for your education.  The price I paid to learn the lesson that you don’t blindly trust anyone was a big change in my life.

You see, I knew I had cancer.  I knew I had cancer a year and a half before the cancer was actually discovered for me.  I had been to the family doctor and said, “Hey man look, there’s a lump.”  The family doctor had looked at it and said it was cancer.  He sent me to the specialist.

The specialist hardly even looked at me.  He said, “Phillips, you’re an idiot and so is your family doctor.  If he was sure you had cancer he would have sent you to the hospital.  He wouldn’t have sent you to me for a second opinion.  You just have an infection.”

The specialist treated me for a year and a half for an infection.  By the time the cancer was discovered by a cardiologist, because I had heart failure, it was final stage four cancer and involved all the organs in my body.

What I didn’t know was all the specialist had to do was poke my finger and give me a blood test.  He would have found the cancer.  But, I just blindly trusted him.  You can’t blindly trust anyone.

One of the reasons I’ve created my legal home study courses is so you will have the information you need so you don’t have to blindly trust your lawyers and CPAs.  You can use the courses to do your own legal work better than most attorneys can do it for you, or you can use the courses as your education, so you can direct what you want your professionals to do for you.

You don’t have to do your own legal work (you can, if you want), but you do have to have the information to know what has to be done.  You can’t just blindly trust.

Start with the new addition of my book, Protecting Your Financial Future, and listen to my DVD, Using the Law to Make Money and Protect Assets.  Get the book at the discounted price and I’ll include the $20 DVD for free.  This is a limited time offer so do it now, and take control of your financial future.

It’s never too early to think about asset protection.  Many people think that asset protection is only for when you’re older and have made a lot of money.   The turn in the economy the last couple of years has demonstrated more than ever that asset protection should not wait until your have gray hair or a million dollars.

There are simple actions you can and should take to protect your assets before you take business risks.  The trouble is that most people do not think that the business endeavor they are investing in is putting them at risk.  For example two years ago many of my clients were involved in real estate investing without giving a thought to risk.  They invested in their own names and put all of their personal assets at risk.  Real Estate seemed like a sure thing at the time.  Others of my clients have been so busy running their operations that they didn’t take time to think about asset protection. Now they’re in trouble.

An asset protection plan is just that, a complete plan for your assets.  It is not a difficult process but really a series of simple steps that you take to protect yourself.  It involves legal documents, insurance, and personal diligence to keep up the asset protection shield.