RPF0602-The_Morality_and_Legality_of_Asset_Protection
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00:00:29.800 | Welcome to Radical Personal Finance, a show dedicated to providing you with knowledge, skills, insight, and encouragement
00:00:34.600 | you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.
00:00:40.000 | Today, we continue part two of our Asset Protection Planning for Mere Mortals series,
00:00:45.900 | wherein I want to speak with you for a bit about the legality and the morality of asset protection planning.
00:00:55.200 | The question is this, is it legal and is it moral for you to engage in conscious planning in order to protect your assets?
00:01:07.600 | Now, in the previous show, I expanded the concept of asset protection planning very, very broadly,
00:01:14.500 | much more broadly than is the customary use of that term.
00:01:18.100 | In today's show, although I think that is a valid perspective for you to continue to think about,
00:01:23.500 | I want to restrict my use of this term, asset protection planning, to the more conventional meaning.
00:01:31.000 | Basically, the conscious decisions that you might make to protect yourself from the legal claims
00:01:39.500 | that other people might seek to make upon you and your money.
00:01:44.100 | The field of asset protection planning, especially as it's practiced in the legal profession,
00:01:49.000 | is newer than many other forms of legal practice.
00:01:54.100 | That's not to say it's entirely new, it's simply newer and it is developing.
00:01:58.900 | So let's start with the simpler question of legality.
00:02:03.700 | Is it legal for you to engage in asset protection planning?
00:02:07.900 | In a word, yes, absolutely.
00:02:10.700 | It is legal for you to engage in asset protection planning.
00:02:15.000 | Now, there are some caveats that you should be aware of, but in short answer,
00:02:20.500 | asset protection planning is entirely legal.
00:02:24.200 | The legal field of asset protection planning draws heavily on the field of estate planning.
00:02:29.600 | So many of the methodologies that are used in estate planning,
00:02:33.600 | which is the conscious decisions that you might make for the disposition of your assets at your death,
00:02:38.400 | so that they go to the people that you want them to go to with a minimum of cost,
00:02:42.500 | with a minimum of friction, and with a minimum of problems,
00:02:45.700 | many of those concepts have been adapted over to the field of asset protection planning.
00:02:50.800 | Asset protection planning also draws heavily on bankruptcy laws
00:02:54.000 | and an understanding of the lengthy history of bankruptcy laws
00:02:58.500 | and an understanding of how to use those things for your own personal effect
00:03:03.700 | and for your own personal benefit.
00:03:05.600 | It is entirely legal for you to choose to align your decisions
00:03:11.000 | and choose to align the things that you do with your money in ways that help you.
00:03:17.600 | For example, one of the simplest and frankly strongest forms of asset protection planning
00:03:25.200 | for you to engage in is to fund something like a 401k account
00:03:29.800 | or to take advantage of another company pension that is offered to you.
00:03:34.400 | The question when you fund a 401k, are you funding that 401k
00:03:40.500 | because you want to break the law?
00:03:42.600 | Of course not. You're funding that 401k because you are seeking to provide for your retirement
00:03:48.400 | and you're seeking to invest for the future.
00:03:50.600 | But in the funding of that 401k, you are taking advantage of a tax loophole.
00:03:57.600 | After all, you are avoiding paying current income tax on your wages.
00:04:02.500 | You're avoiding paying current tax on the increase in the value of those investments
00:04:08.000 | as the money accumulates in your 401k.
00:04:09.600 | So you're engaging in tax planning, which is lowering your cost,
00:04:12.800 | and you're also engaging in asset protection planning
00:04:15.400 | because under US federal law, the assets held within a qualified plan,
00:04:21.800 | such as a 401k, are basically sacrosanct.
00:04:25.100 | They're bulletproof. They are protected from any legal claim that might come against you.
00:04:30.000 | They also happen to be protected from your declaration of bankruptcy.
00:04:36.400 | So if you were to declare bankruptcy, you generally would be able to hang on to the assets
00:04:41.000 | that are in your 401k.
00:04:43.400 | And so that's a very simple example of asset protection planning.
00:04:47.900 | In your state, there will be some provision made also to protect the value of your homestead.
00:04:53.700 | I think there are five states that allow a very high or unlimited homestead exemption.
00:04:58.600 | My state, Florida, is perhaps the best.
00:05:01.200 | It has the strongest, almost bulletproof protection for your homestead from most legal claims.
00:05:08.400 | So if you pay off your house and then somebody sues you,
00:05:13.100 | they get a judgment against you, but they're unable to collect on that judgment.
00:05:16.100 | Have you done something illegal because you paid off your house?
00:05:19.600 | Answer is simply no. No, you haven't. The law is very, very clear.
00:05:24.100 | So the simple answer is yes, it's absolutely legal for you to engage in asset protection planning.
00:05:31.700 | The law, drawing from business law, where legal risks and liabilities are limited within specific business entities,
00:05:40.000 | is well established. We have hundreds and hundreds of years of precedent,
00:05:44.400 | and this is a bulwark of our modern economy.
00:05:47.700 | So the fact that you choose to take advantage of these laws for your own benefit is not only entirely legal,
00:05:52.900 | but it's the standard piece of advice for anybody to engage in.
00:05:58.200 | Now, there are areas of asset protection planning wherein you need to be careful.
00:06:02.600 | For example, there are certain techniques that might be legal, but might also be disallowed by a court.
00:06:10.200 | There is a very important body of legal doctrine called the Uniform Fraudulent Transfer Act,
00:06:17.900 | basically the law relating to fraudulent transfers.
00:06:20.900 | The question is, if you all of a sudden find out that you are exposed to,
00:06:28.300 | let me give you one first an example, then we'll take it to the legal example.
00:06:32.700 | You can generally give away money to other people as much as you like.
00:06:36.100 | Now, there are some tax implications if you give away a lot of money,
00:06:39.900 | but you can at any point in time give money to other people and you can do it completely tax free.
