How The Wealthy Create Tax-Exempt Wealth | Kelly O'Connor | Skillshare

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How The Wealthy Create Tax-Exempt Wealth

teacher avatar Kelly O'Connor, You're Either Informed Or Uninformed.

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

12 Lessons (1h 31m)
    • 1. Welcome Video

      4:24
    • 2. 01 Pie and Mountain

      3:21
    • 3. 02 Three Types and Check Story

      5:10
    • 4. 03 Qualified Plans

      3:09
    • 5. 04 Four Buckets

      13:45
    • 6. 05 The Financial Teeter Totter

      8:28
    • 7. 06 Additional Information Part I

      9:07
    • 8. 07 Additional Information Part II

      14:01
    • 9. 08 Debtor vs Saver

      6:12
    • 10. 09 Client Case Study

      7:14
    • 11. 10 Brother A vs Brother B

      8:38
    • 12. 11 Household Income and The 1%

      7:56
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About This Class

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I believe the IRS tries really hard to take the fun out of being successful.

If you believe the same, then I have a question for you: if it were up to you, how much of your retirement income would you want to share with the IRS?

I hope you said "None of it!"

Our current tax code allows you to make this possible and I demonstrate how the wealthy have done it for years...and all I need is a notepad to show you.

Yep, I'm a financial guy...but so what? This information is typically reserved for individual clients; however, I believe you deserve the opportunity to get what you want (which is to keep the IRS off your money).

Doesn't matter if you ever meet me or not...just educate yourself!

You can also get my audiobook of this class for free by texting "uncommon" to 720.807.5919.

All the blessings,

Kelly O'

PS: If you'd like to schedule a call with me (not an assistant or associate, but me personally) then feel free to do so via this link: https://www.financialcaffeine.com/calendar

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Kelly O'Connor

You're Either Informed Or Uninformed.

