Nelson Nash: Avoid Paying Taxes Legally!!! (13 of 30)

My contribution to the financial world is from my Austrian background. I saw that your need for finance during your lifetime is much greater than you need for protection.

And the life insurance companies have been advocating solving for death claims. Oh, by the way, if you have an emergency of some kind, you could buy a false alone tied you over.

All you need for finance is much greater. Solve for that totally. And if you do, you go ahead and put up a Shabbat death claim here. You can't get it past the underwriters, you'll have to end up insuring everybody you have an insurable interest in. For instance, years ago in the late 80s, two associates and I sold UAB Department of Medicine this concept. That's a world class medical school we have there to give you an idea of the quality of what goes on in the medical community in Birmingham again. Y' all know anything about pro football?

Well, how about Tom Brady? Y' all know him? Oh yeah. All right, about what? Five years ago, first game of the year, he got hurt. They tried to get it fixed in New England. Nobody could fix it. Well, guess where they send him? Birmingham, Alabama. Andrew, Andrew's fixedie. He spent. Bernie spent six months in recovery in Birmingham.

He owes his career to Andrew. Well, how about New Orleans Saints? New Orleans Saints. Tom shove drew Bs, same as Tammy. Six months recovery. Yes sir. Andrew did it. So that gives you an idea of what we got there. All right, we sold U of D, Department of Medicine. We had a good contact there that you guys are going at it backwards out there in the financial world. You're leasing high speed copiers and medical equipment, all that kind of stuff, when all you really had to do was was buy high price life insurance on all the department heads. Now after a couple of years, you got a lot of cash values. They'll go buy the copiers and so forth and lease them to these other guys. Lease these other medical. These other departments that had caught on. You got a captive customer there, they liked that idea. Well, would you believe that? So they bought high priced life insurance on. Yeah, all right. Would you believe that less than three years went by, they had their first death claim.

They didn't buy this for death benefit, they bought this for solving the banking function. Well, one of those doctors, Bob, died of a severe case of lead poisoning. You know what that is? That's a bullet to the mouth. You take that stuff orally, short range and hyperlock, it will kill you.38,45 caliber size. Yeah, one dose is enough.

If you place it correctly. All right. Now, just a few Years after that, Dr. Whitaker was a nickname down there. And he's in a bike race up in Nashville. His bike got tangled up with another bike, landed exactly wrong. Broken neck. All right. In comes that great big goblin money. Do you know that those two death claims exceeded their premiums? Total premiums for about nine years.

This does happen. They didn't buy it for death benefit. Do you all understand that when I conjured all this up, I had to load up on me. I skipped my three children. I bought insurance on Mary. We bought insurance on grandchildren and now great grandchildren. I insured four business partners that were in the real estate business and one in the life insurance business. Would you believe I've already had two death claims?

I didn't buy it for death benefit. I bought it as a place that I could put money. Dean. That I could borrow to pay off both snakes and dragons. They were charging me 23% interest back then in the early 80s. That's why I bought it. But this real estate guy, he and I bought a piece of property together. And partnership, I bought insurance on him.

Now, four years later, we sold property into the partnership. Right? But once an intrudial interest is established, that's yours for life. They can't take it away from you. I had nothing to do with him the next 10 years, Bob. During that 14 years, I had paid into the policy 47,000 premium. But I had borrowed out 48,000 to pay off the banks and such. Now, when he died, Stephen, what happened to that $48,000 debt? Gone. Gone. And then that $207,000 death benefit going to be tax free. And didn't that cancel out a lot of mistakes I made in life before? Yep.

That's the power of this stuff. Now, my insurance partner, I had two small policies on him. And I didn't again buy them the debt benefit. But he died anyway. Whatever. By the way, that real estate guy, he died of a heart attack sitting in the doctor's waiting room. Wait till he's 50 years old.

It does happen. All right, so these are positives here. This is the negative.

Now, at the end of the year, the directors of the Mutual Insurance Company calls in the accountants and say, how do we do on Will's policy this year? Now.

Time has passed. Will say two or three years, something like that. Yeah. How do we do a Will's policy? Well, you got to take into consideration those actuaries, right? They tell the rate backers, we can compute all this pretty good. Because this is probably the only real strong Variable of earnings. We got a guess they're on a conservative basis. We're not looking for high rates of return. We're looking for stability over a long period of time. That's rule number one. Think long range, think elite. Yeah, yeah. All right. All right. Now, they can be pretty accurate here. Deathline projecting. They can be pretty accurate here and just anticipating expenses because they've been at it for quite a while. But these are positive, these are negatives.

Well, the net result would be an ever increasing pool of cash. Well, because of those variables, there's a possibility to get below that projection. Right.

Somebody got to hold this thing up. That's normally the bucks in the stockholder. So the actuators shall, the rate makers. Y' all got to take that into consideration.

We don't have any stockholders.

So consider that line that projected, that's going to be constantly increasing.

If we can produce that for a premium of one, whatever one is, don't y' all collect one. Collect 1.1. That 1.1. That 0.1 is the capital that makes all this thing go. And so how did we do on Will's policy? It said, well, time has gone by and we collected 1.1. But then it only took point 8 to do the job this year. Well, that means the directors can make a decision with 0.3. Now, if the directors are halfway smart and everyone I've ever seen is.

They will put some of them in a contingency file. It does not show up in cash values. Curtis.

Contingency fund. They distribute 0.275 and call that a dividend. Now, the general public out there sees the word dividend. And every time they say, here comes the IRS or whatever you have in Canada, here comes the taxpayer. Wrong. They that is a return of capital.

A return of capital is not a taxable event. Ask any cpa. The Supreme Court ruled out years ago in the USA that the return of capital was a mutual company. Now, if you take that dividend and chunk it back in the policy by pay to prudential Insurance at no cost. Actually, what you have is a constantly increasing food money. It can't go backwards. It's impossible.

