What Schools Will Never Teach You About Money By Robert T. Kiyosaki

BALANCE SHEET
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Cash Flow $685
INCOME STATEMENT
Reprinted with permission

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Chapter Four
Unfair Advantage
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with these entities. The rich learned this a long time a go. If your advisor 
advocates using a sole proprietorship or general partnership, do what the 
rich do: Move up to the next level. Get a new advisor who knows how
to protect you.
Nevada has the best law on asset-protection trusts. Assets that have been 
in the trust for over two years cannot be reached by creditors, even with a 
court order. An example of this structure is as follows:
The LLC allows you to manage and protect the property. The asset-
protection trust puts up an even bigger wall, protecting you as the 
beneficiary from creditors.
In setting up an asset-protection plan for clients, I am sometimes asked the 
question: Won’t the government or the IRS be suspicious of this?
My answer involves the history we discussed at the start. Governments 
encourage asset-protection planning. They allow for the charters, the 
laws, and the taxation. They want the rich and everyone else to invest 
and take risks. In turn, they gain significant tax revenue.
 
So do what the 
government wants: Protect your assets. 
Garrett Sutton explains:
We don’t have to get too legal to know that investing involves risk. When 
investing involves unlimited risk, the chance that out of the blue you’ll lose 
absolutely everything you own, fewer people will invest. But when you can 
hedge your bets and shield some of your assets, more people will put their 
money to work. 
It started with corporate charters granted by the English Crown in the 
1500s. The wealthy and well-connected were able to take risks that others 
could not, and the English economy flourished. In time, governments 
realized that limited-liability entities should offer an equal opportunity 
for protection.
1 
The fact that tax revenues greatly increased with such an 
expansion of rights certainly helped governments make the right decision.
Today, states such as Nevada, Wyoming, and Delaware provide favorable 
risk-protection laws and affordable fees, and generate huge sums of money 
for their treasuries. And, in one of the bigger win-wins out there, they allow 
investors to legally hedge their bets through state-chartered limited-liability 
entities which has allowed the economy to grow and more taxes to be 
collected. Much can be explained by examining self-interest.
Ironically, while providing for the good entity choices, governments 
also offer bad entity choices and don’t tell you which ones to use. The 
paternalistic nanny state so many complain of certainly had not come to 
entity selection. The government doesn’t teach it or warn about it,
2 
and 
they’ll let you make the wrong decision.
The bad entity choices, and the ones that offer no protection from claims 
and thus no minimization of risk, are sole proprietorships and general