Personal ownership of property (real and personal) is a long-held status symbol for most people. When people hear “status symbol”, they tend to think of flashy cars, designer clothing, or large homes.
However, even those who fancy themselves financially responsible own their home, vehicles, and other assets in their own name, looking with satisfaction at their modest lifestyles and “net worth.”
However, when people own their property they (1) set themselves up for disaster and (2) end up not paying themselves first.
Courting Disaster
When people own property in their own name, it can be taken from them quite easily. A lost job, a lawsuit stemming from a car accident, divorce, or any number of other risks can spring upon them at any time. Unexpected medical expenses from an accident, heart attack, cancer, or other untimely unwanted events can quickly leave one vulnerable to creditors.
Even those who have emergency funds, who can weather several months of no income can find themselves out of cash with courts ordering a house’s equity to be taken from them, equity that they’ve created by diligently paying down their mortgage with their hard-earned money.
Paying Other First
When people have earned income, others have claim to their money first. The most obvious are the various taxes taken out of a paycheck before it even hits direct deposit, but others are more subtle.
Control But Do Not Own
Courting disaster and paying others first when not necessary isn’t the best of strategies, given that alternatives exist. Rather than owning a house, a car, a load of paper, etc. it is recommended that one control these things without ownership.
For example, a properly constructed Illinois-style title-holding land trust allows one to not own a home, but still retain all the benefits of ownership. (I recommend people attend a NARS 2.5 day workshop to get a first-rate education in this area.) These are very different from the family living trusts designed to avoid probate, but which afford no legal protection.
Unfortunately, many probate lawyers give the false impression that these tools will offer protection despite endless case law in which these types of trusts are declared dry (meaning they’re invalid) when it comes to asset protection. As of this writing, experts in the field have not found a single case where a correctly constructed equity-holding trust has been declared dry. Use the traditional family trusts to avoid probate, but lock up your property in water-tight structures, such as what NARS educates people on. Put your beneficial interest in the home’s EHT in the family trust, not your home itself.
As far as paying yourself first, businesses are an excellent method to have access to pre-tax dollars, allowing one to spend before even the IRS gets a crack at the money. This must be done correctly and legitimately. Be sure to become educated on the ins and outs to avoid risk. (Remember, it’s you as the human that governs risk.)
Hopefully this will stimulate some thought. Most anything can be controlled without ownership. It takes some stretching of one’s paradigm to see how this can be possible, but it’s been the norm for money wise people for hundreds of years.