All right, now, those dividends can become humongous. Now, maybe I told y', all, I have. I had. Okay? I was in a family of four boys. I'm number three. Number two. My next older brother.

He died at age 52 with a heart attack playing handball with one of his sons. First day of January, 1981. Now, brother.

He was a big time jock.

Three years older than me. So he was involved in World War II.

He.

In the freshman year played quarterback for Auburn University on scholarship and then went in the navy for a couple of years and whatnot. Anyway, when he got back out of the service and finished college, he got in the life insurance business with Franklin Life. Y' all ever heard of them? Yeah. All right. Anyway, he fell on his face and he, it didn't work for him. So he went back to football coaching and such. He had a state championship in Georgia one year. Okay. Then his brother in law convinces him his brother in law is a state farm agent in Griffin, Georgia. Convinces him to get the insurance business with state farming. So back there in 1959, I'm 28 years old and these are my forestry days in eastern North Carolina. Brother sells me this policy when I'm 28 years old for 388 a year. And don't y' all laugh at that.

Everything is relative. He don't got military background in here at all. All right. Do you know what a second attendant Faye was B. Fay was in 1953? $213.75. You got that every month whether you need it or not. And you needed it. Yeah, yeah. $213.75 per month. Now you got $75 housing allowance and you got $42 of food allowance. But do y' all know we got along very well on that. It's all relative to what. Yeah.

I'll bet my brother bragged to his peers for at least two months about what he sold me. That'll give you an idea of what they was like back in those days. Now I was making $10,000 a year back in those days. Now a 28 year old making 10,000 a year at that time was above the average bear. Now.

These are the last 25 years of the actual performance of this policy. This is history, folks. This is not fantasy, this is not projections. You can't argue with history. Now here's the legend here. The red is the premium. This light colored, whatever it is, guaranteed cash value increase per year. The blue is the annual dividend and this is the total of the two. All right, so back there in 1980.

Yeah, nine year old I paid 388. But the guaranteed cash pay increase was $500. The dividend that year was $2,000. Some of them 2,500. Well, I paid 388.

Now can they take that dividend away from me? All right? Now I don't know what it's like in Canada, but there's lots of stock companies out there. They think all those dividends y' all talk about, they're not guaranteed. Now, once they're paid, Richard, they're guaranteed. It can't go backward. They cannot represent the dividends. So all that conversation they come up with is moot. The only dividend that's not guaranteed is the next year. But once it's paid, that's it. All right. Now, do y' all notice that the dividend went up the next year?

Well, you may not be aware that in 1991 there was a reversal of the economy, but the dividend went up.

All right, Mark, you notice it went up the next year. We've been around a long time, so I watched that. Yeah. Sarah, what did she say? I said, I've been around since 77.

Got a T shirt. Right. Okay. Wear proudly. Yes, sir. Anyway. Well, these reversals in the economy, but yet the dividend kept going up with state farms. How do you do that? Well, remember the contingency fund, Stephen? My answer is they said that's why we have a contingency fund. There hasn't been a reversal in the economy. But look, we've got money. We can just dip in there and pay the dividend that we projected. Well, when it got to this point here, they said, whoa, wait a minute, that dividend scale, dividend contingency fund has got a little skinny on us. So let's just pay last year's dividend. Well, here they, in my opinion said we need to fatten up that dividend, a roof of shovel, that contingency fund pool again. Let's reduce the duty and put more in the contingency. Now, you notice that when you connect these and you connect those, they're parallel lines. Got that? Now you notice there's an aberration about every four or five years or something like that. That's just life. All right, let's fast forward. Bob, get out here to 2005. At this point, I'm 74 and a half years old.

I paid 388 premium guaranteed cash pay increase that year. $800 dividend, $4200, 5000 total increase. I paid 388 that premium. Actually, I wrote state farmer a note, change the dividend election, send it to me from now on.

Now, Stephen, I don't need the money, but I want to be able to show people checks. Because you see, I'm out there teaching this people that are not in the insurance business, trying to get them to understand how this stuff works and what can be done. Well.

I want you to show them checks. Because you see those people? If a life insurance person says dividend so and so and use the number, I guarantee you it'll go in one ear, right out the other. Those guys gotta be lying. They all those guys in the life insurance business, they lie. Well, if you can't believe a check.

Curtis, I can't help you. Okay. All right, so here's the first check.

3877. That's just ten times the premium. That's all.

Now, that was dated in 2004.

Now, the next year, the dividend is 39.27. Well, 39, 27 be better than 3877.

All right, here's the next check. 288. Now, y' all tell me what happened in the financial world in 2008. Please. They almost brought the whole financial world crumbling. You got that right. But what happened to my State Farm dividend? Well, you went up 39, 73.

All right, now here's the next check. This is 2009. 4015. It still was going up. Now, y' all don't see any more checks, do you?

You see, Mark, I got a letter from State Farm the next year. See that 8. August 24, 2009 was when I got that check. Okay. Those checks kept coming in August. In August, not that same day. Well, in early July of the following year, I get a letter from State Farm. Send me your Social Security number. Again, clerical errors do occur. We want to make sure we got it right. Because that $4,057 check that you'll be getting is going to be a taxable lip. And you go get a 1099 at the end of the year to put on your income tax.

Yeah, y' all got that. So they changed the tax code. Oh, no. Oh, no. Pay attention.

I have recovered everything I put in the policy.

At that point. I had nothing in that policy.

Nothing.

Now, notice the verbiage here when I reply to them. No, you are not going to send me a 1099. At the end of the year, you are going to change the dividend election to buy a paid a petition. Silent. