RPF0632-Asset_Protection_Planning_for_Mere_Mortals_-_Part_10_-_Personal_Property_Exemption

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00:00:30.360 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now,

00:00:37.360 | while building a plan for financial freedom in 10 years or less.

00:00:40.560 | Today, we continue with our Asset Protection Planning for Mere Mortals series.

00:00:45.400 | Today is Part 10, wherein we discuss the personal property exemptions as a component of your overall asset protection planning.

00:00:53.980 | I'm excited to get back on track with the podcast here.

00:00:56.580 | I really would have always wanted to be in a place where I could just crank out these shows to the tune of three or four a week, do the courses and everything as well.

00:01:04.820 | But maybe I'm getting old. I just don't have the energy for it.

00:01:08.280 | What happens is, over the last few weeks as I've been finishing it up, I was finishing up writing the outline,

00:01:13.320 | and I wrote 102 pages of notes for that course that I just finished.

00:01:18.340 | The one on...

00:01:20.340 | [sighs]

00:01:22.000 | It's not good when you can't remember the name of your own courses.

00:01:26.380 | How to Survive and Thrive During the Coming Economic Crisis.

00:01:29.740 | There's 102 pages of notes.

00:01:32.500 | So if you've ever wanted notes for these shows, I'll just show you that that's what's in that one.

00:01:37.040 | And I often do that. I mean, I've got pages of notes for this.

00:01:39.780 | I don't know how many dozens of pages my notes for this Asset Protection series are, but there are a lot.

00:01:43.580 | So the point is, though, when I'm working through those things,

00:01:46.300 | I find that although I'd love to be able to switch gears and launch podcasts to you as well, I just can't do it.

00:01:52.800 | I get so exhausted by the mental energy required to come up with things and prove things out and find all the problems, etc.,

00:02:00.420 | that I just can't do both.

00:02:01.420 | So now that that course is alive and ready for you to buy,

00:02:03.620 | hint, hint, radicalpersonalfinance.com/store,

00:02:08.420 | I want to get back to this Asset Protection Planning for Mere Mortals series.

00:02:11.220 | And I'm excited about this one.

00:02:12.720 | For context, we've talked through what is asset protection in a big picture plan, from a big picture perspective.

00:02:20.420 | We've talked through a lot of exemptions.

00:02:22.120 | And I'm really focusing hard on Mere Mortals in this series,

00:02:26.520 | because so many of the Asset Protection books and seminars and things that you can find are targeted to very high-end people.

00:02:34.420 | Well, very high-end people, very wealthy people, the best thing to do generally is just to find a good attorney.

00:02:39.420 | But the people that I get frustrated, that get lost, that get left behind,

00:02:43.920 | are the people who are, you know, they earn a good income, six-figure income earners, you know, at least above the median wage.

00:02:50.220 | They're building assets, but they don't think about asset protection.

00:02:53.020 | And you go and you try to read about what the Asset Protection attorneys talk about, and it's just not relevant.

00:02:59.320 | And so I want this to be very relevant.

00:03:00.920 | And today's show is going to be very relevant.

00:03:03.820 | And in fact, today's show is basically a product of my brain and my research.

00:03:08.420 | And the reason is, I have never read, I've read almost nothing about this stuff,

00:03:13.820 | specifically in terms of personal property planning, from the Asset Protection books.

00:03:18.620 | And the reason is, personal property is generally considered to be so small in value as not to be relevant for somebody who's extremely wealthy.

00:03:28.020 | And I get that. I recognize that.

00:03:30.620 | If you look at the way that wealthy people run their lives,

00:03:34.020 | you will generally see that the stuff that they own is not nearly as big of a percentage of their expenses

00:03:42.420 | or of their net worth as the investments that they own.

00:03:46.620 | And this is one of the big secrets of wealth building.

00:03:50.620 | You might go to the wealthy part of town where you live, or go to a wealthy city,

00:03:55.220 | go to Palm Beach, Florida, or go to Los Angeles, or Hong Kong,

00:03:58.820 | or someplace where there are a lot of really expensive pieces of real estate available.

00:04:03.420 | And you'll find there'll be somebody there who would own a $5 million house, or a $10 million house, or a $20 million house.

00:04:09.620 | And you think, "Man, rich people spend a lot of money on their housing."

00:04:13.920 | But what you don't understand is, as measured by a percentage of that person's net worth,

00:04:18.620 | that house is a much smaller percentage of their net worth, their net wealth, than probably the house of your next-door neighbor.

00:04:25.720 | Because most middle-class and lower-income people would tend to make their house their first thing that they approach.

00:04:33.120 | And so if you take an average median income earner who owns a house,

00:04:36.820 | and you compare the value of the house as compared to their total net worth,

00:04:40.220 | you'll find that generally they're going to have a much higher percentage of their net worth tied up in something like a personal house

00:04:46.520 | than a wealthy person does, even though the wealthy person's house is worth $10 million,

00:04:50.520 | and the middle-class person's house is worth $300,000.

00:04:54.120 | And so this is important. Now, is that a bad thing? Not necessarily, because we need a place to live.

00:04:58.320 | And so, should you spend $300,000 on a house? Maybe, if that's what you need in terms of a place to live.

00:05:03.320 | Money is not all about—the path of wealth is not all about getting rich as fast as possible.

00:05:09.020 | The goal is to live a wealthy and rich life now, providing for the things that you need,

00:05:13.520 | while also working towards financial freedom.

00:05:15.620 | Now, if you don't need that much in-house, if you don't need that $300,000 house,

00:05:19.820 | then yeah, it's probably a bad idea, because there are better ways for you to put that money to productive use.

00:05:25.520 | So maybe buy the $300,000 house, and then you move into the garage apartment and rent out the main house for a big rental income,

00:05:31.720 | and now you're on the track towards wealth.

00:05:33.620 | And then later, when you've got $10 million or $100 million, then you can buy the expensive house.

00:05:38.320 | But that's what happens with housing.

00:05:40.820 | Now, the point of that is, personal property is just generally not that big of a deal

00:05:46.220 | in terms of the net worth of a wealthy person.

00:05:50.520 | Yes, they might own millions of dollars of artwork, or millions of dollars of valuable collectibles and such.

00:05:56.320 | But compared to the net worth, it's generally going to be a smaller amount.

00:06:00.220 | And so, this whole aspect of personal property exemption planning generally gets just slid over.

00:06:05.820 | But I think it's extremely relevant for individuals, for mere mortals, to at least understand about personal property.

00:06:12.920 | And here I want to confront a second big problem.

00:06:15.320 | At this point, we don't give, at least in the United States of America,

00:06:18.620 | we don't give much attention to the personal property in our modern life.

00:06:21.720 | And I think this is because we're so awash in money,

00:06:25.520 | that it's much more likely that you and I would view personal property as an encumbrance,

00:06:31.320 | and as an expense, than towards something valuable.

00:06:34.320 | The whole trend in our society is towards minimalism and tidying up,

00:06:39.020 | the life-changing magic of tidying up, how to get rid of your stuff that doesn't spark joy,

00:06:42.520 | and be as minimalistic as possible.

00:06:45.520 | Now, is that a good thing?

00:06:47.520 | I think, of course, it can be very good.

00:06:49.720 | I've interviewed minimalists on the show.

00:06:51.520 | I've publicly advocated for having a mindset of minimalism.

00:06:56.120 | I think tidying up your junk is a great idea.

00:06:59.120 | So, fine, I think that can be a good thing.

00:07:01.920 | But is this idea perfectly necessary?

00:07:04.320 | Is this the magic secret to a happy life?

00:07:07.620 | I don't think so. I really don't.

00:07:09.920 | And I think the personal property is actually very important,

00:07:13.820 | as long as it's thoughtful and well-created.

00:07:17.520 | Because the stuff that we have and use in our lives is very, very useful.

00:07:22.320 | And it can be useful in terms of a bankruptcy filing.

00:07:26.020 | Now, here's personally just a few thoughts on how I've tried to reconcile this tension,

00:07:30.020 | this tension between too much stuff and not enough stuff.

00:07:33.020 | I think that stuff is really only a hindrance if it meets certain criteria.

00:07:36.920 | For example, if your stuff is pointless junk, then I think it's a hindrance.

00:07:42.020 | There's a big difference between having a bunch of pointless junk in your house

00:07:46.320 | that you don't use, that you bought on a whim, that's worthless to you,

00:07:50.920 | than having things that you actually use.

00:07:53.420 | Silly example. Some people have a bunch of shot glasses.

00:07:56.120 | Now, if you do shots regularly and you use all your shot glasses, fine.

00:07:59.620 | If you want to collect shot glasses, that's fine.

00:08:01.320 | But for me, shot glasses would be pointless junk.

00:08:04.020 | But it's not pointless junk for me to have dozens of drinking glasses,

00:08:06.820 | because I regularly entertain large crowds, I regularly use those drinking glasses,

00:08:11.020 | and I don't like to use disposable throwaway stuff.

00:08:13.720 | I like to have good things that are going to last over time,

00:08:15.820 | so I don't have to throw stuff away.

00:08:18.620 | Fill up the landfill, spend a lot of money, etc.

00:08:20.920 | And so for me to have a big cabinet full of drinking glasses is not worthless,

00:08:26.420 | because it's not just junk, it's something that fits my desire, my lifestyle.

00:08:30.420 | But for me to have a big cabinet full of shot glasses would be pointless junk.

00:08:35.320 | Another thing I think that causes problems for stuff is,

00:08:38.520 | your stuff is a hindrance if it's poorly organized and/or poorly stored.

00:08:42.620 | So you know the feeling.

00:08:43.820 | If you go into a friend of yours who's a hoarder and you've got junk stacked everywhere,

00:08:48.120 | that's a very different feeling than going to somebody's workshop that's carefully organized,

00:08:53.220 | and they've got storage bins that are labeled, that are organized,

00:08:56.020 | they're organizing trays inside those storage bins.

00:08:59.020 | And if you ask them if they have a whatchamacallit or a what'sit,

00:09:02.320 | then they'll write which box that what'sit is in.

00:09:05.020 | So keeping things properly organized and stored is a big deal.

00:09:09.220 | I think stuff can be very frustrating if it's not modular,

00:09:12.020 | meaning, and my theory has always been what I've found worked for me,

00:09:15.520 | is I think in terms of modules.

00:09:17.620 | So I organize like compared to like,

00:09:19.920 | and then I make mini modules and I make large collection baskets for those modules.

00:09:23.520 | So in practice, what this actually looks like is I put everything in bags,

00:09:27.220 | whether it's just as simple as Ziploc bags,

00:09:29.220 | I label those Ziploc bags, and then I put a big box of everything that relates to that particular activity

00:09:33.520 | or that particular item, etc.

00:09:35.320 | And you do the same thing with this if you organize your toolbox

00:09:37.820 | or you organize your sewing kit or whatever.

00:09:39.820 | But by having things modular, you can move those modules around and they're not that big of a deal.

00:09:45.220 | That's a big difference than having stuff strewn everywhere.

00:09:48.320 | Other things, if things aren't cataloged,

00:09:50.320 | or more importantly, if things aren't just carefully selected,

00:09:53.220 | if you have a bunch of random junk that you've accumulated and you don't use,

00:09:56.220 | that's different than having lots of useful items that you do use.