00:06:47.800 | As of 2018, the current annual gift tax exclusion amount is $15,000,
00:06:53.600 | which means you can give to any other person up to $15,000 for any reason whatsoever.
00:06:59.600 | You don't have to tell anybody about it. You don't have to file any tax returns on it.
00:07:04.800 | You don't have to file a gift tax return. They don't declare it on their income.
00:07:08.700 | It's just simply a gift. And if you're married, you and your spouse can both give $15,000 for a total of $30,000 to any other individual
00:07:16.100 | for any reason whatsoever in any year that you want. That's the law.
00:07:22.000 | Now, the question is, let's say that you find out that you are going to be facing, you're going to be sued.
00:07:29.700 | Now, all of a sudden, if you go down to your checking account and you take out $15,000
00:07:34.600 | and you give it to your brother and you say to him, here's a gift for $15,000.
00:07:43.000 | Now we have a problem because you potentially run afoul of the fraudulent transfer laws,
00:07:49.200 | where potentially the court can can say, no, you're giving him that gift to, what's the term, a close person with whom you have a close relationship.
00:07:58.400 | This is a sham gift and they'll undo the gift or they'll require you to pay the money in some other way.
00:08:03.800 | And so your legalities of the situation will change depending on the circumstances.
00:08:08.000 | What might be legal for you today might be illegal for you tomorrow.
00:08:12.900 | Now, you can engage in certain decisions and certain planning mechanisms,
00:08:20.300 | even if you are facing a legal judgment to help to protect your assets.
00:08:23.300 | Let me give you perhaps the very best example. In the state of Florida, again, Florida has very strong homestead exemption laws.
00:08:30.300 | And so any residence that you own that is your primary homestead in the state of Florida is with a couple of qualifying rules,
00:08:37.600 | especially related to bankruptcy. And if you've lived there a thousand days or 300 days or whatever the number of days is,
00:08:42.700 | and there's some you're basically protected from that. But Florida has gone so far in protecting that where if you actually are facing a legal judgment against you
00:08:56.200 | and you move to the state of Florida and purchase a house, even if your intent in purchasing the house is fraudulent,
00:09:03.700 | it's provably demonstrably fraudulent in court, Florida will still protect the homestead law.
00:09:09.800 | That's how important it is in Florida courts, which, by the way, to go to extreme asset protection planning,
00:09:14.700 | if you are facing a legal judgment against you, and if you have done no other asset protection planning,
00:09:21.700 | then one of the things you should seriously consider doing is you should seriously consider loading up your car,
00:09:28.400 | going to Florida and putting every bit of cash that you have into the purchase of a house and make it your homestead law.
00:09:34.500 | We'll talk more about that another time. But that is even if done with fraudulent intent that protects you legally.
00:09:40.400 | So there are times wherein legally circumstances change and there are certain methods that are legal.
00:09:49.100 | And there are certain methods that are questionable. There are certain methods and things that you might do that are unproven, unproven in court.
00:09:56.200 | They haven't been litigated yet. And so the tactic, the technique should work, but it hasn't yet been litigated.
00:10:02.200 | I'll give you another example. One of the major questions that people had over the years, especially lawyers,
00:10:07.700 | was who practice in this field was our IRAs, individual retirement accounts protected in the same way that qualified plans such as 401k accounts are protected.
00:10:18.900 | For a long time, the answer is don't know. Now, different states pass different laws.
00:10:23.200 | And so some states have a statutory law that can be looked at. Other states,
00:10:26.800 | you have to look at the litigation and see what is the common law, what are the cases that have been settled on that question?
00:10:32.000 | And you need to be aware of it. If my memory is correct, in Florida, an IRA is protected either in bankruptcy court or from a legal judgment against you up to about a million dollars.
00:10:42.100 | I think it's about one point one million dollars, whereas another 401k or other type of account has no dollar limit in terms of its protection.
00:10:51.600 | So some methods might be legal, but just might be untested.
00:10:55.900 | And unfortunately, we hope that I hope that I'm never one of those people on that, that a court gets created,
00:11:02.700 | a court precedent gets created based upon my experience or your experience.
00:11:06.600 | But unfortunately, that is what happens. Now, let's talk for an additional moment about legality versus illegality.
00:11:13.000 | There are simple things you can do, which may be entirely legal in some circumstances and may be good moves,
00:11:20.700 | but at some point in time might cross over the legal line to become illegal, which is a very serious problem.
00:11:28.700 | Let me give you a very simple example.
00:11:32.000 | Let's assume for a moment that you take my advice seriously to make sure that you keep on hand cash.
00:11:39.000 | And I mean, savings and physical cash, physical currency that's accessible to you.
00:11:44.800 | You look around and you recognize that there could be a hurricane that could come through town.
00:11:49.800 | You might need money to be able to pay somebody to cut the tree off your house and they're not going to take checks and credit cards.
00:11:57.300 | They're going to take cash. And so you recognize I should have some cash or I might need to bail my kid out of jail.
00:12:02.600 | And so I should have some cash. I should have access to some cash.
00:12:05.500 | And you decide, you know what, that's prudent financial planning advice.
00:12:08.600 | Joshua recommends I should have probably be able to lay my hands on at least ten thousand dollars at any moment if I needed to within a couple of hours.
00:12:15.800 | That way I could buy a car if there's a great car deal or a great RV or for an emergency.
00:12:20.800 | And so you decide that you're going to take ten thousand dollars out of the bank.
00:12:23.800 | Now, of course, you could just walk down to the bank and take out ten thousand dollars.
00:12:27.600 | But being a recognizing that's not that important to you, you decide to take it out little by little over time.
00:12:34.400 | And so here and there, you take an ATM distribution of a few hundred dollars out of your bank because, of course, you're doing this little by little.
00:12:40.100 | Perhaps you're just simply saying, I'm going to I'm going to force myself to to take money out of the bank and simply to save it.