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Transcripts

1. Welcome Video: Hi, I'm Kelly O Connor, and I want to start off with what I believe and why I made this skill share in the first place. I believe the I. R. S tries really hard to take the fun out of. Be unsuccessful. Would you agree with that? Have you encountered that at this point in your life, I'm sure that you have Now they do this by creating obstacles and a lot of them to get in our way as we are grinding and working and these obstacles air designed to cause us really big problems when we finally start to use our money. Because of this, I believe successful individuals deserve the opportunity toe Learn how our very own tax code, our tax code, permits them to get their assets positioned in such a way that when it's time to finally use those assets, they are completely exempt from both federal and state income taxes regardless of their level of income and regardless of the state that they resided Now have you ever heard of that before? How does that sound, too? If that were possible? That's what I do. And how I do this is by demonstrating the tax code, which is what this skill share is about, and why I do it is because I believe you deserve the opportunity to get what you want that plain and simple. So what you're about to step into first is a presentation that I do want a digital no pad. This is the conversation I actually have with the clients that I meet with individually, whether it be digitally over webinar or face to face in an officer over coffee. It's just a no pad presentation doesn't take that very long. But I broke that conversation down into ah, Siris of just a few videos. So instead of being one long one, I broke it down, compartmentalized it for you on this skill share here. Then I go into a second set, which is a little additional information to just provide mawr info for you, and those often come around and let's say, like a second appointment with me with an individual and then third. I provided just some additional background information in order to help you understand the aspects of the government and why they want you to do what they want you to do. And the implications that it has on you. So in my industry, in the financial service side that I'm on this conversation that you're about to have access to for free is really the conversation that a lot of us have after we've set an appointment with somebody or clients referred them to us. So some of my constituents, if you will, some of the individuals that I've been involved with in my industry, they're not real happy that I'm putting this out there, um, for everybody to consume because they feel that what I'm doing is robbing the expertise. But you know what? In today's world in the Internet, how it changes everything. If I truly believe what I believe in, what I stated at the beginning, then I should be willing and fully able and fully capable to send this information to as many people as I can, regardless of whether you end up meet me or talking to me or not. If if what I believe resonates and I have the opportunity to show you how you can be structured in a way to make that happen, then I feel it's my duty and my obligation to get this information to you. So that's why I created a skill share. It's just that simple. So enjoy your going to see starting here. This very first video is a conversation that I have with my clients from start to finish. And obviously it's just me talking. So that's what you're gonna be watching over the course of those videos. Okay? I look forward, Teoh. While I look forward to doing this for you, take care for you to be successful. Now I believe they do this certainly by Cream market. New begin. Kelly Kelly O Connor. 2. 01 Pie and Mountain: Okay, So my 1st 1 I asked you a question. I want to see where you sit. We draw the circle here in this circle represents your wealth. It's like a pie represents both current and future wealth of yours. Everything that you have. And at some point in time, you're going to use this wealth in order to fund retirement or distribute income from it. Whatever it looks like for you in the future. Now I'm gonna hand you a knife, and I want you to cut out the slice. That represents how much of this pie you want to share with the I. R. S. How big would you make that slice? I'm quite confident. You said none of it. I wouldn't give him a crumb. I don't want to give him anything. I don't give him crap. Maybe you used a different four letter word, but I'm sure it revolved around something like nothing. You don't want to give him anything. Well, that's really good. What you want is is what I do. How I do this is by demonstrating how the tax code allows this to to happen. And why I do it is because I believe that you deserve the opportunity to make that possible . Now, over the years, I've come up with an analogy that, really, I believe, summarizes the financial journey of of everybody perfectly. And it's climbing a mountain. Now there are three stages to climbing a mountain. You have the ascent, you've got the summit, and then you have the decent. Now, why does this tie in perfectly in the financial arena? Well, because on the ascent here, this is why we are accumulating. We have our accumulation phase. When approval are here in the flag, we have our retirement. At some point in time, we turn the corner right and we start to use our money. We now have distribution, and at some point we're not working as much were working less. Our money is now doing things for us Now the financial industry both starts and stops right here at accumulation. Remember that? I think it was i n g handful years ago might have been fidelity. I don't remember, But there was a commercial of people walk around Central Park with their big green number. What's your number? What's your number, right? How much do you have to get how much you have to get up to here. We'll just like climbing a mountain. You can google this Mount Everest. For those people who die, 73% of them die in the descent phase on the way down. Their most dangerous part of the expedition begins when they turn around and they start to come back. Nobody's goal when they're climbing Mount Everest, or even financially, is just to get a big number. Is just to sum it, because if you got up there, touch the summit and you died, you essentially a major goal, right? The goal is to get up and get back down and lived to tell about it. But just like in climbing a mountain when we are preparing for this journey, we have to take with us the tools we need to get up in order to get back down. And you might not believe this. But in 11 years of doing this business, I have never one single time, and somebody sit across from me that had a tax exempt distribution plan already in place. They already had the tools that they needed to make this possible, so distribution is far more complicated, largely because of taxes, because of Social Security and because of distribution rates. And this is what I'm going to get into and how all this affects our ability to be tax exempt. 3. 02 Three Types and Check Story: Okay, so let's go back up to our circle here. There are three types of money within this pie. We have our accumulated money. This is money that we've already set aside. Right? We're working or saving. This is real estate, business values, investments, whatever. We also have lifestyle money. This is money that we use in order to to live right, Vacations, cars. Now the goal is at some point in time that this pile here is big enough in order to fund our lifestyle. And that's how well and great. But is that really happening? Just like 73% of people who die die on the way down in a Mount Everest expedition when we have to out of 100 people that are distributing their wealth in such a way to where they are self funded, essentially and don't need other sources of of assistance from the government, etcetera. I believe this is where most of these people quote unquote die as well financially. So the third type of money here is transferred money, and this is what I specialize in. And here's what I mean by transferred, it is defined as money you are losing unknowingly and unnecessarily. Now, I'm quite confident you're successful. You're diligent. And you are saying yourself I'm not losing money on New England unnecessarily. Well, it's very easy to do when you're coming down the mountain and let me let me give you three examples. First, you already mentioned to me that if you could, you would want all of this money off. Um, a tax exempt that you would want to control the knife. All of it. Well, if you could be put into that position, if that were possible and it didn't happen for you, then that would be an unnecessary transfer of your wealth. You paid more taxes than was necessary. That's huge. Number two is Social Security. Let me ask you this one Do you feel you're going to receive your cell security benefits? Did you say something like Well, probably not. I doubt it. Who knows? Um, I'm not counting on it. I don't want to rely on it. If I do get it. Whatever. Probably not. Did you say anything like that? So what I want to make sure you were looking at is if we if we say something similar to that, we are admitting to basically a 100% tax because this is all funded with after tax dollars and we're promised it back. And then if we struck our shoulders and say, Well, I probably won't get it We're admitting to 100% tax. We threw tea in the Boston Harbor for taxation without representation. We have essentially double taxation here with representation. We should be revolting over the sisters. Pathetic. But we all know that, right? These entitlement programs air completely messed up. So here's the key question. If you could get all of it, ah, 100% would you Would you take it? I'm sure you said yes. I mean, if you can Well, that's gonna show you how you can do it. But most of us believe you have to have no income or very low income in order to make that possible. So if it were possible for you, but it didn't happen, that would be a big transfer of your wealth. The third is debt. Now we know that there's bad debt in good debt, and I'm gonna talk about the worst kind of debt. We want to do that down here. So let's pretend I want to give you Ah, hypothetical example. Let's pretend for a moment that you need $50,000 and you do not have it anywhere in your circle of wealth. Up here, you've gone to the bank, you've been declined, and you don't have any friends or family that can help you. And you come to me and you say, Kelly, I need $50,000 very badly. Will you lend it to me? And I say yes. And I hand you a check. Now, what are the two things you're gonna want to know about that loan? You're gonna want to know the terms, and you're gonna want to know the rate. Now, here's how the term works. I tell you. I say, Hey, man, there are no terms. You are struggling. I don't want to hinder that. I don't want to burden you. Let's get you on your feet and will determine the terms later, Right? Not bad. You might go, OK, but it could be a catch to that. But here's how the rates gonna work at a future time. When I determine what my needs are, I'm going to calculate a rate then and I want to make it retroactive to today to get back how much I want. How would you feel about that debt? Now that alone is the worst possible loan terms that are unknown and rates that are unknown . That is a huge problem. I'm quite confident you wouldn't take that. But what I just described to a T perfectly is the primary financial vehicle used by most households today. What I just described perfectly, it's a 401 K and IRA and a Sepp IRA. We'll explain what I mean by that. 4. 