February 19, 2019

FPs and Life Insurance Agents – part two

There are two main reasons FPs and life insurance agents pitch asset protection to clients: 1) Cash value life insurance in a handful of states is asset protected from creditors. 2) Asset protection mills (firms that crank out NV, DE, etc, LLCs for asset protection) kick back referral fees to insurance advisors for referrals.

2) Asset protection mills (firms that crank out NV, DE, etc, LLCs for asset protection) kick back referral fees to insurance advisors for referrals.

While this may or may not shock you, non-attorneys are paid “referral” fees to entities which setup the domestic bread and butter tool, Limited Liability Company (LLCs).  There are several paper mills that creat thousands of NV and DE LLCs each year for clients.  While filling out an application for a client is a bit of a gray area, if the client is being given any legal advice when setting up the company (which would include advice about the needed LLC operating agreement), this, in the APS™ opinion, is the unauthorized practice of law.

It sounds so simple and somewhat logical to be paid for a referral.  You can get a referral fee several other places in the business world, why not for the creation of LLCs? Because this issues is governed by State Bar Associations which are very finicky when it comes to non-lawyers giving legal advice to clients.

The APS™ does not blames non-attorneys for trying to get the referral because they have no idea that it is illegal.

This brings us back full circle to the classic problem with asset protection planning.  Most advisors don’t know the subject matter and what works to protect clients.  When a “marketing” firm says to a non-attorney, “would you like to make a six-figure income selling LLCs for asset protection,” what is an advisor going to say?  No, I don’t want to listen?  Advisors of all kinds have listened and are now referring thousands of clients each year to paper mills which kick back fees to non-attorneys for the referral.

We would strongly recommend you stay away from any non-lawyer who is pitching NV, DE, AK LLCs as the asset protection tool. Make sure you ask them if they are making money from referring you out. If they are, it is a sure sign that you do not want to work with such an advisor.

Side note:  Costs of LLCs

If you run into a NV, DE, AK LLC paper mill company who has talked you into buying an LLC as a “cure all” to what ales you, ask them what the price is.  Many of the companies pushing LLCs charge far too much.  One reason they need to charge a lot is so they can pay the referral fee.  The other real world answer is because they can.

The APS™ has heard of NV paper mill companies charging $4,500-$5,500 for a NV LLC.  A reasonably priced attorney who knows that they are doing should not charge a dime over $3,000.

Many of the APS™ rated attorneys subscribe to the C.A.L.M. plan.   The C.A.L.M. plan is a platform with many uses and one of the uses is a legal discount system.  A uniform legal fee structure if you will.   Whether you go to an attorney in NV, AZ, NM, etc., the work done to create an LLC is about the same.  Therefore, you would think the price would be the same right?


Many firms charge outrageous prices. Why? Again, because they can.  The APS™ is a watchdog entity here to watch out for the public well being and we believe a fairly uniform fee structure is needed in the area of asset protection. Therefore, the APS™ endorses the C.A.L.M plan and recommends that all attorneys who become rated by the APS™ subscribe to the fee schedule (although it is not required to receive a positive rating).

If you are going to take advice from any kind of advisor on the very important topic of asset protection, probe their knowledge.  Ask them if they have been rated by the APS™ and if not why not.   By asking your current or potential advisors a short list of questions, you will be able to tell instantly if they know what they are talking about and if they can help you protect your wealth.

To download a series of questions and answers you can ask your advisors to gauge their knowledge on asset protection, please click here.