00:12:48.300 | So every time you go to the store, you go to the grocery store, you go to the home improvement store, you're used to swiping your debit card and you go ahead and click that.
00:12:55.700 | Yes, I want cash back. And every time you make a transaction, you add a twenty dollar cash back to that twenty dollars cash back to that.
00:13:02.700 | Now, what have you done? You have in one of the most private ways possible started to create cash reserves, because when you take a distribution on your debit card as a cash advance,
00:13:16.200 | the only thing that gets registered in your bank.
00:13:20.400 | In the ledger, the transaction ledger for your checking account is the fact that you've spent sixty dollars at Home Depot.
00:13:28.800 | It doesn't say that forty dollars of that charge was for nails and screws for your construction project and twenty dollars was cash.
00:13:36.300 | It just says you spent sixty dollars at Home Depot and that's an entirely normal amount of money to spend at Home Depot or the grocery store.
00:13:41.500 | It just says that you spent one hundred and twenty dollars. It doesn't say one hundred dollars was groceries and twenty dollars was cash.
00:13:47.800 | It says you spent one hundred twenty dollars at the grocery store.
00:13:50.300 | Now, over time, you start to lay aside those twenty dollar bills and you stack them up.
00:13:54.300 | And as the weeks and the months and even the years go by, eventually you arrive at the point where you have ten thousand dollars in cash.
00:14:01.500 | Now, of course, this is divided out. It's hidden carefully. It's secured properly.
00:14:06.300 | It's protected from somebody finding it and from somebody stealing it.
00:14:10.100 | You've never told anybody about that ten thousand dollars that you have in cash.
00:14:15.100 | And there is almost no way that anybody could ever prove that you have the ten thousand dollars in cash.
00:14:23.100 | It's not at an institution. It's not connected to your Social Security number.
00:14:27.800 | There's no evidence or recording of your taking it out.
00:14:30.900 | If you've shredded your receipts and if you haven't made notations of that in your own personal accounting software, there's no evidence of the cash.
00:14:38.000 | And nobody could ever prove that you'd even if they could prove that you had taken the cash out in the form that I described to you.
00:14:43.500 | Nobody could ever possibly prove that you didn't spend it or give it away.
00:14:48.500 | Is what I've just described entirely 100% legal?
00:14:53.700 | Of course it is. There is no law whatsoever that has been broken.
00:15:00.000 | There's not even any moral line that we've approached.
00:15:03.900 | We'll talk about morality in a moment.
00:15:05.300 | But there's no law that has been broken in what I've just described to you.
00:15:09.200 | You now have ten thousand dollars of private money in your possession.
00:15:16.500 | Now, does that help you in terms of asset protection planning?
00:15:24.000 | The answer is absolutely yes.
00:15:26.400 | It helps you because you have now taken some of your assets and made them more private.
00:15:32.200 | So now if you're involved in a car accident.
00:15:36.000 | And somebody decides they're hurt, they're injured, they want to sue you and try to get a claim against you for the car accident, for the damage and suffering that you've incurred upon them.
00:15:46.400 | And they go and take their case to an attorney.
00:15:48.600 | An attorney orders an asset search, be it a legal asset search or an illegal asset search, try to figure out if you are worth suing.
00:15:56.900 | They're not going to find at least the ten thousand dollars that used to be in your checking account.
00:16:01.900 | They're not going to be aware of it. There's no way for them to be aware of it.
00:16:06.900 | And now in that circumstance, there's less of a chance that they'll file a lawsuit against you, especially if you don't have other meaningful assets.
00:16:16.900 | Because most lawsuits that are filed against you, a lawyer is not going to waste their time and their money filing a lawsuit against you unless they have the potential to get paid.
00:16:28.900 | And so the fact that you took your ten thousand dollars out of your checking account and you put it under your mattress or in your home safe is very much in your best interest.
00:16:38.900 | And we haven't broken any laws, but we have engaged in significant asset protection.
00:16:44.400 | Now, there is a point in time. At which you will face a decision.
00:16:50.200 | Let's assume that you are sued. Let's assume that you lose your lawsuit.
00:16:55.400 | And now you owe somebody, the person that you injured in a car accident, ten thousand dollars.
00:17:03.400 | There's a legal claim against you. Question is, what do you do now?
00:17:09.400 | If you are subject to a debtor's examination and if the court requires you to disclose your assets, if you do not disclose your ownership of that ten thousand dollars,
00:17:21.900 | you will now break the law and possibly face additional penalties for that legal change.
00:17:29.400 | So that's the simplest example I can give you to show you that there are certain things that you can do that are entirely legal.
00:17:38.400 | But which at some point in time. Could force you to cross over from legality to illegality.
00:17:47.400 | If you did not disclose that information, the fact that you had the ten thousand dollars, if you pretended you didn't have the ten thousand dollars,
00:17:54.400 | if you pretended you couldn't pay that judgment, if you kept quiet about the ten thousand dollars, all of those would be illegal.
00:18:04.400 | So is it legal to engage in asset protection planning? Absolutely.
00:18:09.400 | But on that subject, pay careful attention to what you're doing because you don't want to break the law and there's no need to break the law.
00:18:17.400 | There is absolutely no need whatsoever for you to break the law.
00:18:23.400 | One of my guiding principles is simply this. I'm all about financial freedom. I'm all about financial independence.
00:18:34.400 | I'm all about liberty. Those things are important to me. There's a reason why I talk to you about building a plan for financial freedom.
00:18:41.400 | Ten years or less. Do you know where you're not free? In jail. If you're in prison, you're absolutely not free.
00:18:52.400 | So there are a lot of things you could do that run the risk of winding you up in prison.
00:18:58.400 | And if there's something that you're doing that could put you in prison, I recommend don't do it because there's no less free place to be than prison.
00:19:12.400 | Now, you may still wind up in prison and you might wind up there on account of conscience.
00:19:16.400 | And if so, I support you in that. But don't do it on the account of money.