03 Qualified Plans: Let's pretend for a minute that this is a 401 K and you've saved and saved. You've climbed and you get up to the top of the mountain and you have a $1,000,000 in this 401 K My first question to you if you were to come to me and say, Hey, man, I got a 1,000,000 bucks in my 41 K My first question to you is gonna be well, how much of this 1,000,000 is yours? Do you know? Think about this over here. How much of it's yours? You don't know. You have no idea how much of this asset is yours because you have a partner in this whole thing and they're the ones who control the knife, not you. And that's the federal government. They have not taken their share yet. They haven't told you how much they want and they have. Unless you take it all out at once, which you again a lot of people would advise you not to do. But if if you do that, you would know how much their share is. But if you decide you're gonna begin distributing income from this year after year after year after year, you have no idea how much they get to take each and every year we don't even know what next year means in the financial arena for distributions out of pretax qualified plan assets, this debt is the worst debt imaginable. It is unknown terms at an unknown rate. Therefore, nobody can plan. So here's what happens. You get to the top of the mountain, you decide you want to start coming down and you ask us, you say to the financial Hey, man, how much can I take out this year? All right. Well, how much do you need? The client will often say, Well, should I take out mawr this year? Because tax rates are gonna be higher next year? Or should I take out less this year so I can take out more? Next year of tax rates happen to go down? Well, now, what is the only answer? After the adviser helped accumulate, helped came late. Got you a big old number. What is the only answer they can give you? The only answer is the same one you had. I don't know. I don't know. How much do you want to see the financial world literally becomes a waiter. We we just we just become a waiter. At that point, we can say, Well, how much do you want to fund your lifestyle? Okay, I'll put the order in for you. And then that happens next year and in the next year and in the next year, this idea that you're gonna be in a lower tax bracket. How is that possible to determine if we have to try to assume and calculate 30 years of a distribution? It's impossible. We don't even know if you will be in a lower tax bracket a year two, we have no idea. So the debt that is associate ID that ties in with this is unknown and you do not control the knife, Not one bit. So what you just told me earlier, which I believe you did when you said if you could throw up to you, you wouldn't give him a crumb of your pie if you had the knife and you control the slice that went to the I R. S. But yet down here, individuals air handing the knife over. It's a major problem 5. 04 Four Buckets: Okay, so let's fast forward to where it is time to finally begin distributing money from our assets. Now, you have only four opportunities of how you are structured. From a tax standpoint, these air different buckets. I'm gonna refer to these as buckets. Bucket number one through four. Now Bucket number one here is the ordinary income tax bucket. Now accounts that fit into this or income that fits into this is income from any business or real estate, or are for a one K's or IRAs, etcetera. So we have finally made it. We have finally gotten to the top of the mountain, and we are beginning to use our assets in order to fund our lifestyle. Now the very first mistake people make here is that they think they want retirement income and you do not. You want retirement cash flow and this is key. Cash flow is what is most important here. So let's take a look at the ordinary income meaning we have built up money over time in these tools, and now we're going to begin to use them to fund our lifestyle. That's just for argument for math. Let's just say we're gonna use $80,000 for income. Now, according to the tax code today, the highest that the I. R s can collect on ordinary income is about 35 grand. Now, keep in mind when you distribute money out of this tool, you have to pay to entities both the feds and the state leaving us 45,000 of spendable income. That's it. Now there's a something else going on here that is fascinating to me and quite frustrating at the same time. If you show $80,000 then the I. R. S believes our federal government believes that you are wealthy beyond your wildest dreams and you do not deserve all of your Social Security. So they will tax 85% of that benefit, meaning they will take 85% of your soul security benefit, and they will add it on top and tax it again at the highest rates. Ordinary income. Now, think about that. You funded this benefit with after tax dollars, and now they're going to say you don't deserve it, and they're gonna tax it again at ordinary income for a second time. I have a major major problem with that as I'm sure you can see why. Because were you able to opt out of the tax along the way? Of course, not required for you to pay it. It's promise you're going to get it back, and then they tax it again. So I want to go back to that first question I had when we're looking at your circle, If you could get all of this regardless of how much income you have, would you take it? I'm sure you answered Yes. So let's move over to the right Here it's next bucket boots gonna know this next bucket is our capital gains bucket Right now. This is stocks, bonds, mutual funds that are not held within our Foreman Care IRAs, but also when we sell a business or when we sell real estate right now, here's how capital gains works. If we were to take an $80,000 distribution from this, the very first thing the IRS wants to know is how much of this was our cost basis. And here's what cost basis means you might be familiar with the, but for those who don't give a very quick description, cost basis is what the I r s wants to know is how much. Let's just pretend this was a $1,000,000 of an asset. How much of it was our contribution compared to how much of it was growth. So if we contributed half a $1,000,000 to this account and it grew to a 1,000,000 than half of this would be a return of our basis the return of what we contributed. So if we took 80 grand out than half of it would be tax free, right? We would not have to pay tax on it. This actually goes back on your schedule. D doesn't hit your 10 40. So we would show $40,000 of taxable income instead of 80 like in bucket number one. Now, when I got in the business, the capital gains rate was 12. Then it went to 15. Then it went to 20. Then it went to 23.8. Because there was a 3.8 net income surcharge added with Obamacare, his second state of the Union. He vowed to make it 28%. Fortunate never happened. But all this is capital gains is just another, you know, bucket that they can another *** it that they can turn on or off as they wish. But for the most part, the industry uses about 20%. So of 40,000 of taxable capital gains income, 20% of that would be our tax bill. So about eight grand leaving us 32,000 of spendable plus, what we had is our cost basis. Our tax bill was drastically lower and our spendable income was drastically higher. And that's the sales pitch. That's why cost capital gains is often referred to as the most advantageous tax and tax code. I would agree, but tax exempt is still better. True. Now here is what really bugs me is at 40,000 of taxable income, just 40 just over three grand a month. The I. R s believes that you're no longer wealthy, but you still don't deserve all of your soul security, and they will tax 50% of it unbelievable so far as we mentioned earlier, if you've gotta have no income or low income in order to get it back, but yet you're the ones who funded it for all those people in the first place. Very frustrating. So let's move over to the right again. This is our tax free bucket. There's only one product that exists that's in this Serena, and that is municipal Bonds often referred to his Munich bonds, and here's obviously the sales pitch for these. If you take an $80,000 distribution from immunity bond, then you get $80,000. It's tax free. But here's the problem. This gets communicated on your 10 40. So you're right back up to 85% of your Social Security being taxed 85% of it now. Oh, and you could be showing about. You could have about an $800 a month Medicare payment. Crazy. So the very last is tax exempt. Let me define tax exempt first, if we were to take an $80,000 distribution from our tax exempt bucket, it is tax free, just like the Munich bonds. You get 80 grand of spendable money, but there is no communication with the I. R. S. Therefore, it nothing hits your 10 40 so this 80 grand does not go on your tax return. You mean that the file a tax return because of it, which means there's no means testing. This is means tested means tested means tested on your benefits. This is not so 0% of your soul security would be taxed. You could qualify for your your Medicare would be about 100 bucks a month. Because of it, you could even qualify for any BT food stamp card. And, of course, all the government cheese that exists with this same $80,000 distribution wealthy beyond your wildest dreams over here. Not wealthy, but still don't deserve it. Wealthy beyond your wildest dreams. Same income distribution. And you get everything. You get all of your soul security back now What you said at the very beginning when we looked at your pie and I said, How big of a slice do you want to cut? You said none. I don't want to cut any slice in that thing. Well, this is the only bucket that allows that to be possible. And let's look at the only two products that make up this bucket. Number one is a Roth. Now, a Roth Ira, um, is seemingly great for a lot of people, but I'm quite confident you don't qualify for it. And in that interesting that the government is going to say yes, this exists, but we're gonna put an income limitation on it so that those who are making money have to fill up these buckets Over here. The government does a great job of getting money shoved into these tools. It's the primary strategy. So there's an income limit, meaning if you begin, if you're at about $117,000 you begin to be phased out of the Roth IRA. Why is that? They're going to allow me to do 53 grand into a Sepp Ira, but nothing into a Roth. Now there's also contribution limits as of now, what it's like 5.5 1000. So even if you do qualify, you can only do about five just just over five grand a year. Which means, of course, if you're distributing from this thing and coming down the mountain, you can't get much money into this thing in the first place. So the distribution won't last very long, so you might be tax exempt for a bit. But you're gonna roll right back into this. Thirdly, a distribution from a Roth generates a 10 99. Now I find that interesting. Why does it generated to 99? Are I've asked CPS that when I present with them, they don't know. And it's not because you know I do, and they don't is because there's no answer. It's a tax exempt distribution. It's tax free and Roth distributions or not, means tested on your soul security. But I believe that 10 99 are being generated is because they're gonna dump it eventually into this bucket. They would still promise them and still maintain a tax free distribution. But if you happen to be blessed enough