How To Unlock Generational Wealth, EASY!

Sometimes people will ask, well, if you get a policy on my kids or my grandkid, well, what happens when I'm gone? Well, if you, if you have a policy on a grandchild and you're no longer with us, you as part of the application process, you get to choose. It comes right on the application who will become the contingent owner.

I saw this video from Shaq describing. He was in an interview and he was talking about wealth. And the question that came up for him was, how do you address that with your kids? And he said, well, you know, one of the things that comes up with my kids is they use language like, we are so rich. And he says, I'm rich, not we. He's teaching his kids that they have to forge their own path. You know, I want to make sure that the kids understand that, you know, this is something that's really important for them to carry on and to keep going.

What I really love about the way that Nelson was sharing that knowledge, it really does cause you to rethink your thinking because he's using a completely different analogy. But he's tying in the implementation of the process through a system of policies where multiple lives are insured across multiple generations. And so when you talk about the income that that creates in the forestry business, and you talk about the windfalls that get created that are passed on to the next generation, as he mentioned, the system becomes self sustaining, but it takes time for the buildup and the generation paying the premium can most easily afford them. So when you've got. When the kids move out. He was describing how you get an instant raise.

Yeah, he said, yeah, $1,500 a month suddenly showed back up in my.

Yeah, and then he talked about being able to easily pay the premiums on policies for grandkids and things like that. And then when death comes, the system becomes self sustaining, but it gets larger and larger and larger. And so this is the absolute truth for families like ours, for families like our clients who've really embraced the family banking system aspect of it. That's like getting into the forestry business.

We were talking the other day and I was sharing this on a call with some of our team members. So, you know, we're at present, we're working on our second book, Jason, and in that book, it's, you know, centered around the idea that cash follows the leader. You know, there's an example that we're putting in there of a situation where, you know, husband and wife, both about 45 years of age, they learn about IBC, decided want to proceed. They're setting up a corporate policy on one of them and another policy on the, on the wife that's personally owned. And then they get policies on each of the kids. They're, they're doing about $2,900 a year, $3,000 a year on each of the kids that are about, you know, 9 and 11 years old. Well, they were already, all they're doing is redirecting money. They were putting money into RSP contributions before that's getting redirected. They were making bi weekly extra accelerated payments on their mortgage. That adds up to $20,000 a year of extra that they were moving there. That's getting redirected now and it's going to, to build equity and policies instead and then, you know, a variety of other things. And they were sending 250amonth to resps, which is what they, they had known. And so they have a, you know, substantial account balance there and they can use that, that's fine. But they realize they don't want to participate in that system anymore. In fact, they've tapped out all the grant potential anyway because they've put that much in. So they're not even getting the, the grants, the Canada Education Saving Grant anymore. They've maximized that. And so all we're doing is redirecting that flow of money now into a policy system. Well, you know, following that example through, if they, you know, continue to fund premiums, they fund their premiums, let's just say for, for 20 years, ideally longer. But you know, just to take a snapshot view, let's say they did it for 20 years and they continue funding the kids policies until, you know, about age 70. Then they're going to be able to take a tax free income using the strategy that we teach people to do in the way that we're able to make that happen in Canada. Yep, they're going to have about 90 to $100,000 a year in tax free income from these four policy sources. That includes using the kids policy, about 7 grand a year each off of each one of the kids plans. Now if they do that for 26 years, that takes them out to age 96. We'll make an assumption it's all just a spreadsheet and a chart. But take them out to age 96 and we're going to assume that that's, that's the, the year that they're no longer with us. Right. Well, there's going to be a tax free death benefit that, that follows somewhere in the 5 to $700,000 range depending on, you know, how things play out with their policy system. Well, that money is going to come back to the kids. The kids will have outstanding policy loans because they've been using some of the money. The policy loans will be around 300, 350,000. Pay off the policy loans and the kids still have, so they have a brand. It's like the policy is now well seasoned. It's been on the books for whatever, 45 years or what have you, 50 years, and there's no policy loans. Plus they also have an extra $300,000 of tax free money. Now the kids are in their early 60s, 61, 64 years old. They fund their own premiums for a few more years. Starting at age 70, they want to take a passive income. Each one of these kids will be able to take roughly somewhere between $28,035,000 a year in tax free annual income for the next 30 years.

Well, Nikki, is that the kids have.

To pay the premium.

I was actually having a conversation with Rebecca this morning and I was chatting with her because I saw this video from Shaq and he was describing, he was in an interview and he was talking about wealth. And the question that came up for him was, how do you address that with your kids? And he said, well, one of the things that comes up with my kids is they use language like, we are so rich. And he says.

I'm rich, not we.

If you want to start a new business, you're going to have to pitch that opportunity to me. No different than anyone else who's looking for an investment from me in that business. If you want to pursue a college degree, university degree, I'll help you along that path. But just understand something. We're not rich.

I am.

And he's teaching his kids that they have to forge their own path. And so we were just having a conversation about that because Rebecca was saying, I want to make sure that the kids understand that this is something that's really important for them to carry on and to keep going. Because she didn't know that there does come a point. She understood it for adult policies, but she didn't know that there comes a point with juvenile policies where they're offset, eligible as well. And she goes, oh, I didn't, gosh, I didn't know that for the kids policies that there would come a day where we could choose to pay premium or choose not to. And I said, don't ever tell the kids that.

Ever.

The message to the kids is you must pay the premiums. In these policies even when you receive windfall, because that will happen at some point. You've got to keep these premiums going and keep the system going as well.

You know, having an 18 year old granddaughter and an adult daughter and just the question about how do I open a policy for either of them with you as the owner. So great question, Freda. Very simple. I mean all the insurance company needs to have is a demonstrated reason to establish what's referred to as a beneficial interest. Right. So generally speaking, and I'm saying generally, the path of parent, child and grandchild is a direct line of, there's a financial integration between family members of that method. So the beneficial interest is generally established. There's not usually a lot of additional stuff that needs to happen to make that happen. So it's very easy. We have clients all over the country that own policies on their children, adult children, as well as on their grandchildren. A grandparent getting a policy on a grandchild is very, very easy.

Sometimes getting a policy on an adult child, depending on ages and there might be a little bit more clarity necessary on what's the reason for the insurance because there still needs to be a rationale for the insurance that needs to be demonstrated to the insurance company. But generally speaking, I hate to use a wide paintbrush. It's not problematic to do that. It's pretty simple. And great grandchildren as well. Also a pretty easy method. I have yet to do a policy on a great grandchild, but I know others who have done so. Yeah.

And thank you for being a die hard believer in ibc. That's awesome. We interact with folks each and every day who are.

Life licensed. I think there are well over 100,000 life licensed advisors in, in this country and so few have even a rudimentary understanding of participating dividend paying whole life, let alone the implementation of a process. And so it's always inspiring to see someone in the profession.

Get excited about it and want to.

Determine whether or not it's something that they want to pursue in their own, you know, their own practice. So yeah, if you're feeling inspired.

Go for it.

Now speaking of inspired, circling Back to page 72 of the book. So again, tying into these, you know, even distribution of age classes, one of the things that Nelson says on here.

One of the differences between the forestry example versus the, you know, the doing this through the banking system modeled using, using life insurance.

Yeah.

As each generation becomes grandparents, they life insurance on the grandchildren. If the message is passed on to each child bearing generation as they become grandparents, then you can create the same effect as an even distribution of age classes. However, in growing trees, this can be far more profitable than, than that because there's no forest fires, there's no plant diseases, there's no storms and there's no property taxes. So what you've created is perpetual motion in your family's financial world. And again, these bullet points on here are really quite fantastic. And for folks in our client community, we, on one of our client coaching sessions that we did, I think it was about a year ago now, Jason, we, we were able to play one of the great sessions that David Stearns walked through. David Stearns as Nelson's son in law, he's been on our podcast a couple of times, both wonderful episodes and David has done some great sessions at our think tank conference talking about his own family system and how, how their, their 26 system of policies was developed and on each of the bodies and how premium, you know, made sense to be allotted for this one and how some of the policies they have are actually ones that Nelson started that they've now taken over. So that's another thing that comes up is the transition of policies. And sometimes people will ask, well if you get a policy on my kids or my grandkid, well, what happens when I'm gone? Well, if you, if you have a policy on a grandchild and you're no longer with us, you as part of the application process, you get to choose. It cuts right on the application who will become the contingent owner. So as soon as you're getting a policy on someone's life that's not you, you have to nominate a contingent owner to take over that policy in the event that you're no longer around. And so sometimes it's the life insured person themselves, you know, it becomes, maybe becomes the grandchild, but if they're not old enough, then it needs to be looked after by a trustee. So you may have that path being, you know, you're the grandparent, maybe the parent of the child is the next in line to be that owner. And then when that person is no longer with us, then the policy automatically falls to the person that's a life insured. So this is another method of control that is available in, in a very simple, easy methodology of asset transfer that I don't think, I don't really don't think there's anything else like it, Jason, that I can connect it to in the financial realm where you can do that.

No, there really truly isn't. You know, embracing this in the family requires Continually developing a deeper understanding of the process in particular chapter that you know, that we're kind of drilling down into here today. But it also requires frequent communication involving the family, which for most people, the topic of money, just the topic of money alone. Never mind creating this amazing process that's going to be self sustaining and help the family create the lifestyle that they desire versus reacting to the one that they currently have. Well, the topic of money is taboo. Geez, don't bring that up. We don't talk about money around here. That's what the financial system is depending on. Listen, don't talk about money or topics like that in your family. Transfer control over the use of your money over to us. We'll do much better with it than you can. And you keep that money topic taboo in the family. Think about that for a second. Where should the control be? The control should be within the family. Not in the hands of bankers, certainly not in the hands of balloon head bureaucrats that are in government.

I don't think they've done anything to demonstrate they have the wherewithal to steward that capital. Not in my opinion.

Not a chance. Why would you ever assume responsibility for an unlimited supply of other people's money? The advantage, it's the advantage that this process represents. Create the lifestyle that you desire and create wealth that's indestructible. And wealth means different things to anyone, tuning in to anyone that we interact with. But the point is that it's yours and you control it and it stays in the family. I haven't educated a single family yet who have said no, no, yeah, we're not interested in that. We'd rather advocate that responsibility and more importantly, the opportunity to enrich someone else other than the family. Like, come on, think about it.

I was chatting with somebody yesterday, Jason. And I remember when I first realized, and we used to, we used to do this in our boot camp. We had a, we had a letter from a law office, an estate planning attorney's office that we used to use. And it talked about very, very high level what happens when somebody graduates, when they pass away. And for. If you're watching this, you may, you may not know this, but every single thing that you own is considered sold that day. So your cabin at the lake, your cottage, the art and stamp collections, you have any bullion that you've got buried in the basement? You know, you got silver coins or collectible coins or whatever, your, all of your cryptocurrency assets, whatever they are, assuming that someone can trace them down to you. You know, your, your rental real estate, the, your valuation, the valuation of any corporation that you own. So if you, a private business, you're a business owner, you have a privately held Canadian control corporation or multiple of them, those have to have a valuation. Now maybe you own a bunch of investment real estate in that corporation. Cool. Well, there's equity there, there's a valuation made for that. If that's a sellable business, there's a value made for that. And all of that gets tallied up and then you know, your investment accounts, whatever stock market mutual funds, whatever you have and all these different, all the bag of things you've got. And for most people, most people, the tax bill that must be paid is the largest and the most unexpected bill in a lifetime. And the problem is you're not even here to deal with it. You're leaving that problem and it is a problem behind for the people you love and care about. Someone, someone has the responsibility to take care of stroking the check to pay that bill. And the CRA has no sense of humor about it at all. They're not going to accept business equipment, computers and shingles and doors and all these other miscellaneous things that you may have that have to be trans transitioned into Canadian currency, whatever the acceptable currency is at the time that CRA will, will receive. Yeah. And for most people, the way that that happens is through a process called liquidation. Now when you hear the word liquidation, what comes up for you? Probably, oh, that's a deal. There's a deal to be had. Yeah, you know, there's, there's all these liquidation stores. You see them, they go up and they're going out of business. And liquidation, well, everyone knows that's where you go to get cheap stuff. You know, if you're a real estate investor, we have a lot of real estate investor clients. Well, they're, you know, they're hunting through. It used to be the classified ads, you know, but now it's, everything's digital. So you know, you're going through MLS or Kijiji or Craigslist or whatever it is and you're looking for estate sales. Well, you hear, see an estate sale that you, you're like opportunity, right? Everyone recognizes that there's a potential of a deal to be had there. That's because the family members are distraught and they have a bill that must be paid and they don't want to deal with all the stuff. And so everything that you, if you're the person that's passed away, you spent a lifetime building, spent a whole lifetime Accumulating, building and trying to create all this, it's all going to get torn down when you're gone and all out of it's going to get sold off at a discounted price. Which means what you think you're leaving behind isn't true. And so insurance, especially when it's well designed. Now first of all, the insurance has to be in force when that event happens. In order to do that, you need to make sure you have permanent insurance that will be there. So participating, dividend paying, whole life insurance is a pretty good thing to fit the bill that will come in and solve that problem. And it's there now to pay the bill so that everything else that you own doesn't have to be torn down around you and you give people peace of mind and time. We all need time, not only to heal, but time to be able to make good decisions without the pressure that's required and the timeline that's been put on the family from CRA to make sure that this, this bill can be rallied together. And here's the other thing I want to share about this. And this is something that people don't really realize. And Jason, we've talked about this before. You know, the day, the day that we pass away, let's just, we'll say you have an investment portfolio. It's in whatever, it's in stock market, I don't care. Pick, pick anything. And it has a value of $500,000 on the day that you, you pass away. But six months later when the bill's due and you're, you go to actually take the money out, the market's tanked and now the value is only $400,000. Well, you have a lot of less value. But the tax bill is payable on the 500 grand. Yeah. So you have a double, you have a double loss event that gets created in that scenario because you lack control. And implementing this process in your life can resolve a lot of those problems for people if they would just get Nelson's book in their hands and start, start their journey of education. Commit three and a half hours of reading a book, 92 pages, 77 of them. Have words and get yourself educated so that you can start making a different decision in your life.