00:19:21.400 | There's a whole lot of stuff that you and I are subject to. I view taxes this way. Taxes are a giant protection racket.
00:19:27.400 | If I don't pay, they put me in jail, just like the mafia goon. If I don't pay his fee when he comes to my shop, then the guy hurts me.
00:19:34.400 | Well, I'm going to pay because I want to stay out of jail.
00:19:38.400 | In the meantime, do everything I can to lobby for it and change my affairs, etc. But I desire to stay out of jail.
00:19:44.400 | It's as simple as that because I'm not free in jail and I'll see what good I do anybody if I'm in prison.
00:19:48.400 | So pay careful attention in the things that we talk about. I will point out to you the things that are legal and I'll point out to you if I know of it, if I know of the legal trap, where something could become illegal.
00:20:01.400 | But I have no better example than what I've just described to you about the $10,000.
00:20:05.400 | Your movements and your behavior are entirely legal until or unless you're sitting down with that court-ordered form and the court requires you to fill it out, at which point you have a decision to make.
00:20:23.400 | Will you write down the $10,000 or will you not? Now you have to decide that at that point in time. But I'll point out to you it's legal until it's not.
00:20:40.400 | And I recommend don't do anything illegal because your plan for financial freedom will be destroyed if you do something that is illegal.
00:20:50.400 | Let's now transition from a discussion of whether it's legal for you to do asset protection planning, which the answer is an obvious, unequivocal yes, it is, to is it moral for you to engage in asset protection planning?
00:21:03.400 | This question is, in my opinion, also yes, but it's a little bit more difficult, a little bit more complicated.
00:21:10.400 | So let me give you some thoughts to consider as you wrestle with the morality of your engaging in asset protection planning.
00:21:18.400 | Let's talk about property. Now, when you own property, here's my question. Do you have the right, nay even the responsibility, to protect that property from theft?
00:21:35.400 | Do you have the right and the responsibility to protect the property that you own from theft?
00:21:44.400 | I believe you do. I believe the answer is absolutely yes. Not only do you have the right to protect it from theft, I believe you have the responsibility to protect the property that you own and control from theft.
00:21:59.400 | You have that responsibility for two reasons. Number one, as the steward of that property, you will give an account for your stewardship of it.
00:22:09.400 | The stewardship of the resources that we're given is a very important responsibility. And at the end of our lives, when you and I stand before God, we will give an account for how we have stewarded the resources that we've been entrusted.
00:22:21.400 | We'll give an account for how we have stewarded the days of our lives. What have we done with our life? What have we done with the abilities that we have been given?
00:22:31.400 | What have we done with the people who have been placed in our life? What have we done with the resources that we've been entrusted?
00:22:37.400 | Those resources could be money, could be businesses, could be assets, it could be simply the physical land that we're given to control.
00:22:48.400 | Did we destroy it? Did we cause it to be destroyed? Did we allow it to be destroyed? Or did we properly steward it?
00:22:55.400 | What have you and I done? What are you and I doing with the resources that have been entrusted to us as stewards?
00:23:05.400 | That's the undergirding philosophy. Now, one of the responsibilities of a steward is to protect the property of his master.
00:23:14.400 | It's bad stewardship. If I come to you, let's say I'm a financial advisor, pretend that I'm still a licensed financial advisor.
00:23:20.400 | You come to me and you say, "Joshua, I'm hiring you as the steward of my retirement accounts. Here is $500,000.
00:23:30.400 | Now we have a fiduciary arrangement where I owe you a duty of care to care for your $500,000. It's not my $500,000. It's your $500,000."
00:23:39.400 | And then I take that $500,000 and I invest it without doing any kind of due diligence, at least any kind of prudent investigation of the investments that we're engaged in.
00:23:49.400 | And some fraudster comes along and steals the money. And I go back to you and I say to you, "I'm sorry your money is stolen."
00:23:57.400 | Who is wrong here? I'm the one who's wrong. I'm the steward. And I didn't do any kind of reasonable investigation.
00:24:07.400 | Now, in that situation, you would have a very strong legal claim against me. I was imprudent with my fiduciary duty to you in that circumstance.
00:24:15.400 | And you would have a legal claim against me and you would win your court case and you would have the legal and I would say the moral right to come and to take my money to write you for the wrong that you've suffered because of my actions.
00:24:31.400 | So we have a responsibility to protect the assets that we have been entrusted. And that responsibility goes at least to the extent of prudence.
00:24:44.400 | We have a responsibility to lock our cars, to lock our houses, to carefully steward the money, think about investments, do due diligence, etc.
00:24:54.400 | Now, is that responsibility ultimate? I don't think so. I don't think that the responsibility for carefulness extends to ultimate investigation, but it does at least extend to basic levels of prudence.
00:25:08.400 | So the first responsibility is as a steward of assets, I have a responsibility to the owner of those assets. You and I will give an account for what we have done with the substance of our lives and all of the resources with which we have been entrusted.
00:25:23.400 | Now, number two, I believe we have a responsibility to protect the things that we have for the moral good of other people. Do you have to make it easy for people to steal from you? I believe it would be morally wrong to make it easy for people to steal from you.
00:25:42.400 | Now, I don't have to deny the ultimate moral agency of each person. Each of us has to make a decision. And so if you steal or if I steal, each of us is independently responsible for that decision regardless of another person's behavior.
00:26:00.400 | But is that morally right? Is it morally right for you not to protect assets? Let's assume that we take that same $10,000 that I was talking about earlier. And I, as a matter of course, I have a dining room that's in the very front of my house.
00:26:18.400 | And I take that $10,000 and nice little $20 bills, nice, impressive stack. I place it on that table right in the front room. I keep the curtains to the street open. And anybody who comes into my house or passes by my house has cause to look and to see that $10,000 sitting on the table.
00:26:44.400 | Is that wise? Is that morally right? To me, it seems wrong. To me, that would seem to put an undue temptation in front of other people, especially if those other people might be struggling.