to have money into one of these than you, quote unquote don't deserve all of your soul security. Just like these other people, I'm extremely confident that's what's gonna happen. So the only other product that exists in the entire tax code in the 46,000 pages of tax code the 26 feet of bookshelf space is over funded life insurance over funded life insurance. Are you familiar with that? Have you heard of that? I'm sure if I know you've heard of life insurance, but over funded. What's interesting about this, really is who owns this? Only 4% of all insurance is actually over funded, and banks make up almost that entire 4% they own. More of this than any entity on the planet is matter of fact. Bank of America has about $23 billion in this right now. Wells Fargo 19 JP Morgan Chase. About 21 billion. Their holdings go up every single year. You can go to F D I c dot gov. It's lying 41 of their assets and liabilities, and they refer to this as their tier one capital. All right, next, politicians. You see, our politicians have to also follow our tax code. They can't. They will have their own tax code. They have to follow the tax code as well. I have a colleague who worked with a current sitting senator who is over funding his over funded life insurance to the tune of half a $1,000,000 a year. Now no insurance contract costs him half a $1,000,000. He's over funding it to the tune of half a $1,000,000 per year. Now he can't do that into a Roth or into a Roth. He can't do that into an I. R. A. Right, but he could do it into his insurance. Our politicians. This is historical. Ted Kennedy, when he died, left $275 million of life insurance. None of it was term. And then the third is the wealthiest Americans. My biggest client does two million bucks a year into their over funded insurance. History is riddled with wealthy people using insurance. Now, what do banks, politicians and the wealthiest know how to do with their money? They know how to shield it from taxes, and they know how to shield it from other people having control. So here's what we look to do. Keep in mind let's keep this descent this distribution in the back of our heads here. What we want to do is we want these assets to create a huge rate of return, go out there and kick butt, go out there and earn a bunch of money. But we have to have this tool in place, just like the mountaineer has to have the tools they need to get down the mountain. We have toe have this in place. Not when we get here, but somewhere along the accumulation side. Now I have a client right now who has a $420,000 a year cash flow out of his insurance bucket. He gets 100% of all of his Social Security. He qualifies for a food stamp card in his state. He doesn't take that. He feels that's abuse, but his Medicare is 100 bucks a month. He takes this and he certainly takes this. I won't explain that one here in just a minute. How we use the sale of his business and commercial property in order to fill this bucket up for him. So this is where he distributed his money from. So let's look at how that works, actually. 6. 05 The Financial Teeter Totter: Let's draw these buckets again. And a teeter totter. The three buckets are over here are over. Funded insurance is over here. Now again, I would advise that we go out and you get a big of a return, as you possibly can. But what we want to do is we might take some of your old money, which is your current accumulated value. We might direct it a little bit of it into the over funded insurance. To establish the bucket, we might take some of your new money, which is your contributions that your funneling into these and redirect as well just for a short period of time, maybe a couple years in order to establish this bucket. Because eventually when we turn the corner, when we start coming down the mountain, we want money here, money here and money here and money here because based upon the tax implications of any given year, we can pull money from this from this from this and none of this, if that is what is the most favorable or weaken, do some from here and more from here or none from here and all from here. But we've got the ability to ensure number one were never in a position to trigger a tax on the income. And number two, We're never in a position to trigger a means. Testing on our Social Security were balanced. So do we always withdraw money from the side now? But we're at least in a position to where we can navigate it down. So here's exactly how my client did it that has a $420,000 lifestyle of spendable income in 100% of their Social Security. He had his commercial, he was a surgeon, had his commercial building and he had his practice. And he knew in about seven years one of his junior doctors was gonna buy both. That was his primary retirement strategy. He didn't want to maintain the building. He just wanted to be done, wanted to cash out. And we put a $1,000,000 for two years into this bucket, and then we stopped. So we, your 3456 and seven we stopped Well, that left a void of $5 million. When he sold the building in the practice. He paid his capital gains once and then was able to take the rest of that and fill this back up. So I only had about seven million in here. He had some money left over in his for one case in IRAs. He had some money left over, certainly from the sale of the building in his practice. And he had some. He didn't use any immunity bonds, but he had money basically sitting in these two. This gets him in a position to have a $420,000 distribution. So if we never touch these, he's it for 20. But we can still pull out if we want, like, say, 20 grand of his IRA. That won't trigger the tax and won't means test. Um, if if If we need to pull more from these because tax rates are totally favourable, we can. But we will be in a position to get 100% of his Social Security, is Medicare for 100 bucks and even qualify for food stamps. All we did was balance him out. So when we look at the pie When I asked you how big of a slice, you said none of it. I don't want to give him crap. I don't have to get all of your money over here to make that possible. I see you get some of it in order to be balanced like this guy, and that's what I do. So this is the concept, and I want to emphasize it is the tax code, not the product, not the product. Who cares what they call it if it accomplishes? When you said you wanted, it's the tax code that affords us all these benefits and gives us the privilege of building wealth in such a way where our retirement distribution is completely exempt from both federal and state income taxes, regardless of our income level and regardless of the state that you reside him now the product is just the funding mechanism for maximizing the efficiency of the code again, who cares what they call it? So look, if you've made it this far, I appreciate it very much. You've been with me for some time now, and there's a reason you stayed for the entire presentation, and if you found it valuable, then I would ask one of two things. First, I would ask that for anybody you have influence with anybody that would that would watch this purely because you told him to watch it that she asked him to do so. Ramos is that one person And then second, I'd like to discover with you and determine how big of a bucket number four over here do we need to build for you according to what you want to do. It's all according to what you want to do. You tell me how much is in each of these buckets and how much you want in the fourth or how much it you need in order to make something like this happen and will attempt to design it for you. We'll see what you're able to accomplish with this and how much tax exempt income you can truly create. Now, over the last gosh, 30 40 minutes or so, I have definitely shared a ton of information like drinking from a firehose with you. But as you know, information alone is not going to save you. You need expertise, you need strategy. And most importantly, you need action. Nothing happens without action. The system that I've created the way I work is not a fee based system. I refuse to charge for my time and or my advice. I've been advised by others over and over that I should do so, but I utterly refused to do it. So there's no skin off your nose except one more call. I'm sure you have questions, and that's why I make my personal calendar available to you. You can click on the button and get direct access to my calendars, availability and schedule. Some time you will speak with me directly. And if it turns out that my calendar is just too full and when I have opened doesn't work for you, then I'll have my business partner or my right hand man a junior associate speak with you. Initially, he knows his stuff, but I personally will track you down. Our job is 100% to simply demonstrate to you what's possible accomplished for you what you claimed at the beginning that you wanted, which was to be the one in control of the knife and then to help you facilitate that plan being put into action. So look, you can find me all over the place. I want to drag this over here. You can check out my linked in profile of typing. Kelly O Connor's picture me here. My instagram I'm building. Kelly D O Connor is my instagram. I like post and stuff of my Twitter. Same thing. I'm Kelly at Kelly D O Conner. Looks like that my YouTube page, um, you can type in Kelly D O Connor. I've got tons of videos. Toe watch and check it out. I'm going viral. I've got what? Or look, let's see. I'm at 101,000 0 my gosh. I am so viral. It's crazy. Now you're gonna notice on this link, though I just want to say I've got this. It says Mountain Financial appear. That was my old company. We got acquired. I made the mistake of creating the custom. You are out, and I didn't know you could only do it one time. So according to YouTube, I can't change it. But I don't care. I'm still posting stuff so you can always find one thing you won't find. And that's a comment anywhere that I was out to scam someone for one silly insurance policy . I'll never risk my license radio ever. I love what I do, and I take great pride in my expertise and my service and my staff. So at this point, we're done. Click on that button and schedule your call with me. You just have to like the i r s a little bit less than you like talking to me. So get on my calendar. Thanks again. I hope to talk to you soon. 7. 