00:10:00.020 | So I don't think stuff is a hindrance if it's carefully chosen,

00:10:03.620 | carefully cataloged, well-organized, modular,

00:10:07.020 | and it's useful to your activities in life.

00:10:10.020 | I guess the only other thing I would say about stuff is stuff can be a hindrance

00:10:13.320 | if you simply have no room or have intentionally decided to have no room.

00:10:17.720 | For example, you've looked around your house and you said,

00:10:19.520 | "Man, we've got this big five-bedroom house, but if we just had less things,

00:10:23.520 | we could downsize into a studio apartment and save $1,500 a month."

00:10:27.320 | In that case, yeah. You might want to get rid of the stuff and say,

00:10:30.020 | "We're making it up in terms of the savings."

00:10:32.120 | Or you say, "We want to go travel the world,

00:10:34.120 | and it would be really bad for us to have a bunch of junk.

00:10:36.920 | Let's get rid of our junk so we can go travel the world."

00:10:39.220 | And so if you're going to go and do something,

00:10:41.020 | then I think having the stuff can be a hindrance.

00:10:44.920 | The point is, stuff is actually important.

00:10:47.220 | I think it's extremely arrogant for us, especially in the wealthy nations,

00:10:51.220 | those of us who are in the West.

00:10:52.520 | It's very arrogant for us to just pretend that we can do fine without stuff,

00:10:56.320 | to live our lives as though Amazon is always going to be there with next-day shipping,

00:11:00.820 | to live our lives as though everything's always going to be there.

00:11:03.620 | Physical assets can be extremely important in allowing you to actually live.

00:11:08.220 | And it's only, I think, a bit of hoo-breeze that allows us to think,

00:11:12.220 | "Well, a hurricane will blow through, and it's no big deal because female gum will take care of it.

00:11:15.920 | Look at the people that are happening in, was it Mozambique right now?"

00:11:19.420 | I mean, it's extremely arrogant for us to think that we don't need stuff.

00:11:24.220 | The stuff only, stuff has a place.

00:11:28.220 | And I think it's bad for us not to plan ahead to take care of ourselves and our family.

00:11:33.620 | What would you do if your house blew down,

00:11:36.120 | and there's no next-day Amazon delivery available?

00:11:38.520 | Do you have the stuff that you could put a roof over your family's head again?

00:11:41.620 | I think it's important.

00:11:43.020 | So, I feel there's a valuable balance, not to have just this mindless consumerism,

00:11:48.820 | but also not to have this mindless eliminationism, to coin a phrase.

00:11:53.920 | To basically say that the proper amount of stuff, properly chosen for your lifestyle,

00:11:58.620 | and the things that you're facing right now, is important.

00:12:01.520 | And too much is bad, and also too little is bad.

00:12:05.320 | Physical items are also something that is, really have a bad impression, or bad reputation,

00:12:13.020 | because we spend so little time thinking about them in a financial context.

00:12:18.920 | Usually, I think if you follow the money, you'll understand why people represent the products that they do.

00:12:24.120 | And the biggest thing that the financial advice industry has succeeded in,

00:12:28.120 | in the United States of America, is to automatically think,

00:12:31.920 | is to automatically plant the seeds in investors' mindsets,

00:12:36.720 | that when you think investment, you automatically think paper investment.

00:12:42.320 | Now, there is a contingent of investors that automatically think real estate, real property,

00:12:46.520 | again, the three classes of investments that you can invest in,

00:12:49.220 | would be real property, paper assets, and business interests.

00:12:53.420 | So, some people do think immediately real property, real estate, etc.

00:12:56.720 | But most people go immediately to paper investments, buying stocks, buying bonds, buying CDs, etc.

00:13:02.020 | Well, that's because those assets are very easily flipped by, or sold, with a commission by salespeople.

00:13:08.420 | And so, you're used to thinking about those things.

00:13:11.120 | But are those assets actually the most important?

00:13:14.220 | There is another category, and I guess we could put this in under real property,

00:13:17.120 | although it's technically personal property, but you can make a lot of money on the sale of physical items.

00:13:21.820 | And in fact, many of your paper investments, that's the basic business model.

00:13:26.020 | Walmart is in the business of buying low, selling high.

00:13:29.120 | And so is your neighborhood grocery.

00:13:30.720 | They're all in the business of buying low, selling high.

00:13:33.120 | But those are usually with physical items.

00:13:35.820 | Buying low, selling high makes sense.

00:13:38.120 | And I think we do people a great disservice when we don't talk about the things that can be done by purchasing physical assets.

00:13:45.920 | I have known a good number of redneck millionaires.

00:13:48.820 | And one of the things that has impressed me is how they don't give two hoots for the stock market.

00:13:54.520 | That's just not important to them.

00:13:55.920 | But they are not poor.

00:13:57.920 | Rather, what they have is this incredible skill of picking up a lawnmower on the side of the road,

00:14:02.520 | cleaning the carburetor, and flipping it for a hundred bucks.

00:14:06.020 | If you teach the average person to do that, I think the average person would build a lot more wealth.

00:14:12.420 | And so you can do a lot with physical items.

00:14:14.920 | You can do a lot.

00:14:16.120 | And physical items also have the benefit of--they're tangible.

00:14:19.720 | People can understand them.

00:14:21.520 | You can teach your children to buy low and sell high.

00:14:24.220 | My favorite saying from--I forget--Jim Rohn, "Make sure your children always have two bicycles, one to ride and one to rent."

00:14:34.920 | These physical items are so much better than paper assets and paper investments for teaching the lessons of entrepreneurship and of investment.

00:14:43.120 | And so you can make a lot of money on physical items.

00:14:45.120 | And then also with physical items, most people can much more easily apply their individual acumen in buying than the stock market.

00:14:53.320 | It's a lot easier for you to learn how to save money at the grocery store, save money at the hardware store,

00:14:57.320 | save money at the yard sale, than it is for you to learn how to save money on Wall Street.

00:15:01.620 | So physical items, I think, are underappreciated.

00:15:05.320 | Now, what about asset protection?

00:15:07.120 | Physical assets are really, really interesting from an asset protection standpoint.

00:15:12.120 | They're very, very interesting from an asset protection standpoint.

00:15:15.420 | Now, usually the first place that people go when thinking about physical items, personal possessions, personal property,

00:15:23.720 | is to the personal property exemptions for asset protection and bankruptcy planning.

00:15:29.120 | And here, bankruptcy planning is at the core of everything we're going to talk about here.

00:15:33.420 | Because in the bankruptcy code, there are a number of specific stated exemptions, asset classes that are exempt from the claims of creditors.

00:15:42.920 | We've talked about those a lot.

00:15:44.420 | Your pension accounts, such as your 401(k) accounts, life insurance, cash values, or annuity values,

00:15:50.920 | college savings accounts, health savings accounts, etc.

00:15:54.420 | But what we haven't gotten to until today's episode is personal property exemptions.

00:15:58.420 | And there are specific personal property exemptions listed in the bankruptcy code,

00:16:04.420 | whether that be the federal bankruptcy code and/or your state bankruptcy code, depending on what state that you're involved in.

00:16:10.920 | And those personal property exemptions tell you the things that you can own, even if you're forced to declare bankruptcy.

00:16:17.920 | So you can own these items, and then you'll go through, you'll declare bankruptcy,

00:16:22.420 | you'll surrender anything that's not on that list and anything that's not an exempt asset,

00:16:26.420 | and then on the other side, you'll come out owning those assets still.

00:16:29.920 | Well, that's an important list for you to know.

00:16:31.920 | And we're going to talk in depth about those items.

00:16:34.420 | But I think that the physical items are underappreciated in the asset protection world

00:16:39.420 | because people think that that's where it stops.

00:16:42.420 | Now, in an ultimate scenario, that is where it stops.

00:16:46.420 | But physical items provide you with a really incredible level of privacy,

00:16:52.420 | which is, in and of itself, valuable.

00:16:55.920 | Physical items provide you an incredible level of personal privacy,

00:17:00.920 | which can very much minimize your legal risks and especially your risks of asset protection.

00:17:08.920 | Let me give you an example to demonstrate to you the difference between this.

00:17:12.920 | Remember that in asset protection planning, if somebody wants to sue you,

00:17:17.920 | they're going to retain an attorney.

00:17:19.920 | And as part of that attorney retainer process, they're going to do an asset search for you.

00:17:25.420 | And in order for somebody to successfully sue you or to really be intentional about suing you,

00:17:30.920 | and in order for an attorney to take on the case,

00:17:33.420 | they're going to have to be convinced that it's going to be in their best interest,

00:17:36.420 | which means that they want to make sure that you have deep pockets.

00:17:39.920 | What attorney is going to take a case on retainer if they're not suing somebody with deep pockets?

00:17:44.920 | Almost no one.

00:17:45.920 | If they do take the case, they're going to take it and make the plaintiff pay up front.

00:17:50.420 | And who knows, maybe you're up against somebody who holds a personal grudge and has deep pockets,

00:17:54.420 | in which case this doesn't protect you.

00:17:56.920 | But that's not the normal situation we're talking about.

00:17:59.920 | The normal situation is somebody's going to be looking for a deep-pocketed defendant.

00:18:03.420 | Now, in this situation, the point of personal assets, physical assets, personal property,

00:18:10.420 | is you can own quite a substantial amount of property,

00:18:13.920 | and there's not a lot of information out there about it.

00:18:17.920 | And remember that the legal rules of disclosure only apply to you if you are forced to make a legal disclosure.

00:18:25.920 | And I'm only aware of two circumstances in which you can be forced to make a legally binding disclosure

00:18:32.420 | under penalty of perjury.

00:18:34.420 | And that would be something like a bankruptcy filing.

00:18:36.920 | So if you are filing for bankruptcy and/or if you're completing a debtors examination,

00:18:41.420 | and those can go together.

00:18:42.420 | So in a worst-case scenario, somebody sues you, then they win their lawsuit against you,

00:18:48.920 | then they bring you into the court and you're compelled to complete a debtors examination,

00:18:52.420 | which basically means you tell somebody everything that you own, everywhere that it is,

00:18:57.420 | and you have to do that under the penalty of perjury.

00:19:00.420 | And so you don't want to lie because lying is a big--

00:19:03.420 | potentially a felony, potentially sends you to prison, which is a bad thing.

00:19:06.420 | It's bad for your financial freedom when you're stuck in prison.

00:19:08.420 | So we want to be cautious and hope to never get to a debtors examination,

00:19:12.420 | but we always want to plan that if we're compelled to fill out a debtors examination

00:19:16.420 | and complete a debtors examination, that we're prepared to fully disclose every asset that we own,

00:19:21.420 | everywhere it is, etc.

00:19:23.420 | But the point is to stay out of that position.

00:19:26.420 | Well, there's a long way between today and a debtors examination,

00:19:31.420 | and there's only a tiny minority of cases that could wind up in that situation.

00:19:35.420 | Somebody would have to sue you, the lawsuit would have to not be settled,

00:19:38.420 | they would have to win, and then ultimately then they can force the debtors examination on you.

00:19:43.420 | Similar thing with a bankruptcy filing.

00:19:45.420 | The last-case scenario for somebody who is forcing a debtors examination on you is to--

00:19:50.420 | if they're able to--to force you into involuntary bankruptcy.

00:19:53.420 | Well, in that situation now you're declaring a bankruptcy court,

00:19:56.420 | or potentially if you're filing bankruptcy on your own volition,

00:20:00.420 | then now you have to make a legal disclosure of everywhere that you own.

00:20:04.420 | But until that point, until you're in the chair with a debtors examination or a bankruptcy filing,

00:20:09.420 | how can someone compel you to disclose what you own and where it is?

00:20:16.420 | I'm not aware of any legal method that could be used to--for someone to force you to disclose

00:20:24.420 | what you own and where it is except for those two.

00:20:27.420 | I'm not aware of anything.

00:20:29.420 | Now, maybe you got a guy sitting in front of you with a gun to your kneecap,

00:20:33.420 | I guess that's possible, but that's a little outside of my planning scenarios here.

00:20:40.420 | And I just think you have massive protection by owning physical assets from someone who's doing that process.

00:20:48.420 | Financial privacy is very hard to come by in today's world, but it's not impossible.

00:20:53.420 | It's very, very difficult in the world of bank accounts.

00:20:58.420 | But it's not necessarily difficult in the world of physical accounts.

00:21:02.420 | Let's say that you have $100,000 in the bank.

00:21:04.420 | If you have $100,000 in the bank, there's a good chance that money can be found out

00:21:09.420 | by somebody who is targeting you.

00:21:11.420 | Either they can have it disclosed by the bank as they're performing an asset search,

00:21:15.420 | or if you're dealing with somebody shady, they could do something like social engineer their way in

00:21:20.420 | to that information, getting it through pretexting your bank, something like that.

00:21:25.420 | So there's a good chance--they could pay somebody on the inside,

00:21:27.420 | they could find some way to do it unethically and illegally,

00:21:30.420 | or through the legal reporting methods.

00:21:32.420 | And this is where people don't understand when it comes to maintaining privacy,

00:21:35.420 | how much of your assets are reported.

00:21:38.420 | The money in your bank is reported to the IRS,

00:21:40.420 | the money in your bank is reported to all kinds of places,

00:21:42.420 | and there are ways for somebody who is using all the methods

00:21:46.420 | to possibly find out about the assets that you own.

00:21:49.420 | But let's say that you take $100,000 and you hold that $100,000 in physical currency

00:21:54.420 | locked in a safety deposit box.

00:21:57.420 | Well, now, there's really no way that anybody can know that you have that same $100,000.

00:22:04.420 | There are other risks, we'll get to that in a moment.

00:22:06.420 | But from a privacy perspective, there's really no way that anyone can know

00:22:10.420 | that you have that $100,000 in a safety deposit box,

00:22:14.420 | barring a court order that forces them to open your safety deposit box.

00:22:17.420 | The way that you avoid that--or avoid that, I guess I should say properly--

00:22:21.420 | the way that you avoid that is make sure that you have private vaulted storage

00:22:25.420 | to make sure that you own storage.

00:22:27.420 | It's still legal in today's world.

00:22:28.420 | As long as you're not dealing with a bank that is complying with Know Your Customer rules,

00:22:32.420 | you can establish a private storage vault in many storage facilities,

00:22:36.420 | and that storage vault doesn't even have to necessarily be connected to your legal name.

00:22:41.420 | So there are ways to bring privacy into your personal affairs.

00:22:44.420 | You put that $100,000 in that storage vault, and nobody needs to know that it is there.

00:22:50.420 | Now, we can go much beyond cash, but the point is,

00:22:52.420 | although personal privacy is very hard to come by, it's not impossible.

00:22:56.420 | So let's talk about how physical items provide you with privacy.

00:23:00.420 | First, physical items are much easier for you to purchase privately,

00:23:05.420 | so you can have privacy of your purchase.

00:23:07.420 | For example, cash still worked great in the United States of America.

00:23:11.420 | I was very encouraged to read a news story recently where--I forget which state it was--

00:23:18.420 | but they passed a new law saying that you had to still accept cash.

00:23:22.420 | I don't love laws and coercion, but at least it's a standing back against the--

00:23:28.420 | it was a state that passed it so that Amazon couldn't refuse to use cash in a local store.

00:23:33.420 | At least it's a pushback against the war on cash.

00:23:35.420 | But cash still works, especially if you're dealing in purchasing items

00:23:39.420 | that you're buying in fairly small amounts and not triggering the various cash reporting requirements

00:23:44.420 | doing transactions that are greater than $10,000.

00:23:46.420 | So you can today purchase all kinds of valuable personal property using cash,

00:23:51.420 | and there can be absolutely no linkage to you based upon your purchasing records.

00:23:57.420 | Cash is wonderful.

00:23:59.420 | For larger items, money orders still work quite well for larger items.

00:24:02.420 | You can buy larger money orders.

00:24:04.420 | Now again, you run up against the $10,000 reporting requirements for larger money orders,

00:24:09.420 | but it still works extremely well,

00:24:11.420 | and you can arrange for physical delivery of various items in a private manner.

00:24:15.420 | So when you're coming to physical items, you can purchase things that are extremely valuable

00:24:21.420 | and do it without long lists of connections to you.

00:24:24.420 | That's important, especially personal property.

00:24:27.420 | You can go and buy gold coins from a local coin shop in cash,

00:24:30.420 | do it in modest amounts regularly over time,

00:24:33.420 | and accumulate tens of thousands of dollars of assets completely privately.

00:24:37.420 | You can go and you can buy stereos, or you can buy boots,

00:24:40.420 | or whatever it is that you want to buy, and you can do that with physical items.

00:24:44.420 | So cash and physical items help you with the privacy of purchase.

00:24:49.420 | What about the privacy of ownership?

00:24:51.420 | With physical personal property, you can own things that don't advertise their presence to others,

00:24:57.420 | and especially personal property where there's no legal deed or title.

00:25:02.420 | It's a little hard to do this with things like cars,

00:25:04.420 | because most people aren't aware of how you title and own a car privately,

00:25:08.420 | and there's always going to be some link of that car to you.

00:25:10.420 | Even if it's extremely small, there's going to be some link,

00:25:14.420 | most commonly through your insurance policy.

00:25:16.420 | You may purchase a vehicle privately, you may register a vehicle privately,

00:25:19.420 | but in general, unless you're willing to pay a good amount of money more,

00:25:22.420 | you're going to be insuring that vehicle, and there's going to be a record of that.

00:25:26.420 | But that gold coin doesn't have the same connection to you.

00:25:29.420 | You go and buy a chainsaw for your garage,

00:25:31.420 | it doesn't have any ownership, registering, titling requirements, etc.

00:25:36.420 | So physical possessions, once you own them, they don't advertise their presence to anybody else.

00:25:40.420 | And again, it's relatively simple for you to have a storage facility for your items that is privately yours.

00:25:45.420 | I'll give you an obvious example.

00:25:46.420 | Your house. Your house is extremely private, at least in the United States of America.

00:25:51.420 | No one can legally force their way into your home to view your possessions

00:25:56.420 | without a legal warrant based on probable cause of the commission of a crime.

00:26:01.420 | Your house in the United States of America is one of the most secure places that you own.

00:26:07.420 | It's one of the most secure things that you have against legal intrusion.

00:26:11.420 | It is far more secure for you to have a safe in your house

00:26:17.420 | and have lots of physical possessions inside that safe than is your bank account.

00:26:23.420 | All the data from your bank account is routinely disclosed to other parties, including the government officials.

00:26:29.420 | But your safe is not.

00:26:32.420 | For your safe to be legally invaded, you have to be targeted by a law enforcement agency.

00:26:40.420 | You have to get a judge to approve a warrant where there's reasonable suspicion

00:26:44.420 | and probable cause that you've committed a crime and that the items that are in that safe are related to that.

00:26:50.420 | Or the items in your house are going to prove that crime.

00:26:53.420 | Well, for the majority of us, we're not involved in anything that would lead to that.

00:26:57.420 | We're just not dealing in that kind of stuff.

00:26:59.420 | So your house is extremely private. It's extremely private.

00:27:03.420 | Now, of course, it is possible that you could be the target of theft.

00:27:06.420 | We'll talk about that in a moment.

00:27:07.420 | But from a legal perspective, your house is very private.

00:27:11.420 | And then even just from a practical perspective, it's fairly easy for you to secure areas within your home,

00:27:16.420 | your outbuildings, etc., that are secure so that no one can see what you own.

00:27:20.420 | You can have a locked room in your house so whenever your house is filled with houseguests,

00:27:24.420 | nobody knows what's in that room. That's your own business.

00:27:27.420 | You can do whatever you want in that.

00:27:29.420 | And it's a lot easier for you to learn about how to put a good lock on your door,

00:27:33.420 | how to buy a good safe, or how to secure your barn.

00:27:36.420 | It's a lot easier for you to learn those things than it is for you to figure out all of the reporting requirements

00:27:41.420 | and the know-your-customer laws and the money laundering laws and what is Chase actually doing with your money.

00:27:47.420 | What are they actually reporting on your bank account? You don't know.

00:27:50.420 | And it's very hard to get straight answers on that. Trust me, I've looked.

00:27:53.420 | So obvious example is you can own things in your house, and your house is actually extremely private and secure.

00:27:58.420 | Now, of course, there are other options.

00:28:00.420 | For example, there's no reason that your home has to be specifically tied to you.

00:28:04.420 | You could rent a place to live or buy a place to live that's less connected to you.

00:28:08.420 | There are methods for that.

00:28:10.420 | Or perhaps a little bit easier, it's fairly easy for anybody who wants one to privately rent a storage unit.

00:28:17.420 | There are storage units all across the United States of America, frankly, all across the world.

00:28:21.420 | And it's not that big of a deal for you to have a trusted nominee go and rent that storage unit

00:28:26.420 | if it's a storage unit that requires identification, etc.

00:28:29.420 | It's not that difficult for you to pay for that storage unit in cash.

00:28:32.420 | And if you do those two simple things, have a trusted nominee rent the unit for you and pay for it in cash,

00:28:38.420 | how is that unit going to be specifically traced back to you?

00:28:41.420 | Is somebody going to follow you in your car while you're going to your storage unit?

00:28:45.420 | It's possible, but if you're dealing with that kind of threat, then you should plan for that.

00:28:48.420 | If you're worried about a private investigator following you to your storage unit, then you better plan for that.

00:28:53.420 | But that's a very remote probability.

00:28:56.420 | It's much easier for somebody to sit back and try to figure out what's in your bank account

00:28:59.420 | than it is for them to go and hire a private investigator to follow you around for weeks and weeks and weeks

00:29:03.420 | to see if you own a storage unit.

00:29:05.420 | But yeah, you can own a storage unit.

00:29:07.420 | It looks like everyone else's, and you can put whatever you want in that storage unit.

00:29:10.420 | And then again, you can go to the fancy end.

00:29:12.420 | You can buy private storage vaults in a non-bank institution, which allows you to legally rent a secure storage.

00:29:19.420 | And you can hold any physical assets in that non-bank storage vault without any legally mandated disclosure requirements.

00:29:27.420 | You can keep any amount of cash that you want in there.

00:29:29.420 | Cash in a safe deposit box is not legally reportable for U.S. citizens.

00:29:32.420 | Of course, if you have bank accounts in excess of $10,000, those must be reported.

00:29:36.420 | Any physical items, gold coins, gold bars, Stradivarius violin, or even a Maserati that you keep in a foreign garage,

00:29:43.420 | all that stuff can be held privately.

00:29:45.420 | And then of course, you can own things like foreign real estate, but that's real property.

00:29:48.420 | Here I'm talking about personal property.

00:29:50.420 | So the point is that you can have privacy of ownership with physical possessions.

00:29:55.420 | Because you can own valuable personal property that's not deeded, there's no legal deed or title.

00:30:02.420 | It's just a matter of your ability to maintain possession.

00:30:06.420 | That's what dictates your ownership.

00:30:08.420 | Possession dictates your ownership.

00:30:10.420 | Possession and securing possession is well within the average person's ability.

00:30:15.420 | What about the privacy of sale?

00:30:16.420 | Physical assets can easily be sold for cash.

00:30:19.420 | Why is it that thieves love to target things like tools?

00:30:22.420 | Because they're easily sold for cash.

00:30:25.420 | There are many advantages to owning physical personal property.

00:30:29.420 | There are a lot of advantages.

00:30:31.420 | Now, there are disadvantages.

00:30:32.420 | The main disadvantages, of course, would be risk of loss due to destruction of the property,

00:30:37.420 | fire, flood, hurricane, tornado, etc., and/or theft.

00:30:42.420 | Theft is a big one, and so you've got to plan for that.

00:30:44.420 | And then, of course, there are risks of obsolescence and deterioration with time, things like that,

00:30:49.420 | if you own personal property that could deteriorate with time.

00:30:52.420 | But those risks are well within the capabilities of the average human being to think about and plan for.

00:30:58.420 | And those risks are nothing like the analytical capability and cognitive ability that's required

00:31:04.420 | for an average person to accurately predict something like international monetary policy

00:31:08.420 | or political futures or stock market.

00:31:10.420 | You could think about how to protect your stuff from fire and flood and theft.

00:31:14.420 | It's not that hard.

00:31:15.420 | Now, notice thus far that I've basically talked about privacy.

00:31:20.420 | And I want to point out to you that that privacy is, in and of itself, a valid asset protection strategy.

00:31:26.420 | We don't want to always have to rely exclusively on privacy,

00:31:30.420 | because we don't ever want to be in a position to where we would have to depend on this stuff all being secret

00:31:37.420 | so that when we're completing that debtors examination or filling out that bankruptcy filing, etc.,

00:31:42.420 | that we have to lie.

00:31:43.420 | Don't want to lie.

00:31:44.420 | And so you've got to be prepared for that.

00:31:45.420 | You've got to be prepared that everything you own is going to be in a situation where it's going to be disclosed someday.

00:31:51.420 | But until you get to that worst-case scenario, privacy gets it for you.

00:31:57.420 | And privacy of physical possessions is a lot easier than privacy in almost anything else.

00:32:03.420 | And yet that privacy is, in and of itself, valuable.

00:32:09.420 | For the sake of illustration, consider this.

00:32:12.420 | Let's pretend that the only financial assets that you owned in terms of paper assets were in exempt asset classes.

00:32:23.420 | If you were a Florida resident, you would have a homestead in Florida, debt-free, exempt asset.

00:32:31.420 | You would have money in your 401(k), exempt asset.

00:32:35.420 | You would have money in your Roth IRAs, exempt asset.

00:32:39.420 | You would have money in your cash value life insurance policies and annuities, exempt asset.

00:32:44.420 | You would have money in your 529 account, exempt asset.

00:32:48.420 | You would have money in your health savings account, exempt asset.

00:32:51.420 | That's enough. We don't even have to go to the other little tiny ones.

00:32:54.420 | You could put millions of dollars in that stuff, millions of dollars.

00:33:00.420 | And then you only, in addition to that, keep maybe some thousands of dollars in your normal accounts for just normal banking, etc.

00:33:09.420 | And then you own personal property.

00:33:12.420 | Well, on paper, if your personal property were properly concealed and made private and you weren't posting pictures of it all over Facebook,

00:33:22.420 | and somebody came and tried to do an asset search on you, you would look pretty judgment-proof.

00:33:31.420 | Because your big assets, your millions of dollars of assets are in 401(k)s, etc.

00:33:36.420 | How do they know that you've got a couple hundred thousand dollars in gold coins in a secure storage locker in Canada?

00:33:44.420 | There is no connection to that. That can't be proven because it's physical assets.

00:33:48.420 | How do they know that you've got a couple years worth of food in your basement that would see your family through hard times?

00:33:54.420 | It doesn't show up on a balance sheet.

00:33:57.420 | So you've got massive legal protections because of the privacy.

00:34:02.420 | But thus far, notice, I haven't relied on any of the legal exemption for personal property.

00:34:09.420 | So let's do that now.

00:34:11.420 | It's important that you start with that.

00:34:12.420 | Physical items provide an incredible level of personal privacy, but they're not perfect.

00:34:18.420 | So let's talk now about what would happen in something like bankruptcy.

00:34:22.420 | Well, again, remember bankruptcy is very unlikely, especially if you're doing all the things we regularly discuss.

00:34:27.420 | I always talk about bankruptcy in a matter-of-fact manner.

00:34:29.420 | But if you're prudent, it's very improbable.

00:34:31.420 | How do you avoid it?

00:34:32.420 | Don't borrow money.

00:34:33.420 | Insure properly.

00:34:34.420 | If you do borrow money, segregate the risk.

00:34:36.420 | Make sure you have unsecured debt.

00:34:37.420 | Or make sure that if you're going to borrow secured debt, that that debt is segregated.

00:34:40.420 | Be careful. Be prudent in all your dealings, etc.

00:34:43.420 | The risk of being forced into and being found liable in a lawsuit is extremely remote.

00:34:49.420 | But the risk of being forced into an involuntary bankruptcy is even more remote.

00:34:54.420 | So we're dealing in very remote circumstances here.

00:34:57.420 | But you should understand the exemptions that are available to you for personal property.

00:35:02.420 | Because for each of us, there is a clearly defined list of exemptions available for you to use.

00:35:08.420 | And those would vary according to your state.

00:35:11.420 | Now, even in a legal situation where you are fully disclosing on a piece of paper everything that you own,

00:35:18.420 | you could own quite a lot of useful personal property that is simply not attractive to a creditor.

00:35:24.420 | Let's pretend for a moment that you get sued.

00:35:26.420 | You get forced to submit to a debtor's examination.

00:35:28.420 | Maybe you get forced into involuntary bankruptcy by your creditor to try to pay off the judgment that they have taken out against you.

00:35:36.420 | As part of that examination, you start listing off personal possessions that you own.

00:35:41.420 | Pretend that your list includes some simple things like this.

00:35:44.420 | I own an outfitted style or a military style wall tent that we use for our annual hunting excursions.

00:35:51.420 | I own a portable wood stove.

00:35:53.420 | I own a propane stove, a propane lantern, and bottles of propane.

00:35:57.420 | I own a couple of solar panels and some deep cycle batteries.

00:36:00.420 | I own a game cart. I own a water barrel.

00:36:03.420 | I own a CB radio with an extendable mast and a dipole antenna.

00:36:07.420 | I own gardening tools and seeds, and I own a scratched up indented cargo trailer.

00:36:12.420 | Now, etc. You add whatever you want.

00:36:15.420 | What creditor in their right mind wants that list of junk?

00:36:19.420 | What creditor in their right mind would try to sit down and figure out how to foreclose on you and repossess a used military wall tent?

00:36:28.420 | It's inconceivable.

00:36:31.420 | Personally, I find that if I had that list of stuff, that would be very useful.

00:36:35.420 | Because it means that if my family and I are forced out of our house,

00:36:39.420 | maybe our house got foreclosed on and we lost it in bankruptcy,

00:36:42.420 | or a tornado came through and ripped it off its foundation,

00:36:45.420 | at least I can still keep my family warm and dry, which of course is my responsibility as a father.

00:36:51.420 | To my creditor, that tent might not look very valuable, but to me as a father with young children, that tent is very valuable.

00:36:58.420 | Because that means if my house gets destroyed, I can show up at a friend's backyard and say,

00:37:01.420 | "Listen, can we set up our tent in the backyard, put the wood stove there, etc."

00:37:05.420 | No creditor wants your junk.

00:37:07.420 | The creditor wants cash, or at least things that can be turned quick and easily into cash.

00:37:12.420 | But how would that weird list of stuff that I described be turned quickly into cash by a creditor?

00:37:18.420 | How would a trustee oversee the disposition of that list of stuff?

00:37:22.420 | Are they going to have an auction and sell your junky cargo trailer that you bought for $1,000?

00:37:29.420 | Are they going to sell it for $200 at an estate auction?

00:37:32.420 | You are in a strong bargaining position, even if you own valuable things that are important to you personally.

00:37:39.420 | Now let's go a little farther down.

00:37:41.420 | Let's say we're not dealing with weird stuff like I described there that's personally important to you, but not financially valuable.

00:37:47.420 | If you're dealing with personal property, there are massive marketability discounts that are available to you.

00:37:51.420 | Just simply due to the difficult valuation of items.

00:37:54.420 | Let's say you buy an expensive mobile phone.

00:37:56.420 | You pay $1,000 for that phone, you're using it.

00:37:58.420 | And that mobile phone starts to show a little wear and tear.

00:38:01.420 | Now you have to list that mobile phone on a disclosure of everything that you own.

00:38:08.420 | What's the value of that $1,000 phone in the private market?

00:38:11.420 | Six months old?

00:38:15.420 | How do you know?

00:38:16.420 | Well, it's a tiny value compared to what you paid for it.

00:38:19.420 | It may be worth $1,000 to you, but the actual market value, due to its difficulty of valuing that phone, is very, very low.

00:38:27.420 | Now let's say that you do that with other things that don't even have such a market as a mobile phone.

00:38:34.420 | Let's say I buy an expensive amateur radio transceiver for $3,000, and this is just part of my hobby of amateur radio.

00:38:44.420 | Well, it's way less obvious to anybody what that valuation is.

00:38:48.420 | If somebody is trying to assess the value of that, that might be valuable to me because of my personal hobby,

00:38:54.420 | but the market for that kind of thing is so tiny.

00:38:57.420 | It's a few thousand people on a global basis.

00:39:00.420 | It's very difficult to assign a valuation to that.

00:39:03.420 | So you can get massive discounts on things just simply due to their marketability.

00:39:08.420 | But yet those discounts on personal property, they don't matter to you because it's personal property that you care about.

00:39:14.420 | You insert whatever your hobby is or whatever your thing is that you like to have, your fishing gear, your surfing gear, your snowboarding gear, etc.

00:39:22.420 | That stuff doesn't sell for anything in the used market, at least not at quick sale prices, which is always how bankruptcy sales work.

00:39:30.420 | It basically is a fire sale price.

00:39:32.420 | It doesn't sell for anything, but to you it's important.

00:39:35.420 | So your personal items are extremely valuable.

00:39:37.420 | If you had to replace your snowboard gear today, it probably cost you a lot of money.

00:39:42.420 | But if you had to sell your snowboard gear today, you wouldn't get much money for it.

00:39:47.420 | And so you're having a discount in the value due to the marketability.