00:27:03.400 | Let's say that my house cleaner is struggling financially. Now, every day they have to clean the house and stare at that $10,000 knowing they could just reach out and pilfer just a little bit and it probably wouldn't be missing. That doesn't seem right. We shouldn't make it easy for other people to sin.
00:27:27.400 | So consider that. You don't have to make it easy for people to steal from you. And I believe you can simultaneously defend the moral duty that each of us has to not steal, but also defend the idea that in principle, it's important for us to consistently not put undue temptation in front of other people.
00:27:56.400 | Now, let's expand the moral responsibility one more level. Now, remember, I've added now two levels. I'm going to add one more. Level one, each of us is morally responsible not to steal. Number two, I believe we have a moral responsibility to protect one another from a moment of weakness where somebody is in need and protect them from adding a sin of theft to their moment of need.
00:28:23.400 | Well, what about enabling theft by other people on other people? This is, in my opinion, perhaps the most insidious of moral evils in our culture, in the modern US American culture. We live in a culture that is infused with jealousy, sin, greed, sin, and larceny, sin.
00:28:45.400 | And the idea is, well, I'm not going to steal from you directly, but I'll just gang up with all of my neighbors and then we'll all get together and we'll all steal from that person over there.
00:28:57.400 | We will take from those people over there, the rich people who don't need their money, and we'll give it to these people over here, the poor people who obviously need money, and we'll do it with violence.
00:29:13.400 | We'll do it with the threat of violence because we'll send the tax man who's backed up by the government goon with a gun to enforce our will on those people.
00:29:24.400 | Now, I will fight tooth and nail for two things. I'm assuming you're rich because obviously you're listening to radical personal finance. So either you are rich on a global basis, you absolutely are, or you're going to be rich.
00:29:38.400 | And I'll fight tooth and nail for two things. Number one, other people have no moral right to steal from you just because they want your money. And it doesn't matter whatsoever how altruistic they seem.
00:29:55.400 | I'm ashamed to say there are a whole lot of people who self-identify as Christians who lead this charge and they say, "Well, we're going to go and we're going to take from all those rich people and we're going to steal from them and we're going to give it to these other people that we believe are more deserving."
00:30:08.400 | It's theft flat out. You should protect yourself and your assets against theft. Number two, you will give an account for how you use and distribute those assets.
00:30:22.400 | Charity is not forced distribution of your assets. Charity is you choosing what to do with your assets. Now, you must do what is morally right with your assets.
00:30:38.400 | But it's absolutely morally wrong for other people to try to come and steal your assets through the force of law at the point of a gun. You should protect yourself against that in every way possible.
00:30:57.400 | Which now we pivot. How do we resolve these things? How do we resolve what's morally right and what's legally right? Well, I believe you should always do what is morally right regardless of whether it is legally right.
00:31:13.400 | Now, of course, life is a little bit simpler when those two things are lined up, when what is morally right and what is legally right are in line. But unfortunately, sometimes those don't line up.
00:31:25.400 | And now you will be left with the excruciating decision of wrestling with what to do. And you don't give an account to me. You only give an account to God for your actions.
00:31:39.400 | Perhaps the best example of it, I always remember Dietrich Bonhoeffer, just his deep wrestling with, in the wake of World War II, his deep wrestling about whether or not he should be involved in the assassination of Hitler.
00:31:52.400 | That's the type of moral wrestling that you will have to engage in if you take any kind of moral stand in your life. Because the law will not always line up with what is right.
00:32:04.400 | Let me just give you some examples that I've noticed in the past few years. In the past years, there have been a number of lawsuits filed by cities against organizations that feed homeless people.
00:32:19.400 | And they come against them and they try to feed them for all kinds of lawsuits. Now, some of these have been settled. Some of these have worked out.
00:32:26.400 | But you're going to come to me and you're going to tell me that I'm not allowed to feed somebody who's hungry and you're going to try to use the penalty of law to keep me from feeding somebody who is hungry? Nonsense.
00:32:37.400 | Throw me in jail, take all my money away, but I'm not about to stop. One of the one that bothers me right now in 2018, the idea of hiring an illegal alien.
00:32:49.400 | You're going to tell me that I can't make a contract with a person who needs work and is willing to work and pay them for their work? Because if you forbid them from working because they're an illegal alien, now you force them into crime.
00:33:05.400 | What else are they going to do? It's absolutely immoral. I don't care what the law says. Any free man has a right to contract with any other person for moral, upright work and to be paid for their wages.
00:33:18.400 | So the law needs to come in line with what is morally right. Or the example from Hurricane Florence went through North Carolina. North Carolina woman was arrested and charged for taking in, I think it was 27 pets, and she was charged with practicing veterinary medicine without a license.
00:33:34.400 | Now, for background, she was in the process of setting up a pet shelter and she told people, hey, if you can't take your pets, I'll take them in. So she took in 27 pets, some of which were sick, and she's charged with practicing veterinary medicine without a license because she gave amoxicillin and a topical antibiotic to some of the animals.
00:33:53.400 | Are you kidding me? Doesn't matter what the law says. Do what's right. The animals are in need. You care for them. And there are so many more examples that could be given. For this last week, the Amazon headquarter movement. This is the most outrageous, outrageous example of crony capitalism that's come across in months.
00:34:19.400 | It's absolutely outrageous. If you're a resident of Northern Virginia or New York City and your governments give a private company billions of dollars of bribes to move and you're the one paying for that.
00:34:39.400 | It's one of the most egregious examples of the horrors of crony capitalism. And yet it's all front page news. So now, how do these things apply you personally? I don't live in Virginia. I'm not taking in 27 animals. I don't have a business where I'm hiring illegal aliens where the FTC can come against me and charge me for all of that stuff. You'll have to deal with those things if they're yours.