06 Additional Information Part I: Hey, I'm very grateful that you take a few extra minutes to dig into how you can create tax exempt wealth. This should only take about 10 minutes. Now, I know you can take this information and go anywhere with it. I'm absolutely OK with that. But that is exactly why other experts in my field won't market the way that I do. You see, they like to hold these conversations close to their chest so that you have to meet with them face to face, right? I did that for a long time as well. However, I'm done being mysterious about strategy in order to set appointments for myself so I could demonstrate my expertise to people. I'll do it now here anywhere. Whether someone works with me or not, just promise me one thing. You'll take it serious for yourself because if you are interested in minimising risk, optimizing cash flow when it's finally time to retire, even if it's 30 years away, generating returns, creating efficient distribution strategies, optimizing your liquidity, optimizing control and maximizing your tax exempt wealth, then what I've already showed you and what will dig in deeper now is very relevant for you . Look, this has nothing to do with selling insurance. It has everything to do with helping you acquire the strategy that you want tohave. Let's do a quick lesson on over funded insurance contracts that I haven't covered as of yet . It's highly likely that what I'm about to show you is something no one has ever shown you before. Not even your current insurance professional, but you certainly deserve to see it. So let me flip over to my screen right now. You're gonna like this one. So I want to use an example of an actual client I met with this morning. This box here this box represents his life insurance contract that he's wanting to buy. And it has a death benefit of $2,800,836. Now there's a reason to this. I'll explain that here in a minute. There is a minimum that he could pay for this insurance. And who determines that minimum other than himself. Because if it were up to him, he would want it for free, right? So who determines us? It's the insurance company. They look at your age or sex. Your habits or hobbies. They test your blood, your urine, native side, how much they're going to charge per month or annually in order to have this death benefit of $2.8 million. Now, in this case for this client, they determined that for $2946.12 per year, he could have this death protection. This is term insurance. Have you ever wondered how this works? I mean, economically, it can't. You give them 2900 bucks and you walk in front of a bus and your spouse gets $2.8 million. You confined studies that show that less than 2% of all term policies ever pay a death benefit, meaning that people don't die during the term. So 98 cents of every dollar collected for a term policy is pure profit to the insurance company. Now, if there is a minimum that's advantageous to the life insurance companies, there's also a maximum. Did you know that? Did you know there was actually a maximum amount that this client could pay for this same $2,800,836 policy? Here's what's interesting who determines the maximum. It's not him. It's not you, it's our government. The US government sets the maximum now that causes me to pause and think about that fact for a moment, since we know that they try to take the fun out of our success, why would the government give this guy give you and me of limitation on what we can do with our own money? It was pretty easy because they want to control our funds as much as possible and the corresponding taxes of those funds. This maximum wasn't always present. Prior to 1988 you could put as much as you want it into an insurance contract. You could shove CapitaLand into these things kind of interesting. But in 1988 with the Technical and Miscellaneous Revenue Act, the government established a maximum dollar amount for each policy. By making one big change to insurance contracts, they discontinued the ability to dump a lot of money in at once and still receive favorable tax treatment. So there's no more putting a $1,000,000 in one time and still maintain a tax exempt status . Now there's countless ways that someone could end up with a large sum of money and want to protect it. So in order to receive the tax exempt benefit, the government said you must put money in more than once, not just one time, meaning more than one premium payment. But they didn't specify for how many years. Interesting, isn't it? So in 1988 the government said you can no longer make one large premium deposit. You have to spread your deposits out over time. If not, if you make one big payment, you dump all of it in at once. Then they will tax your life. Insurance money is just like an IRA. I mean, aren't they the best? Gosh, They have our best interests at heart, don't they? Now, remember how I said I believe the I. R. S tries really hard to take the fun out of being successful. Here's yet another example. Please note. They didn't get rid of the tax benefits, not one bit. All they did was changed. How you get your money into the contract. Our own politicians have to follow the tax code as well. So here's how this works. The insurance company will provide you a health rating right, and they will then run the math to see exactly how much money you can shove into the contract based upon the government's limitation. So, using the example of my recent client from this morning, he wanted to put in, ah, $120,000 per year of his capital. So they under rode him based upon his age, South's Saxes habits and the desire to fund a policy to the tune of $120,000. They approved him for the minimal, the smallest death benefit possible of 2,800,000 836 bucks. You see, the strategy here is to buy the smallest to squeeze this corridor by the smallest amount of life insurance allowable by the I. R. S. In order to get the most amount of your cash into the contract, we want to squeeze this corridor here. Does that make sense? So that's what we did with this guy. He wanted to direct 100 and 20 grand of his annual cash flow into an over funded contract instead of, you know, looking instead of shoving the money into his capital gains bucket. Or certainly you know a pretax ordinary income bucket that was bucket number one. He wanted to shove it into his bucket number four. So we took an application. He was under it and they approved him. And based upon his health rating, the government's limitation for his 120,000 he could buy 2,800,000 836. That's it of life insurance as the minimum death benefit allowable by the federal government in order to get all of his premium working inside the contract in order to make it over funded with cash. It was so beautiful. But what most insurance people do. Could you imagine how much life insurance he could buy if he was willing to spend 120,000 per year? I mean, probably tens of millions of dollars in protection, right? But that would be a waste of his money, since all of it would be going to the cost of that large amount and very little of it to the accumulation. So if that were the case, he should definitely by term and invest the difference because he could get this 10 million's and coverage for significantly less. But you see, he's over funding this policy. He's buying the smallest death benefit and maxing out the government limitations in order to create a large bucket of tax exempt wealth. Again, it's so beautiful how this works. You can do this to you. Simply determine what you can direct in the form of an annual premium from your buckets from we look at your new money, your contributions and your old money, which is money that you currently have. And how much of it do you want to create in the fourth bucket? It's it now. Where you definitely want an expert is when you're designing these policies to create the room for future assets. As I discussed in that first video for that, I definitely recommend you book some time on my calendar. And if your agent has never had this conversation with you, then I'd strongly suggest you find someone who understands this exceptionally well and can therefore properly implemented for you. My calendar is available to you simply click on the link below, and you can book something with me immediately. 8. 07 Additional Information Part II: once again. Thank you for listening. I truly am honored to be a resource. Recently somewhat asked me to explain if there are any additional benefits with having capital inside of an insurance contract. And looking at that last example in my previous video to of that client doing 120 grand. They said Kelly seriously other than building tax exempt, there's gotta be other benefits associated with it. So I thought I'd explain that to you as well. And I even have the notes from the previous video, so I'm just gonna add to them. So let's go ahead and switch over and do that now. Okay, so here we Oregon. Hopefully you remember this client of mine. Now, if this guy could buy the $2,800,836 worth of life insurance as a term policy and only pay $2946.12 per year, why in the world would he direct 100 and $20,000 per year for the same death benefit? You already know that he'd be creating a ton of capital inside of an account that could be distributed tax exempt, but there has to be other benefits, and their most definitely are. So let's explore those only go through these pretty quick number one, you get a tax free accumulation. So on the way up the mountain, you don't have to pay the taxes on the growth number two on the way down the mountain, you have a tax free distribution while you're alive, you don't have to actually die to get the money. Number three, you have a tax free transfer to your spouse and number four, you have no penalty to access your contributions prior to age 59 a half. Now, do these 1st 4 sound pretty familiar to you? I mean, have you seen these before? If so, you would know that these are a Roth. Now Roth has a couple more. I'll get to the Remember. These are the four primary benefits of a Roth IRA. Now. Number five. What are their additional benefits that aren't in a rock? Now? You might have heard that insurance is referred to as the Super Roth or the Roth for the wealthy. Well, let's take a look at why that IHS Well, one beautiful part So the fifth benefit here is you don't have a penalty, not only to access your contributions prior to 59 a half, but you don't have a penalty in your insurance contract to access your gains prior to 59 a half A. Roth doesn't have that. Number six. You have a tax free death benefit. Ross don't have those either. Number seven. There is no 10 99 meaning there is no communication between the I. R s and the insurance company, whether money is going in or out of the account. So a proper distribution doesn't hit your 10 40 which means it's not only tax free, but it's also tax exempt number eight. Because it's tax exempt. There is no means testing on your Social Security or other government cheese. We like that one a lot, which I demonstrated that to you in that longer video. Now I will say this that a rock also, even though a 10 99 has generated with the Roth I discussed that before. But a Roth also is not means tested, So Roth does have this benefit. No Number nine money inside of an insurance contract is not subject to creditors. Now this is state by state, but over 30 states in the union have I'm 100% protection of all capital inside insurance contracts, and now it's a bad example. But it's a good when you gotta think. O. J. Simpson. He was found liable to the Go Brown family, but hey didn't pay them opinion because he had his money and insurance contracts with the state of residency in Florida, which has 100% protection. Another reason why I have a lot of people retire in Florida. But think about that. Think about storing capital in a position to where creditors can't touch. That's a big one. Number 10. This money is not subject to the A m T tax, the alternative minimum tax. Now, I think this is one of the most egregious taxes out there. It's painful, but money inside of the insurance contract is not subject that it looks like potentially, um, you know, with with some trump tax law, this might be gone anyway. But inside of these contracts, there is no empty number. 