00:39:50.420 | Other discounts for items being used, any kind of used item that you own plummets in value, but it might not be plummeting in value to you.

00:39:58.420 | For example, you might have a used car.

00:40:02.420 | And that used car might, because you plan intelligently and you're facing a situation like this,

00:40:07.420 | that used car might be worth just a little bit above what your state exempts in terms of the value of the automobile that you can keep.

00:40:14.420 | But it could be worth a lot more to you because you know the condition.

00:40:19.420 | A used car that I know, that I own, that I drive is worth a lot more to me than it is to a buyer because I know the condition and the reliability of that car.

00:40:28.420 | Biggest consideration in a used car is the risk of it not being a good one.

00:40:32.420 | And so you know it's a good one, so it's worth a lot to you, but it's not worth a lot to your buyer.

00:40:36.420 | Or a used chainsaw, or a used tractor, whatever it is that you own.

00:40:40.420 | And then of course there are various costs that are involved in selling an item that is sold.

00:40:45.420 | And this plays into account when you're listing out a list of personal property.

00:40:49.420 | A bankruptcy trustee who's overseeing a bankruptcy knows that first of all there are lots of fees and commissions that have to be sold, have to be paid to sell an item.

00:40:59.420 | And then the bankruptcy trustee has to be paid for their time and their work as well.

00:41:03.420 | And if you've got a lot of little items, how on earth is the bankruptcy trustee going to dispose of those things in a way that is reasonable and is cost effective?

00:41:10.420 | Now if you compare that to cash on hand, money that's in bank accounts, or investments that can be easily converted to cash in order to pay off a creditor.

00:41:19.420 | You own stock in a publicly traded company, by the end of the day that stock can be sold and converted into cash and that cash can be handed over.

00:41:27.420 | But you're dealing with a house, a car, and furniture. To resell that stuff costs a lot of money, takes a lot of time.

00:41:34.420 | And so because a creditor can't even get some of that stuff, depending on the type of bankruptcy that you're filing,

00:41:40.420 | and because it often sells at less just because of a fire sale, for example you own a valuable instrument,

00:41:46.420 | you sell the thing at auction, it's not going to be worth so much.

00:41:48.420 | You can argue on paper with full disclosure for a low value.

00:41:53.420 | And then of course, the point is that even if you're in that situation where you're listing out the assets of everything that you own,

00:42:00.420 | there are major discounts available to you because it's personal property.

00:42:04.420 | And then of course if we move into the world of shady and ill-advised dealings,

00:42:09.420 | the reality is when you're dealing with physical assets that are non-deeded, that are non-tracked,

00:42:15.420 | it's a lot easier for you to transfer those items to another person,

00:42:19.420 | and it's a lot harder for somebody who's trying to prove that a transfer happened,

00:42:23.420 | it's a lot harder for that person to prove it.

00:42:25.420 | And that could be a big deal when it comes to making certain transfers in advance of all of the amounts of time required

00:42:34.420 | for you to disclose certain transfers, etc.

00:42:36.420 | You're facing a long, slow-moving court case, something like that.

00:42:41.420 | If you're dealing with assets that are hard to move, they're expensive, you have to re-deed them,

00:42:45.420 | there's lots of paperwork filed, now you've got to make those transfers,

00:42:49.420 | you start to run the risk of fraudulent transfers, designations, etc.

00:42:54.420 | Those things are all tracked and on paper.

00:42:56.420 | But you're looking down and you're seeing some risks and you decide,

00:42:59.420 | "You know what? I'm going to take my $100,000 gun collection over and split it up between a couple of buddies of mine."

00:43:05.420 | You can make that transfer very, very quickly and easily,

00:43:09.420 | and it's really hard for somebody to prove when you actually did it.

00:43:13.420 | So there are some very practical considerations to value, to having those items.

00:43:18.420 | It's hard to prove that you own it or don't own it.

00:43:20.420 | It's hard to prove what actual values are involved with what you have or what you don't have.

00:43:24.420 | And so I think it's worth paying attention to those practical considerations

00:43:28.420 | while we focus on the legal considerations as well.

00:43:32.420 | Now, what are some basic categories?

00:43:34.420 | I've read through all the different states with the personal property exemptions.

00:43:37.420 | And here are the basic categories of property that many states allow.

00:43:42.420 | And I want to give you some highlights.

00:43:43.420 | The first thing is you will have to look at your state,

00:43:46.420 | and you will have to assess whether you are subject to the federal bankruptcy exemptions

00:43:50.420 | or to a state-specific list of bankruptcy exemptions.

00:43:54.420 | Now, if you live in one of these states, then you can choose to use federal bankruptcy exemptions.

00:44:00.420 | And the states are Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan,

00:44:08.420 | Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas,

00:44:16.420 | Vermont, Washington, and Wisconsin.

00:44:19.420 | So if you live in one of those states, you may choose to use the federal bankruptcy exemptions.

00:44:23.420 | What are the federal bankruptcy exemptions for personal property?

00:44:27.420 | Well, here they are.

00:44:29.420 | Animals, crops, clothing, appliances, books, furnishings, household goods, musical instruments, up to $600 per item,

00:44:40.420 | and up to $12,625 total.

00:44:45.420 | I repeat.

00:44:46.420 | Animals, crops, clothing, appliances, books, furnishings, household goods, musical instruments,

00:44:56.420 | up to $600 per item, and up to $12,625 total.

00:45:01.420 | Now, think about that list for just a moment before we continue on,

00:45:05.420 | and think about what I was talking about with regard to valuation.

00:45:09.420 | How do you value an animal that you own?

00:45:14.420 | It's hard to do.

00:45:15.420 | Now, of course, maybe your personal pet that you own, a value on that.

00:45:20.420 | But here we're talking about, usually, I think, animals that are valuable to a person,

00:45:23.420 | about a horse that you own, or a goat that you own, or a herd of goats, or a cow.

00:45:28.420 | I don't know what animals you own.

00:45:30.420 | And the point is that animals, there's a very subjective point to that.

00:45:34.420 | You could have a lot of money out grazing in your backyard,

00:45:38.420 | but that money would vary depending on who's inspecting it,

00:45:42.420 | and what creditor actually wants to come and pick up your family milk cow.

00:45:46.420 | But yet how valuable can that family milk cow be to you?

00:45:49.420 | What about clothing?

00:45:51.420 | How do you assess the actual value of the clothing in your closet?

00:45:56.420 | Well, you'd have to go through item by item.

00:45:58.420 | What you'd find is that some items are extremely worthless.

00:46:01.420 | I mean, you sell it at a yard sale for a dollar, maybe.

00:46:04.420 | But then some items are worth a little bit more.

00:46:07.420 | But a used, very high-quality coat that you buy and own

00:46:13.420 | is worth a lot more to you than it is in the resale market.

00:46:17.420 | So you can protect something like a valuable coat

00:46:19.420 | by making sure you have a lot of money in coats or boots or whatever it is,

00:46:22.420 | furnishings, household goods, etc.

00:46:24.420 | All of these things are aspects of personal property.

00:46:29.420 | And you can have up to $12,625 worth of that stuff

00:46:34.420 | and emerge from bankruptcy court with it.

00:46:38.420 | Health aids.

00:46:39.420 | Health aids are the next category in personal property

00:46:42.420 | that is exempt in the federal bankruptcy exemptions.

00:46:44.420 | And health aids is one of the most interesting things

00:46:47.420 | because almost every state exempts health aids.

00:46:50.420 | Now, what is not clear to me, some states specifically note

00:46:55.420 | that health aids have to be obtained by prescription.

00:46:58.420 | And so that limits your ability if you don't have a health condition

00:47:01.420 | to purchase health aids.

00:47:02.420 | But what it does mean is some people have very expensive health equipment

00:47:07.420 | that's important to them.

00:47:08.420 | Well, in that situation, there's usually not a dollar amount

00:47:11.420 | associated with health aids.

00:47:12.420 | And so you might be well-suited to make sure that you think about that

00:47:15.420 | and have backup items.

00:47:17.420 | And there's no reason why those backup items couldn't be sold in a pinch

00:47:20.420 | if you needed to sell them for quick money.

00:47:22.420 | Of course, the risk of obsolescence, etc., is difficult.

00:47:25.420 | Jewelry up to $1,600.

00:47:28.420 | Some people have more than that.

00:47:30.420 | Some people have less than that.

00:47:31.420 | But you can exempt up to $1,600 of jewelry.

00:47:34.420 | And we'll talk in a moment a couple of states

00:47:36.420 | you can have unlimited exemptions.

00:47:37.420 | Lost earnings payments.

00:47:39.420 | Motor vehicle up to $3,775 of value.

00:47:42.420 | And I want to point out here that it's interesting to note

00:47:44.420 | that that is not a hard and fast number.

00:47:47.420 | So there is a clear number of $3,775 in the Federal Bankruptcy Code.

00:47:51.420 | But remember that first, if you're assigning the value of a vehicle,

00:47:55.420 | we're going to use a fire sale price.

00:47:57.420 | Basically, what could you sell it for today?

00:47:59.420 | And then there's also going to be seller's commissions and fees

00:48:01.420 | associated with that.

00:48:02.420 | So you might very reasonably be able to take what to you is a $7,000 vehicle.

00:48:07.420 | But if you wanted to sell it quickly, you would have to sell it for $5,000.

00:48:10.420 | And then there would be commissions, et cetera, on it,

00:48:13.420 | fee to the bankruptcy trustee.

00:48:14.420 | You might be able to keep your $7,000 vehicle

00:48:17.420 | based upon all the fees that have to get categorized in assessing the value.

00:48:22.420 | And then in the Federal Bankruptcy Code, tools of trade are exempted,

00:48:25.420 | implements, books, and tools of trade up to $2,375.

00:48:29.420 | Those are the federal bankruptcy exemptions.

00:48:32.420 | Now, each state has its own bankruptcy exemptions.

00:48:34.420 | And if you live in your state--you obviously live in your state--

00:48:38.420 | you should look up those exemptions for your state

00:48:40.420 | and see if there are any interesting wrinkles that would apply to you.

00:48:44.420 | I'll point out a few interesting ones, fun ones,

00:48:47.420 | but there are some states that just don't have much of anything.

00:48:49.420 | For example, Florida.

00:48:51.420 | Florida has wonderful asset protection laws for all of the big accounts,

00:48:56.420 | homestead exemptions, life insurance, IRAs, 529 accounts, et cetera.

00:49:02.420 | But they have basically nothing available to you

00:49:05.420 | in terms of personal property exemptions.

00:49:07.420 | So the Florida rule is that you can claim a personal property exemption

00:49:11.420 | for anything that you own up to $1,000 no matter what,

00:49:15.420 | just any personal property up to $1,000 in value.

00:49:18.420 | Or if you're not claiming a homestead exemption, up to $4,000 in value.

00:49:23.420 | You can maintain health aids that are exempt from personal property

00:49:27.420 | as personal property, and a motor vehicle up to $1,000 in value.

00:49:31.420 | And then you can exempt pre-need funeral contract deposits.

00:49:35.420 | And beyond that, you've got college educations,

00:49:37.420 | hurricane savings, and medical savings, but that's it.

00:49:40.420 | And Florida has no exemptions for tools of the trade.

