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Entity layering is a key concept in risk management. It is like the layers of an onion. The outside of the onion is the toughest layer and there are many layers to the onion. As soon as you peel that first layer back, a chemical reaction begins, because the onion is defending itself and in each layer, the reaction gets a little stronger. This is a good analogy for asset protection. You want to have layers of protection. Each layer makes it more difficult to penetrate. If you put the right techniques in place, in the proper sequence, you will make it very difficult for a plaintiff to get to your assets. That means realigning the ownership of how you hold title to reduce your risk. You want to have assets held so that you have some layering between you and the plaintiff. The corporate veil is what protects you from lawsuits. However, the veil can be pierced if the corporate rules stipulated by IRS code are not followed. Corporations require a lot of formal procedures and documentation. To protect the corporate veil, you must have and document board meetings. Resolutions must precede actions taken by the corporation. One way to help protect your corporate veil is by accumulating business credit. You donate just open a business one day and get a $500,000 line of credit the next day. You need discipline and to focus on doing it the right way. You can get there faster than you think when you set up your business the right way and apply for credit after you get established. The biggest mistake people make in the area of business credit is that they apply for a credit profile with Dunn and Bradstreet too soon. By realigning the ownership of your assets to reduce your risk and further protect yourself for potential problems, you will to have a much lower stress level and be able to enjoy your wealth as you accumulate it. Level one is having the right kind of trust. It might be a Living Trust, a Wealth Preservation Trust, the Multi Generation Dynasty Trust, or a combination. Limited Partnerships Level two is the management and control layer. It may be a Limited Partnership or a Limited Liability Limited Partnership. At present, the LLLP has only been adopted in about seven states. But it can be established in any of those seven states and then imported to where you live and it can own your corporation and/or your Limited Liability Company. Asset Protection Level three is the operations layer consisting of your corporations and LLCs that are owned by the LLLP. These techniques put layers between a potential plaintiff and you. You want that plaintiff to be two or three layers out, so that when they start trying to peel that onion, they cant go directly to your bank account. You want them to be forced to go through the layers and you want it to cost them a lot of money.
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