11 definitely have a competitive rate of return when you net everything out when, um other investment accounts have fees and potentially taxes along the way, or riding the roller coaster going up and down and you net that out. Insurance without a doubt maintains a very competitive net rate of return. Now number 12. There's also a provision called Waiver of Premium. Now this is amazing because if you become disabled and you cannot make your contribution. So if this guy appear, became disabled and could not make his $120,000 a year contribution, the insurance company will do so and insurance companies cover up to 20 grand a month, meaning 240,000 of annual premium. So imagine if this policy for this guy is designed this way to be about cash, not life insurance. And the Insurance Committee, if he becomes disabled, will continue to accumulate inside his policy for him. They will continue to fund it, so it's a self fulfilling, even in the condition of, um, disability, which is fantastic. Number 13. There's chronic and terminal illness writers, meaning If you are chronically ill and a terminally you know as well and the insurance company knows this, they will allow you to have access to a large portion of your death benefit, Um, whether that could be used for anything to help pay for your final care toe. Help. Have a surgery if you want. They know they're gonna pay the death claim, so they'll give you a portion of it. That's fantastic. Number 14. There is no market risk, right? There is no such thing as writing the roller coaster up and down. That's critical mathematically Number 15. And this one is very important, specifically, um, as you're building capital and then when it's time to even use it later on, there are guaranteed loan provisions, meaning no matter what, you always have access to your capital. There's no qualification. You have access. This guy has can access to utilize these funds at any point in time Number 16 you have the ability to make unlimited contributions. Now you would think that that would counter what we talked about here being the government max. But let's just say, for example, this guy couldn't do any more than 120 grand a year into his insurance. Let's just for some reason that, say, he couldn't get more insurance, but he wanted to do $80,000 more. He had an additional 80 grand of capital to direct. What we could do is just direct that to his wife. Right? If he was insurable for more, we would just say, Well, okay, You want to 200 grand? Well, how much does to win a grand by? Maybe that only buys 3.5 $1,000,000. Right? Is can he had qualify for that. C makes sense. If he maxes out himself and his wife, he could also do this on his Children. He could also do this on business partners. All right, so you really have unlimited contribution capability. And lastly, number 17 money inside of your over funded insurance contracts can be used as collateral. And this one is absolutely critical. This is key. It's the critical component to how you use these monies later. It's a concept I call collateral capacity. And it's why banks hold billions and billions of dollars in these contracts. Let me show you what I mean. Delete this. This is the financial zero line, right? You must remember that we finance every single thing we buy. You either pay interest or you lose it. So this is the one who pays it, who I call the debtor. He wants something bad enough that he'll go into debt for it and then make payments to get back to the zero line again and it starts all over. He does it again. He buys another car. He doesn't again by something else. He does it again. Now the saver. What this person does is they delay gratification, right? She saves up, then pays cash and saves up again because she wants a new car. Then she saves up again cause she wants something else than she saves up again. But both of them get back to zero. And this works actually mathematically as well. When the variables were the same, this person could have earned 5%. And this person is paying 5%. They get to the exact same spot. They both lose the opportunity to earn interest on their money. So the debtor paid interest and the saver last interest because she continued to deplete her account again. Mathematically thes air identical. Now, within this model is the third type one who has collateral capacity. What I call the wealth creator. Here's why. Their money never stops compounding even if they use it. You see, if this individual wants to buy with these two bod, then they simply put a loan against their asset and use it as collateral and then pay the loan off just like the debtor. And just like the saver replenishing their account. It's the same thing. Only the Wealth creator never lost the ability to earn interest on their money, right? This is exactly what Banks do. If you and I were partners in a huge construction project, let's say we were building a $100 million golf course in Florida and we went to the bank. Would they loan us the money from the depositors, right from what they have on on hand, I mean, no way. What they do is they leverage their billions of dollars in their insurance contracts. Bank of America has like 24 billion chase like 20 billion. They have so much money in life insurance reserves. It's crazy. So what they do is they borrow ah, $100 million from the insurance company. There'd be alone against that, and you and I would pay that loan back all the while. Their money never lost the ability to learn. They just simply used it as collateral. Now, real estate is no different, right? If your home is free and clear and you have no mortgage and you decided to put a mortgage against it with the value of the house change, I mean, of course not with loan against the house has no bearing on the value of the house itself. This is the part I love about what I do. By the way again, I believe you deserve the opportunity to get what you want and have your assets positioned in such a way that when it's time to finally use those assets, you are completely exempt from both federal and state income taxes, regardless of the income level in regardless of the state that you reside in. So here's how we do it. You climbed the mountain, right? You did it properly. You insured you had some proper financial tools and were effectively balanced. If you get back to the balance, the little teeter totter, you were effectively balanced when it was time to distribute your wealth. So in this case, you had a large amount of capital in your over funded insurance bucket. Now let's take a look at that. Just like this guy doing $120,000 into his insurance the year that you decide to use it for income you put alone against it. And again, loans guaranteed with the insurance company. Loans are not a taxable event. They do not hit your 10 40. Could you imagine if loans became taxable income? Holy crap, That would be a huge disaster. Loans or not Taxable. This is a loan from the insurance company, which you are guaranteed to have access to within your policy contract. And it's alone using your entire cash value as the collateral because it's alone and not a withdrawal of an asset. It is completely tax free and doesn't have a place to go on your tax return, which means you have zero means testing for your Social Security and any other benefits, regardless of the size of the loan. Does that make sense now? Do you see why this client of mine wants to put 100 20 grand a year into this thing? Along the way he can use it like the bank. Did he come borrow against it for opportunities without any headaches. But when it's time to use it his income, he takes loans against it to create the spendable income, and he doesn't have to pay it back because his assets the collateral. So his first year of the loan is small compared to the entire value of the bucket. Now it does have a small interest expense, but our entire bucket is still earning. So this loan would never catch up to the entire earnings of this policy. The next year he does the same thing and so on and so on. All the while, the entire balance is still earning. He's simply collateralized his retirement spin down. This is why people shove money into these things. This is why you often read how the wealthy use insurance. But it has nothing to do with the wealthy. Anyone conduce oh it as long as they qualify for the insurance. Now, if you're not structured in this way, then I'd be curious to ask you why. I'm sure in the very first video, when I asked you how much of your financial pie you wanted to share with the I. R. S. That you said, I don't share any of it well, so if that's what you want and you have the opportunity to make it happen, then why don't you have what you want? Proper expertise is important, that's for sure. My calendar is available to you by simply clicking the button below. You can book a time with me directly. Let's take a look and discover what opportunities exist for you again. I believe you deserve the opportunity to get what you want. Hopefully, I can chat with you. 9. 08 Debtor vs Saver: This is the financial zero line, right? You must remember that we finance every single thing we buy. You either pay interest or you lose it. So this is the one who pays it, who I call the debtor. He wants something bad enough that he'll go into debt for it and then make payments to get back to the zero line again and it starts all over. He does it again. He buys another car. He doesn't again by something else. He does it again. Now the saver. What this person does is the delay Gratification, right? She saves up, then pays cash, then saves up again because she wants a new car. Then she saves up again cause she wants something else and she saves up again. But both of them get back to zero. And this works actually mathematically as well. When the variables were the same, this person could have earned 5%. And this person is paying 5%. They get to the exact same spot. They both lose the opportunity to earn interest on their money. So the debtor paid interest and the saver last interest because she continued to deplete her account again. mathematically thes air. Identical. Now, within this model is the third type one who has collateral capacity. What I call the wealth creator. Here's why. Their money never stops compounding, even if they use it. You see if this individual wants to buy with these two body, then they simply put a loan against their asset and use it as collateral and then pay the loan off just like the debtor. And just like the saver replenishing their account, It's the same thing. Only the Wealth creator never lost the ability to earn interest on their money, Right? This is exactly what Banks do. If you and I were partners in a huge construction project, let's say we were building a $100 million golf course in Florida and we went to the bank. Would they loan us the money from the depositors, right from what they have on on hand, I mean, no way. What they do is they leverage their billions of dollars in their insurance contracts. Bank of America has like 24 billion chase like 20 billion. They have so much money in life insurance reserves. It's crazy. So what they do is they borrow ah, $100 million from the insurance company. There'd be alone against that, and you and I would pay that loan back all the while. Their money never lost the ability to her. They just simply used it as collateral. Now, real estate is no different, right? If your home is free and clear and you have no mortgage and you decided to put a mortgage against it with the value of the house change, I mean, of course, no loan against the house has no bearing on the value of the house itself. This is the part I love about what I do. By the way again, I believe you deserve the opportunity to get what you want and have your assets positioned in such a way that when it's time to finally use those assets, you are completely exempt from both federal and state income taxes, regardless of the income level in regardless of the state that you reside in. So here's how we do it. You climbed the mountain, right? You did it properly. You ensured you had some proper