00:49:43.420 | So any tools of the trade that you own are not going to be exempt

00:49:46.420 | in a bankruptcy filing.

00:49:48.420 | So Florida has wonderful laws for everything except personal property.

00:49:51.420 | Now there are other states that don't have very helpful laws for big accounts,

00:49:55.420 | but that do have exemptions for big amounts of personal property.

00:50:01.420 | Here are some categories for you to think about maximizing.

00:50:03.420 | One that are common to almost all the states, it seems like.

00:50:06.420 | First, books and possibly school books.

00:50:09.420 | It may be very helpful to you to have large amounts of books,

00:50:13.420 | because of course books are a primary way that you should be absorbing

00:50:16.420 | the knowledge that you need in order to earn a lot of money

00:50:19.420 | and to do well investing so that you can quickly rebuild your wealth.

00:50:23.420 | And then also things like school books.

00:50:25.420 | And so usually books and school books are not assessed a dollar value,

00:50:30.420 | and that can be extremely helpful.

00:50:32.420 | For example, let's say that you're trying to turn a non-exempt asset

00:50:35.420 | into an exempt asset.

00:50:37.420 | But let's say that you are a homeschooling family of several children.

00:50:41.420 | Well, if you're using a mainstream curriculum,

00:50:43.420 | that curriculum can be extremely expensive.

00:50:45.420 | But if you're sitting there looking at $20,000 in your checking account

00:50:48.420 | and trying to figure out how do I turn this $20,000 in my checking account

00:50:52.420 | from a non-exempt asset that will be exposed to the claims of my creditors

00:50:55.420 | to an exempt asset, one way you might consider doing that

00:50:58.420 | is by turning it from money into school books.

00:51:02.420 | Another big one is burial plots.

00:51:04.420 | Burial plots are interesting.

00:51:05.420 | Almost every state seems to exempt burial plots,

00:51:08.420 | and only a few of them add a specific size restriction

00:51:11.420 | and/or a specific dollar restriction.

00:51:14.420 | Some states, I think Tennessee will get to as a one acre.

00:51:17.420 | You can have up to a one acre burial plot.

00:51:19.420 | The interesting thing about burial plots, though,

00:51:21.420 | is I'm not aware of any more specific recommendations

00:51:24.420 | than just there's a burial plot.

00:51:26.420 | And so in some cases, I think you could own one of the more expensive burial plots

00:51:29.420 | and have that be an exempt asset.

00:51:31.420 | So if you are looking at a big pile of non-exempt assets,

00:51:35.420 | such as cash in a checking account,

00:51:37.420 | and trying to figure out how do I turn this from a non-exempt asset

00:51:39.420 | to an exempt asset, you should look into buying a burial plot

00:51:43.420 | for yourself and for your family.

00:51:45.420 | And you should look and see if you can make that burial plot

00:51:47.420 | one that you could resell in a few years if you ever wanted to, etc.

00:51:52.420 | Church pews are almost universally exempt.

00:51:54.420 | I don't understand that one.

00:51:56.420 | I've never been involved in a church that sold pews.

00:51:59.420 | I don't get it. I haven't researched the history of it.

00:52:01.420 | But hey, if you've bought a church pew, that's exempt as personal property.

00:52:05.420 | Clothing, however, is a very big one.

00:52:07.420 | Clothing is an exempt asset.

00:52:09.420 | And I think this would be one that would be very useful for a mere mortal.

00:52:12.420 | If you're looking at a big pile of non-exempt assets

00:52:15.420 | and you're trying to figure out how to turn that pile of non-exempt assets

00:52:18.420 | into an exempt asset, clothing, I think, could be a very useful solution for you.

00:52:22.420 | Again, how do you store lots of value?

00:52:25.420 | Clothing works. We need clothing to protect us.

00:52:27.420 | And in some states, there's no dollar limit on clothing.

00:52:30.420 | In other states, there is a dollar limit on clothing.

00:52:32.420 | Well, I look at, you know, my wife and I, we have lots of clothes for our children.

00:52:36.420 | She's got it all organized. They're all in big boxes.

00:52:39.420 | They're categorized according to age. We're always getting free clothes.

00:52:41.420 | That saves us a huge amount of money.

00:52:43.420 | Her work that she does of getting those clothes for free or super cheap

00:52:46.420 | and then organizing them so that we always have the next age of clothes

00:52:50.420 | so we don't have to go and buy it at retail prices, that's a huge benefit.

00:52:53.420 | And if we were facing bankruptcy court and if we didn't live in Florida,

00:52:56.420 | which only gives us personal property for whatever,

00:52:59.420 | we'd be working hard to convert a pile of non-exempt assets into exempt clothing.

00:53:04.420 | Building materials is another category that is frequently exempted.

00:53:08.420 | You can store a lot of money in building materials.

00:53:11.420 | So, I don't know if you've ever priced a 2x4 recently, but they're not cheap.

00:53:15.420 | So, one of the things that I would be seriously looking at

00:53:18.420 | if I were facing some circumstance and I were thinking about

00:53:21.420 | how do I turn a non-exempt asset into an exempt asset,

00:53:24.420 | a good pile of building materials that's needed for a specific plans that I have

00:53:28.420 | to expand my house could be just the ticket.

00:53:31.420 | And especially if I could pair that with a good homestead exemption.

00:53:36.420 | I would go ahead and if I were facing a circumstance, I would plan ahead.

00:53:39.420 | I would have the homestead exemption on my house.

00:53:41.420 | I would have a specific improvement plan

00:53:44.420 | and I would buy the building materials that I needed

00:53:46.420 | and make sure that they were carefully stored

00:53:48.420 | so that I could enhance the value of that house.

00:53:50.420 | And that very well could be the technique that saw you through

00:53:53.420 | on the other side of your bankruptcy court.

00:53:55.420 | If your house is worth $100,000 today and you can keep it through bankruptcy court

00:54:01.420 | with the appropriate housing exemptions,

00:54:03.420 | and on the flip side of it, you could invest some of your time,

00:54:07.420 | which is lowering your wages, which is helpful to you,

00:54:09.420 | invest your time and buy a big pile of building materials

00:54:13.420 | and expand that house in some way or improve that house,

00:54:16.420 | then now you have a solution where a few years after bankruptcy court,

00:54:20.420 | you can sell the house, by the way, your gain would be tax-free,

00:54:23.420 | and then use that money to restart your investment life.

00:54:26.420 | So think about building materials.

00:54:28.420 | Another important category is appliances and furnishings.

00:54:30.420 | And here's where there are sometimes dollar amounts associated and sometimes not.

00:54:34.420 | If there are not dollar amounts associated,

00:54:36.420 | recognize that by buying high-quality furnishings that have a high market value

00:54:41.420 | and keeping good track of those things,

00:54:43.420 | you can have your house filled with tens of thousands of dollars worth of value

00:54:46.420 | and keep those furnishings through a bankruptcy proceeding,

00:54:50.420 | which could be extremely helpful to you.

00:54:52.420 | Same thing with appliances.

00:54:53.420 | Some states apply dollar amounts to appliances.

00:54:55.420 | Some states don't.

00:54:57.420 | Health aids we've talked about.

00:54:58.420 | Think about having some extra versions of any expensive health equipment that you need.

00:55:02.420 | Wedding engagement rings are sometimes exempted without dollar value.

00:55:06.420 | If I were living in a state that had no limit on the dollar value of a wedding ring,

00:55:12.420 | an exempt ring, or an engagement ring,

00:55:14.420 | I would make sure that my wife had an extremely expensive wedding ring,

00:55:18.420 | extremely expensive wedding ring that was documented, that was insured,

00:55:22.420 | and that was kept locked and secured in a very safe storage location.

00:55:27.420 | And maybe she just didn't wear a wedding ring,

00:55:29.420 | or she wore the cheap wedding ring or cheap engagement ring as a standard practice.

00:55:35.420 | But wedding and engagement rings can be useful.

00:55:37.420 | Another interesting thing that is often exempted is security deposits.

00:55:40.420 | So if you're a mere mortal who's facing bankruptcy proceedings,

00:55:43.420 | if you're in the position of moving,

00:55:44.420 | one of the things that you should make sure that you do is you want to make sure

00:55:46.420 | that you give maximum security deposits on any transactions that you're engaged in.

00:55:51.420 | So instead of giving your credit, your social security number to the electric company

00:55:56.420 | so that they can turn on your electricity with your social security number

00:55:59.420 | without charging a security deposit,

00:56:01.420 | make sure that you give them a nice security deposit.

00:56:03.420 | Make sure that you have an apartment where they give a big security deposit, etc.

00:56:07.420 | It's all got to be legal and above board,

00:56:09.420 | but there's no reason not to maximize the security deposits you've given,

00:56:12.420 | knowing that you'll be able to get those things back in the future.

00:56:15.420 | Big one is food.

00:56:17.420 | In almost every state, large amounts of food are exempted.

00:56:21.420 | Sometimes that food is set in terms of a maximum amount with regard to the amount of time.

00:56:27.420 | Here's where we see an interesting interplay.

00:56:29.420 | Let me ask you a question.

00:56:30.420 | How much is your family going to spend on food this year?

00:56:36.420 | If you're the average family, it's almost $7,000 to $10,000 if we use U.S. consumer expenditures

00:56:43.420 | and the amount of money spent on food at home and the food away from home.

00:56:46.420 | Let's say almost $10,000.

00:56:48.420 | That's common.

00:56:50.420 | That's a lot of money that can be had in food.

00:56:53.420 | And the cool thing about food is large amounts of food can be stored in a way that is stable

00:56:58.420 | and it is stable and protected and useful for many years to come.

00:57:03.420 | Not everything, but a lot of things can be.

00:57:06.420 | And the interesting thing, food is one of the best, most reliable things to see you through in a bankruptcy filing.

00:57:12.420 | First of all, there's the difficulty of inventorying it.

00:57:15.420 | You, of course, inventorying it, anybody else inventorying it.

00:57:18.420 | Then there's the difficulty of valuing it.

00:57:21.420 | Let's say that you have 100 cans of Campbell's chicken noodle soup for whatever reason.

00:57:27.420 | How on earth are your 100 cans of Campbell's chicken noodle soup going to be valued?

00:57:33.420 | And how on earth is that going to be counted in terms of a dollar figure?

00:57:38.420 | If you take a larger family, family of 3, 4, 5, 6, 7 people,

00:57:44.420 | you could have tens of thousands of dollars worth of food that is an exempt asset class available through bankruptcy court.

00:57:52.420 | That's important for you to recognize because if you're looking around saying,

00:57:55.420 | "How do I turn a non-exempt asset into an exempt asset?"

00:57:59.420 | Turning it into food may be your best solution.

00:58:04.420 | Fuel is another one that is interestingly exempted sometimes.

00:58:08.420 | Now, some people, especially in colder climes, have heating oil tanks, etc.

00:58:13.420 | But there's no reason why if your estate exempts fuel,

00:58:17.420 | you can't make sure that you have a large fuel tank on your property.

00:58:20.420 | And that large fuel tank can't be filled with appropriate fuel for yourself.

00:58:24.420 | And then tools of the trade also are a basic category.

