Privacy is a big topic and it’s not just about being careful with whom you share your personal information with. There are a lot of tricks and techniques out there on the ‘blogosphere’ that we could learn and implement.
However, it can also be overwhelming trying to ‘hide’ our personal information in this day and age of technology, if not outright futile. It’s difficult to determine which strategies work and are worth the effort.
The important point I want to make in this short article is that we need to understand what we are trying to protect, and then be targeted and exact in our privacy protection strategies.
Since the publication of my last book “The Tax and Legal Playbook”, wherein I included a chapter specifically on the topic of privacy, I have started to consult with clients more and more about making the distinction between personal privacy and asset or property privacy.
For example, safeguarding our personal information from identity theft and not letting ‘the world’ know where we live, is very different than hiding a rental property or asset. Otherwise stated, our personal privacy is different than the privacy needed in keeping the location of an asset private.
In daily practice we might, and in many instances as a business owner should be, willing to let people know who we are, where are office is, how to contact us, and follow us on social media. This could be a very important part of our marketing efforts to brand ourselves or our businesses. (In fact, I myself am not ready to drop ‘off the grid’ and disappear quite yet- I want good people like you to be able to get a hold of me).
But in turn, I certainly don’t want the general public to know what assets I own. For instance, I don’t want a potential stalker or disgruntled tenant, and especially a creditor or their attorney to do a public record search and discover all my assets sitting there just waiting to be attached in a lawsuit.
So lets go through some privacy action items that will help make the distinction between ‘personal and property’. First, here are some practices that I have previously referenced as ‘Level 1 Strategies’ that work great for personal privacy.
- Pay for a credit bureau tracking service and carefully monitor any activity they find.
- Keep critical data for both you and your family members, under a watchful eye. Items such as social security numbers, driver’s licenses, credit cards, bank account numbers, etc.
- Invest in a safe deposit box, or a carefully hidden fireproof safe for the house, and place important papers in it.
- Go paperless with an encrypted cloud hosting service to store all your data.
- Copy all contents of your wallet and keep in an encrypted cloud service, a safe, or a safety deposit box.
- Confirm that all firearms are properly registered and that the licenses are protected from theft.
- Move the contents of the glove compartment in your car to a locked box in the trunk.
- Consider the significance of the content you share on social media.
- Protect your incoming and outgoing mail, which might have sensitive information in it.
- Shred important documents and sensitive information with a quality cross-cut shredder at home and in your office.
- Install antivirus software on all business and family computers.
- Don’t keep sensitive information on laptops or smartphones.
- Remember to log out of your computer at home and at work, and use a security measure like a password or pass code on your mobile phone.
I call these ‘Level 1 Strategies’ because they are a great place to get started and don’t cost a lot. They just take some time and effort that could have significant benefits and results.
More advanced strategies for personal protection may include some of the following:
- Since your personal address is probably already ‘out there’ (which is typical when we don’t vigorously guard our privacy), you may move or purchase a home for cash, and own or rent with a trust, an alias, or company name for the purposes of public record and utilities.
- Use a P.O. Box, CMRA, or ghost address for all mail deliveries and never giving out your home address.
- Pay for everything with cash.
- Set up email under an alias and use your alias aggressively—but always legally—to maintain personal privacy.
- Follow specific rules when traveling. There are numerous privacy blogs where you can learn tips for what information to share when booking travel.
- Have no information about yourself or your work habits in public view. Close your Facebook account—sorry.
Now these strategies again, don’t focus on protecting the privacy of specific assets, but your personal privacy. Notice that these techniques are personal in nature. The steps above don’t do anything at all to stop someone from finding the assets you own with some relatively simple searches on the web.
In contrast to personal information, when it comes to protecting the privacy of an asset, obviously the ‘type’ of asset is going to dictate our options. Typically we are helping clients implement privacy procedures for assets on public record. Assets such as 2nd homes, raw land, rental property, cabins, beach houses, etc… Assets that don’t have a ‘public recording’ are much easier to protect from public searches.
Here are some of the techniques we are using to help clients protect the privacy of assets and/or businesses:
- Always use an entity to hold title to income producing property for asset protection and Never hold title to property in your personal name.
- For property where asset protection isn’t necessary, utilize a land trust or privacy trust as they may be termed. They are revocable trusts for privacy, not irrevocable trusts that come with a lot of baggage and unintended consequences when it comes to flexibility and taxation.
- Implement a mail forwarding address service, P.O. Box, or CMRA for the company address and never give out your personal address or main operating business address.
- Pay for a Registered Agent service in every state you have an entity to serve as a your street address (required for every filed entity).
- Engage a property manager for your assets and share only the necessary contact information needed to maintain the relationship (you’re never sure what they may share with 3rd parties in a crisis).
- Create a holding company (LLC) in a state such as Wyoming or New Mexico where the Managers and Members of the company aren’t listed on public record. Almost every other state discloses the ‘Manager’ of the LLC on public websites, and some states even disclose the actual owners/members. Be careful you understand what is listed on the state websites before registering your entity.
- Give Power of Attorney (POA) for someone to serve as the Manager of record for entities or Trustee for any trusts on public record so your personal name isn’t used. Potentially even use a specific alias (legally) for this purpose.
- Always file your tax returns honestly and ethically, but vigorously protect what you share about your assets with any institution or professional that doesn’t have a legal duty to keep your information private (i.e. a bank, attorney or financial advisor).
In my book “The Tax and Legal Playbook”, referenced above, I discussed 4 levels of privacy and a wide range of techniques. I highly recommend you review chapter 16 of the book if this topic is of interest to you. In my book I actually blend a number of personal AND asset privacy strategies through these 4 levels.
In the future, I hope to focus more on these differences between personal and property privacy protection as I continue to write and speak on this topic. Invariably we are already seeing in our law firm that in our one on one consultations with our clients around the country we get into these difference of personal versus property and it’s something we feel strongly more lawyers should discuss and plan for.
What type of privacy strategies are best for you to utilize will generally depend on three factors, 1) your individual ‘risk tolerance’ (i.e. how much privacy do you desire), 2) the assets in question, and 3) your personal lifestyle choices about your public and private life your willing to share.
The different techniques that you can choose from will need to be carefully tailored to your situation. Nonetheless, don’t give up on this process and your quest for privacy. It could be one of your most valuable assets.
Mark J. Kohler is a CPA, Attorney, Radio Show host and author of the new book “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions” and “What Your CPA Isn’t Telling You- Life Changing Tax Strategies”. He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP and the accounting firm K&E CPAs, LLP. For more information visit him at www.markjkohler.com.