financial tools and were effectively balanced. If you get back to the balance, the little teeter totter you were effectively balanced when it was time to distribute your wealth. So in this case, you had a large amount of capital in your over funded insurance bucket. Now let's take a look at that just like this guy doing $120,000 into his insurance the year that you decide to use it for income you put alone against it. And again, loans guaranteed with the insurance company. Loans are not a taxable event. They do not hit your 10 40. Could you imagine if loans became taxable income? Holy crap. That would be a huge disaster. Loans or not Taxable. This is a loan from the insurance company, which you are guaranteed to have access to within your policy contract. And it's alone using your entire cash value as the collateral because it's alone and not a withdrawal of an asset. It is completely tax free and doesn't have a place to go on your tax return, which means you have zero means testing for your Social Security and any other benefits, regardless of the size of the loan. Does that make sense now? Do you see why this client of mine wants to put 100 20 grand a year into this thing along the way, he can use it like the bank. Did he come borrow against it for opportunities without any headaches? But when it's time to use it, his income, he takes loans against it to create the spendable income, and he doesn't have to pay it back because his assets the collateral. So his first year of the loan is small compared to the entire value of the bucket. Now it does have a small interest expense, but our entire bucket is still earning. So this loan would never catch up to the entire earnings of this policy. The next year he does the same thing and so on and so on. All the while, the entire balance is still earning. He's simply collateralized, his retirement spin down. This is why people shove money into these things. This is why you often read how the wealthy use insurance. But it has nothing to do with the wealthy. Anyone conduce oh it as long as they qualify for the insurance. Now, if you're not structured in this way, then I'd be curious to ask you why. I'm sure in the very first video when I asked you how much of your financial pie you wanted to share with the I. R. S. That you said I don't share any of it Well, so if that's what you want and you have the opportunity to make it happen, then why don't you have what you want? Proper expertise is important, that's for sure. My calendar is available to you by simply clicking the button below. You can book a time with me directly. Let's take a look and discover what opportunities exist for you again. I believe you deserve the opportunity to get what you want. Hopefully I can chat with you. 10. 09 Client Case Study: Someone recently asked me if I was a fee based planner. And the answer to that is no. If you and I spend hours together and nothing comes from it, there is no bill for my time. I don't operate that way now. I thought, I demonstrate to you another case study gone through a couple thought I would do one more. This lady came to me recently because she had quite a tax spin down problem. You're going to see that. Let's go ahead and get to the no path. All right, so let's take a look. So, this lady, let's give you a couple variables here She was 55. She wanted to be done at 65 right? It's good timing now. This woman had a decent amount of capital and she had quite a bit of capital. So when you look at this, don't think this would only work for her. This works the same. If you take a zero or two off right, it's it's scalable regardless of your wealth. But this woman had $2 million primarily in banks so very liquid, and then she had $30 million of other money, mostly and brokerage accounts and in real estate. So if we get back to the buckets, right, she was like this. I mean, realistically, these air None. This is the ordinary income bucket. She did not have any. She didn't have any in the tax ream unibond bucket. And she had zero in the tax exempt over funded insurance bucket. She had all of this sitting in the capital gains bucket here. Now, if we look at that, if we get back to the whole teeter totter at distribution, she's like this, right? She is predominantly. I'm 100% of her money sitting over on this side. Now, from a standpoint of how much money she can, you know, distribute to herself. She can, without a doubt, maintained her lifestyle for sure, right, Like this woman's got a lot of money. But I asked her the same thing I asked you in the video. I said, OK, well, if we look at everything you have here as a pie and it comes time to finally begin using this pie using your money for your lifestyle and everything you want to do, how much of this do you want to share with the I. R s. How much do you want A carve out for them? And of course, she said, Don't want to give him a thing, right? I don't give anything. Well, unfortunately, she is not set up that way just yet, right? She's gonna have capital gains tax. Of course, she's gonna have continued taxes and a brokerage accounts as they continue to earn. She's, um also without a doubt at her income levels. She's gonna have 85% of her soul. Security means tested for sure. So I asked her that, too. I said, You don't need it right? She's like, Of course not. I said that you've been paying into that thing a lot. If you could get your Social Security, would you want it? And she's like, Well, yeah, absolutely. I would want it. Okay, so the only way you can get it with this type of an income level, of course, is if you're showing a tax exempt status and so that it's not means tested. So here's what we look to do. These were two options for her. She ended up choosing 1/3 1 but I'll get to that here in a moment. So we like to do is that's that's just play with this two million. That's liquid. If you recall back in one of the previous videos prior to 1988 you used to be able, with the stroke of a pin. Just dump all that money one time into an insurance contract. Have all the benefits that we talked about earlier. But the government doesn't allow you to do that anymore and avoid being taxed like an IRA type of an account. So what she could do is we've got a 10 year period of time. We could just bleed it out over time. We could do $200,000 a year, and we could just slowly transfer this money like from one pocket to the other and put in a position to be a little bit more balance. She still would be predominant here, but she would have them about $2 million in the insurance. Now that would allow her some distribution capability to come down, potentially to offset what she has to take out of this. But but the lifestyle she wants, she actually wanted to be able to do a little bit more now again. Listen to those words, please. They're important this in about selling insurance about what she wants to do. But that's all we can demonstrate for her. So could she qualify for a policy for buying the smallest death benefit with a $200,000 premium of? Of course she could. So then we demonstrated to her Well, what if there's a secondary option? What if we use this two million? But we broke it down into two payments. So $1 million for two years, and then we stop. And now we have eight years of not funding this thing, which creates a void at a 1,000,000 bucks a pop. So about an additional $8 million. So at this age, it 8 65 when she begins, when she begins to divest from these accounts, if she divested from those, let's just call it 10 million. And she paid two million in capital gains tax, right? So if she divested $10 million payday capital gains tax and dumped that eight million into this thing now, her teeter totter is a little bit different now. Should be sitting here with about 20 million. Um right. Yep, and she'd be sitting here with about 10 million the 1st 2 and in the eighth. Now her distribution is seriously more balanced. Without a doubt, she can pull enough out of here to maintain her lifestyle and created a tax exempt structure for herself and get 100% of herself security and qualify for all the government cheese she wants. She could even move to California and not have to pay the state income tax because she's not even showing any income. She liked that one a lot. So she asked, Well, how aggressive can I get? Can I get this balanced even, you know, even more. Can I get like this, right? Haven't even better. Well, unfortunately, we weren't able to do that. Based upon her age and her health and everything else that goes into those applications, the maximum I could get for her was a was an insurance policy. With the premium about 1.3 million. That was it. All right, so that's what we did. So we put her in a position to be greatly balanced here instead of so lopsided and then her distribution is incredibly strong. She can pull more money from this of tax laws of real favorable or Portman are pulled more money from this. But either way, no matter what, if she's coming down the mountain, she's going to be tax exempt, and she's gonna be able to play that game with additional benefits, etcetera, and maintain use in control of her money. So this was a great example that I wanted to spend a couple minutes to share with you and again. Please, don't be, You know, don't look at the the M and the 1,000,000 here. If this is 20 grand in the bank account and $300,000 worth investing, this kind of stuff works the same way. So I tell you what, you're going to see that little button the capability to schedule on my calendar. If you're interested in looking at how we can try to devise a strategy like this for you than I had asked that you click on that button, you get direct access to my calendar and you can book a time with me, right? So, uh, please do that. I'd be honored to be a resource for you and see what the opportunities exist 11. 10 Brother A vs Brother B: Hey, how are you? I appreciate your time again. I've been asked often about the difference with pre tax and post tax, as many self employed individuals were told constantly every year by their accountants or CPS that they should invest in the CEP IRA, you know, why does the government allow them to do over 50 grand into a CEP IRA? But most of them don't qualify for the Roth. What is the What's the big deal? Why is that the case and which one truly is better? If you could do pre tax or if you can do post text, there's a lot of misinformation out there. So this video, as you can imagine, I got a great new pad presentation for this one's quick. But it impacts so many people. So let's get to it. Okay, this is what I call brother a verse. Brother B. No, brother is our pretax brother and brother B is our post tax. Now, both of these gentlemen have $10,000 pretax to invest. Right? Brother A decides to do that very thing. He decides to defer the tax now instead of the for. I prefer to use the word postpone because that's all that he's doing. He's not saving anything on taxes. He is simply postponing them to his future self. He's literally telling his future self A. I'm not gonna deal with them now. You deal with them later. Let's see how that works. Now we have to use a tax variable. So let's just say 30% brother be decides. You know what? I want to pay the tax. Now I'm gonna pay the three grand. I have seven grand left over and I'm gonna invest in the exact same thing. Is my my brother a here and I double my money as well, but I have a balance of 14 grand now. What's interesting to me is how mathematically both of these guys get to the exact same place. There is a lot of just bogus information out there that