00:58:27.420 | Now, each state has some different categories, but the point of these things is,

00:58:30.420 | when you're thinking about asset protection,

00:58:32.420 | you're trying to think about how do you convert an asset that is not exempt from the claims of creditors

00:58:38.420 | into an asset that is exempt from the claims of creditors.

00:58:42.420 | And all of these asset classes are useful.

00:58:45.420 | Depending on your state, you can sometimes shelter a huge amount of money in these exempt asset classes.

00:58:51.420 | It's extremely helpful.

00:58:53.420 | Last thing, and I want to talk through some specific states that have interesting numbers,

00:58:59.420 | is remember that some of these things are subject to doubling.

00:59:02.420 | So when a married couple files for bankruptcy jointly,

00:59:05.420 | sometimes the federal law or state law allows them to claim,

00:59:08.420 | each of them to claim a full amount of an exemption.

00:59:11.420 | And so that's called doubling.

00:59:13.420 | Not all states allow it, and it's not allowable on all property, but it is very interesting.

00:59:18.420 | Let's talk through some states quickly.

00:59:20.420 | And I'm just picking and choosing.

00:59:21.420 | You look it up for your state.

00:59:23.420 | But just picking and choosing individual states,

00:59:25.420 | and then using some of this to show you about asset classes that come across.

00:59:30.420 | Alabama exempts books of the debtor and family from protection.

00:59:36.420 | Now, interesting thing about books is there can be very inexpensive books,

00:59:40.420 | or there can be books that are extremely valuable.

00:59:42.420 | I don't know if there's a court case in which somebody has gone out

00:59:45.420 | and systematically purchased valuable collector books.

00:59:48.420 | I don't know if that's been done, but I would sure think about it.

00:59:51.420 | If I were in that situation, I would research that myself.

00:59:54.420 | I haven't bothered to research it in this situation.

00:59:56.420 | But if you're in a state like Alabama that exempts books, make sure you have plenty of books.

00:59:59.420 | Burial place for self and family and clothing of the debtor and family are all exempted without caps,

01:00:05.420 | without financial caps.

01:00:07.420 | Alaska exempts building materials.

01:00:10.420 | Again, building materials could be very helpful.

01:00:13.420 | To have tens of thousands of dollars of building materials for you to expand your house could be helpful,

01:00:17.420 | and you could protect those assets through bankruptcy court.

01:00:20.420 | Burial plot.

01:00:21.420 | Alaska protects a deposit in an apartment or condo owner's association and pets up to $1,350.

01:00:27.420 | That may be useful.

01:00:29.420 | Arizona exempts all kinds of specific property, which is interesting.

01:00:34.420 | For example, household and furniture and appliances not covered by other exemptions up to $6,000 total.

01:00:40.420 | Arizona will exempt a Bible, a bicycle, a sewing machine, a typewriter, a computer, a burial plot,

01:00:45.420 | a rifle, pistol, or shotgun up to $1,000 total, and a bunch of other things.

01:00:49.420 | Arkansas will exempt as personal property a burial plot up to five acres

01:00:55.420 | if you're choosing the federal homestead exemption under their option two of their bankruptcy laws.

01:01:01.420 | So I would be looking into what it takes to have a five-acre burial plot.

01:01:05.420 | Clothing and prepaid funeral trusts are also exempt.

01:01:09.420 | California has two different systems of personal property, but if you file for bankruptcy under system one,

01:01:14.420 | appliances, furnishings, clothing, and food are exempt in California,

01:01:20.420 | and I'm not aware of any dollar caps on that.

01:01:23.420 | I repeat, appliances, furnishings, clothing, and food are exempt under California bankruptcy law system one,

01:01:32.420 | and I'm not aware of any dollar caps on that.

01:01:35.420 | Additionally, California exempts burial plots, which is, I could say ironic,

01:01:41.420 | but it's at the very least interesting because in California you have some of the most exclusive,

01:01:47.420 | highest cost burial plots in the country.

01:01:50.420 | For example, there's one in Los Angeles called Pierce Brothers Memorial Park in Los Angeles,

01:01:56.420 | and just to buy a six-by-eight-foot burial plot, you'll pay as much as you will a house

01:02:00.420 | because that's where Marilyn Monroe's grave is,

01:02:03.420 | and so a lot of people evidently want to be buried near where Marilyn Monroe is,

01:02:07.420 | and there are others as well, so you should check into having a burial plot

01:02:12.420 | as part of your real estate investments if you live in California.

01:02:16.420 | Colorado, again, offers one burial plot for a family member.

01:02:19.420 | I'm not aware of any rule in Colorado that says that that burial plot has to be in Colorado

01:02:23.420 | or any other specifics, but if I were speaking with a bankruptcy attorney in Colorado,

01:02:26.420 | that would be one thing I would look into.

01:02:29.420 | Colorado also, interestingly, exempts motor vehicles or bicycles used for work up to $7,500,

01:02:36.420 | placed there in that for an expensive bicycle, which the Coloradans seem to love,

01:02:41.420 | or $12,500 if used by a debtor or by a dependent who is disabled or 60 or over.

01:02:47.420 | So possibly that could be helpful to you.

01:02:49.420 | In Connecticut, appliances, food, clothing, furniture, and bedding are all exempt without a dollar amount.

01:02:55.420 | Burial plot, health aids, and residential utility and security deposits for one residence,

01:03:01.420 | as are wedding and engagement rings in the state of Connecticut,

01:03:04.420 | and I'm not aware of any dollar value to which those are limited.

01:03:08.420 | So it might be a good reason for you to have a very expensive wedding ring.

01:03:12.420 | Delaware exempts burial plots, clothing, pianos, and leased organs.

01:03:16.420 | Sewing machines, so if it's up your way, you might consider having a valuable piano.

01:03:21.420 | District of Columbia will exempt as personal property, among other things,

01:03:24.420 | cemetery and burial funds, and food for three months.

01:03:28.420 | So you could have three months' worth of food in the District of Columbia,

01:03:30.420 | and that will be exempt in bankruptcy court.

01:03:34.420 | Let me continue on.

01:03:35.420 | One of the more interesting ones from Illinois was school books and clothing.

01:03:40.420 | That, of course, covered.

01:03:42.420 | Kansas will exempt food and fuel to last for one year.

01:03:49.420 | Now, again, I'm not sure what the Kansas courts rule in terms of fuel,

01:03:55.420 | but I would take that and need to do a little bit of research with a local Kansas bankruptcy attorney,

01:04:00.420 | but I would take that food and fuel for one year and consider that to be a fairly expansive definition.

01:04:05.420 | I would make sure we had plenty of food for one year,

01:04:07.420 | and I would make sure that we had plenty of fuel, fuel for my vehicles, fuel for my house, et cetera.

01:04:12.420 | What about -- and then also in Kansas, a motor vehicle with a value of $20,000,

01:04:17.420 | and then if designed or equipped for a disabled person, no limit.

01:04:21.420 | I don't know if someone in your family has to be disabled

01:04:25.420 | or if it's just a matter of whether the vehicle is designed or equipped for a disabled person.

01:04:30.420 | That would be a question for a person in your household.

01:04:33.420 | Louisiana is fun.

01:04:34.420 | Louisiana will exempt as personal property.

01:04:36.420 | Military accoutrements, also bedding, dishes, glassware, utensils, silverware,

01:04:44.420 | but yes, the silverware has to be non-sterling silver, clothing, family portraits, musical instruments,

01:04:50.420 | bedroom, living room, and dining room furniture, poultry, one cow, household pets,

01:04:57.420 | heating and cooling equipment, refrigerator, freezer, stove, washer and dryer, iron, and sewing machine.

01:05:05.420 | In addition, Louisiana will exempt firearms, arms, and ammunition for any purpose up to $2,500.

01:05:12.420 | Maine is also fun.

01:05:13.420 | Maine will exempt as personal property animals, crops, musical instruments, books, clothing, furnishings,

01:05:21.420 | household good, appliances up to $200 per item, cooking stove, furnaces and stoves for heat,

01:05:28.420 | food to last six months, fuel not to exceed 10 cords of wood, 5 tons of coal, or 1,000 gallons of heating oil,

01:05:36.420 | also military clothes, arms, and equipment, seeds, fertilizers, and feed to raise and harvest food for one season,

01:05:43.420 | tools and equipment to raise and harvest food, and then as a tools of the trade exemption,

01:05:49.420 | Maine will exempt a commercial fishing boat up to a 5-ton limit.

01:05:54.420 | Massachusetts will exempt as personal property 2 cows, 12 sheep, 2 swine, and 4 tons of hay.

01:06:01.420 | So if you are a Massachusetts resident and you're trying to figure out how on earth you can convert some of your

01:06:06.420 | non-exempt property into exempt property, you might consider repurchasing 2 cows, 12 sheep, 2 swine, and 4 tons of hay.

01:06:14.420 | Also burial plots, tombs, and church pew.

01:06:16.420 | Cash for fuel, heat, water, or light to $500 per month.

01:06:20.420 | Cash to $2,500 per month for rent in lieu of a homestead exemption.

01:06:24.420 | And food or cash for food up to $600.

01:06:27.420 | Minnesota exempts appliances, furniture, radio, phonographs, and TV to $10,350 total.

01:06:33.420 | Minnesota also exempts clothing, one watch, food, and utensils for a family.

01:06:39.420 | So there would be an opportunity for those of you who have an expensive taste in watches.

01:06:43.420 | If you're in Minnesota, you can now justify your expensive watch.

01:06:46.420 | Nebraska has clothing, crypts, lots, tombs, niches, and vaults, personal possessions.

01:06:52.420 | Nevada has an interesting exemption.

01:06:54.420 | Metal-bearing ores, geological specimens, art curiosities, or paleontological remains.

01:07:05.420 | Now these must be arranged, classified, cataloged, and numbered in reference books.

01:07:10.420 | But if you're into paleontological remains or metal-bearing ores, and if you classify them, catalog them, and number them in reference books,

01:07:17.420 | you have the opportunity to exempt those assets.

01:07:21.420 | What I found was interesting in Nevada is you can exempt one gun as personal property.

01:07:27.420 | I would be asking a bankruptcy attorney in the state of Nevada very carefully to know if there is any precedent for the particular value of that gun.

01:07:37.420 | That would be one in which I would certainly be applying for a Class III firearms license,

01:07:41.420 | and I would certainly have a six-figure automatic weapon if that were appropriate under that particular exemption.

01:07:49.420 | Nevada also has an interesting exemption about stock in certain closely held corporations.

01:07:54.420 | I would be talking with a bankruptcy attorney about how to structure my affairs so that the stock in closely held corporations could be exempt under the Nevada bankruptcy laws.

01:08:04.420 | New Hampshire has the standard ones, but they also have one cow, six sheep, and their fleece, four tons of hay that's exempt.

01:08:10.420 | New Mexico will allow you, in addition to other things, materials, tools, and machinery to dig, drill, complete, operate, or repair oil line, gas well, or pipeline.

01:08:25.420 | So that would be an interesting area of investigation for you to see.

01:08:29.420 | What about New York? New York allows you religious texts, school books, other books up to $550, pictures, clothing, church pew receipts, sewing machine, refrigerator, TV, radio, furniture, cooking utensils, and tableware, dishes, food to last 120 days, stoves with fuel to last 120 days, domestic animal with food to last 120 days up to $1,100, wedding ring, watch, jewelry, and art.