00:35:08.400 | But there are a whole lot of things that I'm personally concerned about. Probably my biggest concern is watching the law be weaponized over moral issues. People say, Joshua, bake the cake, you bigot. And the idea is we'll destroy you if you don't line up and affirm what we would say to affirm.
00:35:31.400 | I'm sorry, but been there, done that. I can't engage in the harming of people. I can't encourage genital mutilation to satisfy what you would like me to do. So take me to jail, take all my money fine. But I can't do it.
00:35:48.400 | Or perhaps a better example, probably one of the best examples of people wrestling and asset protection is the example of Randy Alcorn. Randy Alcorn is a Christian preacher. He wrote a book called The Treasure Principle. It's a good book if you're interested in Christian theology as it relates to money. It's very good. I need to have him on the show at some point when I can do interviews again.
00:36:06.400 | But Randy Alcorn back in the 1980s was involved with Operation Rescue, which was an anti-abortion movement which had many prominent Christians. And basically they sat down and physically blocked people from going into abortion clinics.
00:36:23.400 | Well, some people got sued. Operation Rescue resulted, it was I think a pretty successful movement if my historical analysis is somewhat accurate. But of course, Operation Rescue got shut down and passed a bunch of new laws. And Planned Parenthood sued a number of people, including Randy Alcorn. He lost the lawsuit against them.
00:36:42.400 | And they got something like a six or eight million dollar judgment against him. Now, the question is this, how can any morally thinking person ever pay a judgment like that? How could you ever pay six or eight million dollars that goes directly into the coffers of an organization that is responsible for the murder of millions of people?
00:37:06.400 | Just this past week, I was stunned to watch the appearance of Dr. Leanna Winn, the new president of Planned Parenthood. She showed on CBS this morning, didn't once say the word abortion. Didn't once. Most profoundly perfect example of propaganda and not even engaging in an argument.
00:37:27.400 | Talking, she made a statement of basically, "I can't believe that in 2018 we're arguing over," what was her comment? "We're arguing over health care as though we're arguing over the penicillin or birth control." Something like that. It's the most stunning moral evasion of all time.
00:37:48.400 | Meanwhile, annual report, what, 320 something thousand babies murdered last year as though we're just arguing about insulin or penicillin, whatever the medicine that she referenced.
00:38:06.400 | The point is, how can you ever put yourself in a situation, if you're facing one of those lawsuits, how could you put yourself in a situation where the assets that you're given stewardship over go to support such horrendous and evil activities?
00:38:28.400 | I consider this probably the biggest risk that you and I face today. I've lost a lot of confidence in the court system. I'm not an extremist one way or the other. I've read enough legal cases to not jump onto the headline that says, "This is the worst thing in the world and there's no case totally frivolous." But I've also not gone to the other side. And I've just lost a lot of confidence these days.
00:38:53.400 | So here's my point. Let me wrap it up with this. Here's the point. Your money and your stewardship of your money is your responsibility. If you owe somebody money, you should pay. But if somebody is extorting money from you, you should not pay.
00:39:21.400 | If you are wrong, you should right the wrong. If you've caused injury to another person, you should seek to the best degree that you're capable of to compensate them for that injury.
00:39:37.400 | If you've caused harm to another person, you should seek to whatever extent you possibly can to rectify that harm. That includes both personal actions and it also includes finances.
00:39:53.400 | And if you've caused harm to somebody and it costs you your entire fortune, that's a price well paid for you to right that wrong. That is a price well paid. But that should be your choice. That should be your choice.
00:40:15.400 | If you came to me and you asked for financial counseling and you said, "Joshua, I've got a million dollars over here. This million dollars is entirely protected. Legally, nobody can touch it.
00:40:33.400 | But the problem is I've harmed somebody. I stole a million dollars. I extorted a million dollars from this person. Or perhaps more, I stole two million dollars from this person. I extorted two million dollars from this person."
00:40:49.400 | My advice to you is going to be very simple. You stole two million dollars. You need to pay it back. So you need to take the million dollars that you have, even though they can't legally touch it, and give it to the person that you wronged.
00:41:03.400 | And then you need to work out a plan where you work extra and you pay extra and you do everything you can to pay back that other million dollars. And you plead with them perhaps to forgive you that debt. And if they will, that's fine.
00:41:15.400 | That's between you and them. But even if you spend the rest of your life working to repay that debt, that's the right thing to do. So the legality of the situation doesn't matter. The morality of the situation is what matters, at least to me.
00:41:31.400 | But let's flip it around. Let's say that you're in Randy Alcorn's position and you've got an eight million dollar court case that you've just lost because you've been sued and arrested for sitting down on a sidewalk to try to block a mother from murdering her baby. And now you've lost an eight million dollar judgment because of that.
00:41:57.400 | Well, my advice to you, I don't care how much money you have. Alcorn didn't have anything. But if you've got the money, you better not for an instant allow one dime to go towards that evil. Better for you to be tossed in prison for contempt of court than to allow the money that you're a steward of to be used in that way.
00:42:25.400 | Now, the good news is you can use the legal strategies that we're going to talk about to put those things on your side. And that should be a significant moral weight on your shoulders, because now you're going to have to choose of your own free will to do the right thing.
00:42:47.400 | Can you handle it? I don't know. I don't know if I can handle it. Wealth is a burden. It is a responsibility and it's not to be taken lightly. I just don't think you should run from that burden. So the answer to today's question is asset protection planning legal and moral? Legal, the answer is absolutely yes.
00:43:16.400 | Asset protection planning properly practiced is 100% legal. And I encourage you, don't commit any illegal acts. Don't commit perjury. Don't violate bankruptcy laws. Don't fraudulently conceal your assets from your creditors. And make sure that you plan ahead so that you don't wind up in a morally vulnerable situation.
00:43:43.400 | You know, I'm guilty of something and I don't quite know what to do it. But because I understand the rules, I try to be a little bit edgy with some of the things that I say, because that's attractive from a marketing perspective. So even yesterday, as I was finishing up the show, I was trying to promote my credit card course. And I was talking about how you can buy things on credit cards that aren't going to be claimed by creditors. Now, is that true? Absolutely. But I don't. It is legally true. And is there a place morally to do it? Maybe. I don't know.