literally says you have more money in the brother. A position I mean, 20 grand is more than 14 but it's just mathematically false. You haven't paid your tax yet, so let's just assume the variables stays the same. There's a 30% tax rate. So this gentleman brother, a widow $6000.30 percent 20 He would he would have a balance than of 14 grand. Mathematically, pre tax and post tax get to the exact same place every single time. Every time. Now, if they get to the same place every time, then why is the government more interested in your brother a position than your brother B? Seriously, we need to ask that question. First of all, it's proved that they're more interested on our brother B position. I I want to ask you have do you, um, qualify for a Roth? Do you make too much money? You see, there are income elements. Have you ever been told that you can't contribute to Iraq because of your income level, Right. Well, if so, why if they get to the same place at the end? What? Why is that? Why is that the issue? But there are income limits. There are also contribution limits. You can only do about five grand into a Roth IRA. That's it. So if we get back to that mountain conversation and specifically when we begin to distribute money, nobody can really get much money into a Roth in order to sustain them for their retirement . Certainly I mentioned that in those bucket conversations, we got major problems with them, so they get to the same place. But the government's gonna tell you, and many people will. You make too much money, you can't do it. And even if you could do it, you can't contribute much money in the first place. It's kind of interesting, isn't it? They get the same place. What's the big deal? Now? Let's look at our their income limitations in a brother a position? No, there are not. There are no income limits. You can make $3 million is W two employees and you can still contribute into this. You can, um I mean, you can be a self employed individual making millions of dollars and still be told by your C p a. To, you know, put $50,000 into your Sepp. So the contribution limits. There are contribution limits, but they are significantly greater. I'm told that I'm able to do 54 grand into a CEP ira, but I can do nothing over here now. Why? If I'm the successful, why would the government if this is you as well, why would the government want I want us to defer to postpone our tax. Interesting. Have you ever thought about that? Aren't they wanting to collect from us as much as they can? Now, why do they want us to be building an asset that they haven't collected on yet? Well, what's very interesting is the math behind this. The only factor mathematically, the only factor that determines the winner is the future tax rate. Now see, if taxes were actually lower then Brother A was brilliant. He deferred it 30 to pay it a 10. He only 02 grand. He won. He has balanced the fort of 18. But if they go up, he was eight. He lost. You see, mathematically, the only variable that determines who wins between these two brothers is the future tax rate. And who owns and controls that? Do you get to determine? I mean, let's go back to the pie. If you grew your assets and you got to choose how much of it you want to share with the IRS , How big would you make it? How big would you make that slice? Well, most people say again, I wouldn't give him anything. What can you do that with your brother? A position? Of course not. You have no idea how much they're going to take. It's an unknown. Great. So you don't make that determination. Does your financial planners make that determination? No. Do they know what it is? No. Nobody does. Nobody can predict the future. Certainly we can't predict it for a 30 year spend down coming down the mountain every single year that when we say you'll be in a lower bracket. Well, how do you know that for the entire life expectancy, it's impossible. The government does they own and control this calculation. Have you ever thought of it this way? Don't you see why they tell you you can't do this? But, boy, could you ever do this? Do you really believe in your heart of hearts that they're telling you is a successful person? Don't worry about a man. Don't pay us the 30. We're gonna make sure we collected it. 10 later, Please. I ask you don't believe that dialogue that you'll be in a lower bracket. All you got to do is read the CBO reports. As a matter of fact, I have a video on my YouTube um used be titled Outlays and Receipts. It Z now titled What The Government doesn't Want you to Know About Your for a One K and it goes through the table s five the proposed budget by category, and it shows you what they're telling us. So this brother and brother B position affects a lot of people, but very simple math and understanding the motivation behind it can really help people figure out where they're wanting to direct their capital. So when we look at your buckets and as I as I've talked about this previously, when we look at new money and old money, old money is what you've accumulated already knew. Money is your contributions. So we take a look for you. Where are you contributing? Does this make sense for you? Is this building what you wanted or is it building something you don't want? And we simply lay out alternatives and strategies and we look at what your opportunities are. So here's what I'd ask you to do. You're going to see the calendar button to schedule with me, right? Or a link for it. Do that. You can get direct access to my calendar and be booked with me personally. We can spend some time on the phone and even on a webinar if we need to look at some some of this information for you. So let's get something booked and let's dig into this for you and show you your opportunities, Dr Soon. 12. 11 Household Income and The 1%: All right, I've got a simple question for you today to consider. If you were to think about the entire United States of America and all the people that file a tax return in the United States, would you consider your adjusted gross income your household adjusted gross income? Would you consider it comin or uncommon statistically? Now, if you said uncommon, I'd have to ask him, follow a question and say, What was it uncommonly low or uncommonly high? If you said originally common that I'd ask you now, is that just common in regards to your current demographic, like where you are located or common across the entire United States? So understanding where you sit is a key component understanding what advice you should be following. Let me get to that here. You're gonna like this one. Okay, so I already drew some things out on my handy dandy note pad here. So what I want to look at is the household a g I now this columns for your guests and this column is the actual according to the federal government, and the most recent tax data is from 2014. So if I were to ask you. What does it take to be in the top 50% in household age? I have populations behind you. Half the population makes more money than you. Most people put it somewhere around 40 grand in the top 25%. Now 75% of the population is behind you. I get a lot of people that say 75 grand, the top 10%. Not only 10% of populations above you. 90% of the population does not make a much as you do as an as your entire household. I get a lot of people that will say 150. Okay. And now the top five man, 95% of every single household that files tax returns. It doesn't make a Muchas you. This is where I'll get a lot of people that will often say, like, 300,000 bucks a year. Okay. And now the infamous one percenters, right? Remember all that stuff? We are 99. Couple presidential elections ago, these guys and gals were referred to as the corporate jet owners and flyers. So obviously there's a huge political talking point about the one percenters. Do you think it takes tow to be in the top 1%. And I typically get people that say a $1,000,000 or more. I've had some people go crazy high. Um, I had someone tell me they actually think it takes 50 million bucks a year to be in the top 1%. So now let's look at the actual In order to be in the top 50% in the country, you need to make about 38. Most people get this one pretty close to be in the top 25 about 78 and again people get very close to these 1st 2 But they start to kind of separate here in the top 10. It only takes 133,000 as a household to be in the top 10%. And this is where a lot of people start to miss This gap here to be in the top five as a household, you need toe show on a G I of 189,000 and the one percenters 465 grand a year is all it takes to be in the top 1% in the country. Now for the individuals that I work with. Some of them might be down here, but almost everybody I work with desires to move up this percentage chart here, and that's a critical component because what I want to look at also is the percent of taxes paid by each of these. So the top 1% pay 39.48% of all federal income tax is just 1% of the population pays almost 40% of our federal burden. The top 5% pay 59.97 5% pain. About 60% of the entire federal tax obligation is crazy. The top 10% pay 70.88 the top 25 86.78 in the top 50 97.25 meaning half of the population are responsible for less than 3% of our tax burden federally. But let's get back to that. Are you comin or uncommon? I'm confident that if you're watching this, you fall in this arena that you fall in being statistically uncommon. So my question to you is, why in the world would you follow common advice? No, let's look at this What are all of these people here told to do? Every one of them is told to to further tax to the future date. They're told to shove as much as they can into their I. R A were there for a one K, and they're told that they won't be in a position to save on taxes. Now, look at this. Isn't this interesting? Doesn't it seem to make a little sense by these people here cannot do a Roth IRA. The federal government can't afford them to be doing that. This the federal government certainly takes the tax now today, but also wants to be in a position to take the tax in the future from these people who have the ability to actually create wealth. But I find it so fascinating that the one percenters are given the exact same advice as every single person on this chart. Literally tell me something different that everybody is told to do in a traditional financial planning sense. Everybody on this chart is given the same advice. So if you are, in fact uncommon, should you be following common advice? The answer to that is obvious. Absolutely not. And I'm sure earlier what I asked you if you were to take your overall pie that you're looking to build all of your wealth. And in the future, when it's time to finally use that wealth, you get to decide how much of it you want to share with the I. R. S. How big would you make that slice if it was up to you to carve it? I'm very common. You said none of it or some form of that. Well, okay. Is that your current exit strategy? Are you set up that way? Are you in an uncommon position from an income standpoint? If so, man, I urge you to pay attention to these conversations and at the very least, well, let me ask it this way. Do you trust your current plan enough to get a second opinion? So let's do this. Let's at least take a look and where you're sitting, what you have in the opportunities that exist for you to get what you want here with. With this pie of wealth that you have, you can click those buttons, click the button, click the link that connects you to my counter. You can schedule right on my calendar. Let's have a conversation