01:08:55.420 | So with those definitions in New York, you should be able to exempt a decent amount of personal property.

01:09:00.420 | There are a number of other things as well in the state of New York.

01:09:02.420 | All of these, I'm just picking and choosing some fun ones to talk through, and especially I'm choosing some of the ones that don't have dollar caps on them.

01:09:09.420 | Oklahoma books, portraits, and pictures, burial plots, guns for household use to $2,000, household and kitchen furniture, personal computer and related equipment, livestock for personal or family use, five dairy cows and calves under six months, 100 chickens, 20 sheep, 10 hogs, two horses, bridles and saddles, I don't know if a dollar amount there, forage and feed to last one year, and a motor vehicle up to $7,500.

01:09:35.420 | Oregon exempts building materials for the construction of an improvement.

01:09:39.420 | So in that situation, I would definitely make sure that I had plans driven up and specific building materials that we're buying on that list.

01:09:45.420 | Pennsylvania exempts Bibles and school books, clothing, military uniforms, and écoutrements, sewing machines.

01:09:52.420 | Rhode Island exempts clothing.

01:09:54.420 | South Dakota exempts food and fuel to last one year, health aides professionally prescribed.

01:09:59.420 | Tennessee allows burial plots up to one acre.

01:10:02.420 | I don't know what a one acre burial plot costs, but I don't know if that has to be in Tennessee, but I would try to have a one acre burial plot.

01:10:09.420 | Texas is one of the more interesting ones.

01:10:11.420 | I'm going to go over the Texas laws.

01:10:12.420 | So Texas has, in addition to ample homestead exemptions, which are quite helpful, Texas has one of the more interesting personal property exemptions.

01:10:21.420 | Texas will exempt personal property up to $100,000 total for the family or up to $50,000 for a single adult.

01:10:29.420 | And you have to include the tools of trade and personal property in the aggregate limit of $100,000 and $50,000.

01:10:36.420 | But here's their list of acceptable items.

01:10:38.420 | Athletic and sporting equipment, including bicycles.

01:10:42.420 | Bible or other book containing sacred writings of a religion, which doesn't count towards the $30,000 or $60,000 total.

01:10:49.420 | So you might want to be a Bible investor in that situation.

01:10:52.420 | Burial plots, which are exempt from the total.

01:10:55.420 | Clothing and food.

01:10:58.420 | Health aids, which are exempt from the total.

01:11:00.420 | Health savings account.

01:11:01.420 | Home furnishings, including family heirlooms.

01:11:04.420 | Jewelry, which is limited to 25% of the total exemption.

01:11:09.420 | So as I read that, you can have up to $25,000 worth of jewelry.

01:11:12.420 | Pets and domestic animals, plus their food.

01:11:16.420 | Two horses, mules or donkeys and tack.

01:11:19.420 | Twelve head of cattle, 60 head of other livestock, 120 fowl.

01:11:24.420 | One, two, or three or four-wheeled motor vehicle per family member or per single adult who holds a driver's license,

01:11:31.420 | or if not licensed, who relies on someone else to operate the vehicle.

01:11:35.420 | And two firearms.

01:11:37.420 | Now as tools of the trade, you can also exempt these items, which are included in the aggregate dollar limits for personal property.

01:11:43.420 | Farming or ranching vehicles and implements.

01:11:45.420 | Tools, equipment, including boat and motor vehicles used in trade.

01:11:49.420 | And books.

01:11:50.420 | So Texas has interesting, probably the most generous of personal property exemptions come to you in the state of Texas.

01:11:56.420 | Utah, clothing.

01:11:58.420 | Food to last 12 months.

01:12:00.420 | That could be significant, up to really tens of thousands of dollars there.

01:12:04.420 | Vermont will give you a cow, two goats, ten sheep, ten chickens and feed to last one winter.

01:12:10.420 | Three swarms of bees plus honey, five tons of coal or 500 gallons of heating oil, ten cords of firewood, 500 gallons of bottled gas,

01:12:18.420 | growing crops to $5,000, a yoke of oxen or steers, plow and ox yoke, two horses with harnesses, halters and chains.

01:12:27.420 | Or perhaps more practically, Vermont will give you an unlimited value on your wedding ring.

01:12:33.420 | So that would be useful.

01:12:34.420 | Virginia will give you up to $3,000 of firearms and wedding and engagement rings.

01:12:38.420 | Also tools, books and instruments of trade as tools of the trade, including motor vehicles, up to $10,000 needed in your occupation or education.

01:12:46.420 | Washington, food and fuel for comfortable maintenance.

01:12:49.420 | And then Wyoming will give you school books.

01:12:52.420 | So you can read through them for yourself.

01:12:54.420 | I've just tried to identify some of these categories that are generally not limited in terms of dollar values.

01:13:01.420 | Remember, the point is this. You want to be able in a situation to move a non-exempt asset over into an exempt asset.

01:13:09.420 | And sometimes these personal property value options will do that for you.

01:13:15.420 | Now, the best time to do any of this stuff is long before you would ever need it.

01:13:19.420 | So it really be best for you to avoid running down and buying two cows and ten swine and 120 fowl just because you found out you were going to have to declare bankruptcy.

01:13:29.420 | But you will probably know long in advance of anybody else if you might ever need to do that.

01:13:34.420 | And so what I would do at the very least with this information is sit down and say, what would I do if I knew that in the future there was a possibility I were going to have to declare bankruptcy?

01:13:43.420 | And then act accordingly. And this is available to anybody.

01:13:47.420 | These laws are open for you to know and to use for yourself.

01:13:51.420 | And so make sure that you understand what they are.

01:13:54.420 | And the planning will vary depending on your state.

01:13:58.420 | So read the personal property exemptions from your state, understand what they are, and seek to maximize them if possible.

01:14:05.420 | And then again, in closing, I say to you, don't forget that just because something may not be exempt in bankruptcy court, that your physical ownership of that asset may not still protect it.

01:14:17.420 | Just because it's not protected in bankruptcy court.

01:14:20.420 | The value of that personal privacy, that privacy of purchase, privacy of ownership, the fact that there's not a deed sitting there on the tax rolls that are easily available to anybody with an internet connection, that can be extremely useful to you.

01:14:33.420 | And so don't recognize that personal property is valuable even if it's not specifically exempt.

01:14:39.420 | Look up the laws of your state, understand what those personal property exemptions are, and then see if in coming days it works into your life, into your own personal lifestyle, into your plans.

01:14:49.420 | For you to maximize those personal property exemptions.

01:14:53.420 | I recognize very clearly that these are not the best exemptions for many people.

01:14:59.420 | Most of us will have far more money in our 401k than we will in a head of swine out in our backyard.

01:15:06.420 | The swine don't really work so well when you live in a hoity-toity neighborhood.

01:15:11.420 | They really don't.

01:15:12.420 | They're generally not going to be allowed at all.

01:15:14.420 | So I recognize that it's not necessarily for all people the most practical of purchases.

01:15:19.420 | But I want to add one additional level of practicality.

01:15:22.420 | And here is, I just want to add one more thing.

01:15:25.420 | In addition to the privacy of all these things, recognize that some of these assets might work when nothing else does.

01:15:32.420 | One of the big things I made a focus on in my course on how to survive and thrive during the coming economic crisis is that you have the opportunity to completely disconnect yourself from the economy.

01:15:47.420 | Too many people try to do all of their planning based upon the economy.

01:15:52.420 | And yet, sometimes you can't control the economy.

01:15:57.420 | But you can control your economy.

01:16:00.420 | And a lot of this stuff could be a way for you to maximize certain exemptions and protect assets that also protects you from the economy.

01:16:10.420 | For example, let's say that I were worried about what would happen in terms of electricity prices if we went into an economic crisis.

01:16:18.420 | Well, I can today take money from my bank account, buy solar panels, and bolt them to my roof.

01:16:25.420 | And it's my guess, although I have not confirmed this with an attorney, that solar panels that are bolted to my roof are now protected in the state of Florida from collection because they're part of my property.

01:16:38.420 | They are a part of my property, so they're part of my homestead.

01:16:41.420 | I can go and I can put seeds in my backyard, plant fruit trees that will provide for me fruit and garden vegetables, and that will come in no matter what's happening with the economy.

01:16:50.420 | So I can do these things and disconnect myself from the economy by providing for the things that I need, electricity for my home, food for my family, etc.

01:17:00.420 | And by doing that over time, I can really put myself in a situation where I understand the law and I've disconnected myself from those things.

01:17:08.420 | So solar panels on my roof can be used to charge maybe an older plug-in hybrid that's inexpensive that I'd be able to hang on to through bankruptcy planning or a plug-in electric car, a fully electric car.

01:17:21.420 | It's very doable for me to do that.

01:17:23.420 | And so think about these things and in all of your planning, think about how you can disconnect yourself from the economy so that you're still able to provide for yourself no matter what, even if you were forced into bankruptcy.

01:17:35.420 | I would have schoolbooks for my children, and if I were forced into bankruptcy, I would just quit working.

01:17:40.420 | I would make sure that I sit back at my house, I would work in my garden, I would make just enough to pay my taxes, and I would take care of my kids.

01:17:49.420 | Think that way. Consider that way.

01:17:51.420 | Now, hopefully you never need this, but the time to think about it is long before you ever need it.

01:17:55.420 | Nobody who winds up in bankruptcy ever intended to be there.

01:17:58.420 | And I've focused a lot on the responsible methods, the idea that somebody could sue you if you lost a lawsuit, you could be forced into involuntary bankruptcy, et cetera.

01:18:08.420 | I want you to avoid bankruptcy, but if you ever wind up there, make sure that you're protected.

01:18:13.420 | If you would like more information on kind of how to disconnect yourself from the economy and how that's such a powerful planning tool, in addition to everything else that I've talked about, I really invite you to come by and check out my newest course called "How to Survive and Thrive During the Coming Economic Crisis."

01:18:27.420 | How to survive and thrive during the coming economic crisis.

01:18:31.420 | Go to RadicalPersonalFinance.com/store.

01:18:34.420 | RadicalPersonalFinance.com/store, and that will show you the "How to Survive and Thrive During the Coming Economic Crisis."

01:18:39.420 | My first wave of students is going through that course.

01:18:41.420 | So far, I've had great feedback.

01:18:43.420 | A bunch of really great situations.

01:18:45.420 | It really seemed to have struck a nerve, and I really am looking forward to hearing from more of my students as they go through with the information to find out just how practical it is.

01:18:53.420 | I think you're really going to love it.

01:18:55.420 | I have noodled on these problems for years, trying to come up with practical solutions that recognize the significance and severity of risk, ways that I can protect myself and my family, our finances, our lifestyle, no matter what, but to do it with a minimal amount of cost.

01:19:11.420 | I appreciate that some people are willing to upend their lives to plan for economic crisis, but I want to plan for success, not for crisis.

01:19:19.420 | But I recognize that crises can come, and so I want to have an insurance policy for economic crisis.

01:19:24.420 | So go to myradicalpersonalfinance.com/store, check out the newest course, and I would love to see you there inside the course.

01:19:29.420 | In the meantime, understand your personal property exemptions.

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RPF0632-Asset_Protection_Planning_for_Mere_Mortals_-_Part_10_-_Personal_Property_Exemption_Planning