00:44:12.400 | But I don't want to. I need to figure out how to pull back from the line because I want to engage in decent marketing and be slightly edgy. But I don't want you to do anything that would result in defrauding somebody. Don't steal money from people. And if you borrow money and don't have a plan to pay it back, that's what you do. If you borrow money and don't pay it back, you have stolen. So I don't want you to be near that. I want you to plan. That's why we constantly talk about things, having savings, being well, like all the things that you possibly can to stay away from that line.
00:44:41.400 | So I should make that clear because I probably myself, I probably tiptoe close to the edge sometimes. And I don't mean to, but I need to be more careful. So legally, yes, it's absolutely legal. Morally, you should be in charge.
00:44:58.400 | Just think of asset protection as a form of financial self-defense, as protecting the things that you have. Protect your assets. If you are rightfully sued because you have committed wrong, then negotiate the settlement and pay the claim. You can always choose to do that.
00:45:22.400 | But on the flip side, if you're sued and you're not wrong, but the court finds you wrong, now you have no option if you haven't engaged in asset protection planning. If your assets are exposed, you don't have any luxury of choice. Now, is it the end of the line if that happens? No. And my kind of final point, here's what I would encourage you to do. Hold all your assets lightly. Hold your money lightly. Recognize it's just money.
00:45:50.400 | And if you devote yourself to money, if you devote yourself to being rich, if that's your number one goal and you couldn't easily adapt to being poor again, you got problems. Then the money controls you. It's not a blessing to you. In that case, it's a curse.
00:46:06.400 | Money is deceitful, has problems, brings with it tremendous responsibility. So hold those things lightly. But do think about asset protection planning. And remember, you'll always have the choice. So we talk about things. If you have money in your 401(k), you always have the choice to choose to take it out and pay off a creditor if that's what's right.
00:46:32.400 | But I want you to have that choice because the courts can be weaponized against you in some really egregious ways. It's always best to be strong and from a position of strength, choose to give something away. From a position of strength, choose to lay down your life. That's what's strong. Not because it's taken from you, but because you choose.
00:47:00.400 | Perhaps I've preached too much, but I want to close with one final encouragement to you. One of the reasons why these topics are so important to me and why I seek to equip you is because I want you to be active in your life, your family, and your community and to use your money rightly. Not to be swept up with a whole bunch of other people over which you have no control.
00:47:28.400 | One of the things that most concerns me in 2018 is the increasing collectivization of behavior. The idea that, well, we can just do all these things if we all get together. Well, it doesn't work.
00:47:44.400 | Just like it's entirely wrong, morally wrong, for me to get together with a band of my friends and then to come and say, "Well, we're going to steal your money because we're going to give it to these other people over here." It's not going to do those other people over there any good because you're not involved in it. And whenever somebody builds a bureaucracy and builds an organization over which you have no control, you can't control it.
00:48:05.400 | And that's why you having agency, you having control over these things is the most important thing. If somebody steals from you, you will face a choice. Do you prosecute them? Do you forgive them? Sometimes it's right to prosecute them and sometimes it's right to forgive them. And I have no way of knowing that about your situation, but you do.
00:48:31.400 | If somebody sues you, you have a choice. Do you give them money? Go along, make it easy? Or do you fight? I don't know what's right, but you do. And so from a position of strength, you can now use these things and seek and pursue justice and righteousness, whatever that is in your specific situation.
00:49:00.400 | I'm 30 minutes over what I intended today's show to be, but it's obviously not a light subject. I want to close just with what I've always considered to be one of the most inspiring scenes in How to Handle Money. And it touches on these questions, that interplay between morality and justice and doing what's right and how do you know it.
00:49:23.400 | The scene, of course, the scene comes from Victor Hugo's book later adapted into a musical called Les Miserables, Les Miz. And it happens to be my favorite musical. And there is a scene in it where the protagonist of the story, Jean Valjean, he steals from a man, a priest who has put him up for the night.
00:49:43.400 | And he's caught by the police and that priest has the opportunity to either have him thrown in prison or that priest has the opportunity to forgive him the debt. By way of backstory, the musical version, let's just stick with the musical and ignore the book for a moment.
00:50:01.400 | The musical opens with, again, our protagonist, Jean Valjean, who has been in prison for many years. He was in prison five years for stealing a loaf of bread and then he tried to escape from prison. He was in prison for, I think, another 15 years, a total of 20 years in prison.
00:50:17.400 | And he gets out of prison and he says, OK, I've finally paid my debt to society. I'm going to go ahead and I'm going to go ahead and get a job. But the problem is, because he's an ex-convict, he can't get a job. He's paid a fraction of what he's worth. He's taken advantage of.
00:50:35.400 | Just like in 2018 in the United States of America, if you will open your eyes and look around, you will see all kinds of people around you who can't get jobs and who might be being taken advantage of because they're ex-cons or because they're illegal immigrants or whatever those circumstances are.
00:50:59.400 | Now, the question is, what do you do? Do you vote? Do you get involved? I'd recommend that you get involved. Now, vote if you want, but get involved and try to help the people who are involved work things through.
00:51:17.400 | So when you come in contact with an illegal immigrant, try to help them work through the situation, try to figure out what's morally right. How can they follow the law, be a good citizen of the empire, and also do what's right? It's not easy. It's tough. But get involved.
00:51:37.400 | Now, the cool thing is when you get involved and you're dealing with your money, not someone else's, now you have the choice to forgive a debt. You have the choice to show mercy. Not with someone else's money. It's not your choice to show mercy with my money. It's not my choice to try to show compassion with your money. But you do have a choice with your own money.
00:52:01.400 | And so in this story of Les Mis, as the show opens, Jean Valjean, he is out working and can't do it. He's sleeping in the courtyard. A priest comes across him sleeping and says, "Come, stay at my house." Takes him in for the night. Feeds him.
00:52:21.400 | And then Jean Valjean, in the middle of the night, wakes up, steals the silver from the man's table. The police find him, bring him back to the priest and say to him, "You know, we caught the thief." And Jean Valjean's defense is, "The priest gave him to me." And the priest, lying, says, "I gave him to him."
00:52:45.400 | The police let him go and he tells Jean Valjean, "You need to take the silver and start over." I encourage you to never forget this principle. What's yours is yours. You can forgive any debt. You can forgive any injustice. You can forgive any wrong. And don't ever lose sight of that.
00:53:11.400 | You can do that from a weak and vulnerable place. You may be abused by the court system and you're the victim. You still have to forgive. But the most powerful testimony comes from a place of strength when you choose to forgive. But only you are going to know whether that's the right thing to do in the actual circumstance of your life.
00:53:32.400 | So my hope is the content of this series will help you to be that strong person and that you'll then use the strength that you have, the blessings that you have, the privilege that you have to go and help others. I'll close with just this particular series of scenes from the musical. If you're not familiar with it, I would encourage you to enjoy the musical. If you are, just enjoy this, one of my favorite scenes from Les Mis.
00:54:00.400 | [Music]
00:54:15.400 | Freedom is mine. The earth is still. I feel the wind. I breathe again. And the sky clears. The world is waking. Drink from the pool of clean taste.
00:54:42.400 | Never forget the years, the waste. No, forgive them for what they've done. They are the guilty, everyone. The day begins and now let's see what this new world will do for me.
00:55:09.400 | [Music]
00:55:22.400 | You'll have to go. I'll pay you off for the day. Collect your bits and pieces there and be on your way.
00:55:28.400 | You've given me half of the other men get. This handful of tin wouldn't buy my sweat.
00:55:32.400 | You broke the law. It's there for people to see. Why should you get the same as honest men like me?
00:55:42.400 | Now I know how freedom feels. The jailer always at your heels. It is the law. This piece of paper in my hand that makes me cast throughout the land. It is the law. Like a car, I walk the street. The dirt beneath their feet.
00:56:06.400 | Come in, sir, for you are weary. And the light is cool out there. Though our lives are very humble, what we have, we have to share.
00:56:28.400 | There is wine here to revive you. There is bread to make you strong. There's a bed to rest till morning. Rest from pain and rest from wrong.
00:56:52.400 | Let me eat my fill. I had the lion's share. The silver in my hand cost twice what I had had. In all those nineteen years, that lifetime of despair. And yet he trusted me.
00:57:09.400 | The old fool trusted me. He'd done his bit of good. I played the grateful serf and thanked him like I should. And when the house was still, I got up in the night. Took the silver. Took my flight.
00:57:34.400 | Tell his reverend, surest, or me. Let us see if he's impressed. You were locked in here last night. You were the honest bishop's guest. And then out of Christian goodness, when he learned about your plight, you became he made a present of this silver.
00:57:55.400 | That is right. But my friend, you left so early. Surely something slipped your mind. You forgot I gave these also. Would you leave the best behind?
00:58:13.400 | So, monsieur, you may release him. For this man has spoken true. I commend you for your duty. And God's blessing go with you.
00:58:32.400 | But remember this, my brother. See in this some higher plan. You must use this precious silver to become an honest man.
00:58:55.400 | Why the weakness of the martyrs? Why the passion and the blood? God has raised you out of darkness. I have bought your soul for God.
00:59:20.400 | What have I done? Sweet Jesus, what have I done? Become a thief in the night? Become a thief in the night?
00:59:47.400 | What have I done? Sweet Jesus, what have I done? Become a thief in the night? Become a dog on the run? Have I fallen so far? It is the hour so late. But nothing remains but the cry of my fate. The cries in the dark that nobody hears. Here where I stand at the turning of the years.
01:00:04.400 | There's another way to go. I missed her twenty long years ago. My life was a war that could never be won. They gave me a number, murdered Valjean when they came here and left me for dead. Just for stealing a mouthful of bread.
01:00:32.400 | Why did I allow that man to touch my soul and teach me love? He treated me like any other. He gave me his trust. He called me brother. My life he claims for God above.
01:00:55.400 | How can such things be? For I have come to hate the world. This world has always hated me.
01:01:08.400 | Take a knife for a knife. Turn your heart into stone. This is all I have lived for. This is all I have learned.
01:01:31.400 | I'm glad for him and I'd be back. Beneath the lash upon the rack. Instead he offers me my freedom. I feel my shame inside me like a knife.
01:01:47.400 | Tell me that I had a son. How does he know? What spirit comes to move my life? Is there another way to go?
01:02:08.400 | I am reaching but I fall and the night is closing in. As I stare into the void, to the well-born of my sin. I'll escape now from the world, from the world of Jean Valjean.
01:02:31.400 | Jean Valjean is nothing now. Another story must begin.
01:02:47.400 | [applause]
01:02:51.400 | Just playing you just a little bit makes me wish that I could share the whole thing with you. Go and enjoy it.
01:02:55.400 | My favorite version of it is which I've just played you, just an excerpt from. There is a 10th anniversary concert that was delivered at Royal Albert Hall with basically the Dreamcast almost 20 years ago.
01:03:06.400 | And that was some of the vocalists that I just played for you. If you haven't seen it, the 2012 version of the movie was not bad. It certainly didn't have the vocal power of some of the Broadway performers or the version that I've just played for you.
01:03:18.400 | But you can certainly get a lot out of the story. Just remember this. There are real people involved in all of these affairs.
01:03:26.400 | And I hope that you will know wisdom and discernment as you seek to whatever your affairs, if you're facing lawsuits or putting these things in place, I hope that you will know wisdom and discernment to do the right thing so that in your corner of the world, you can bring light and justice rather than death. God bless.
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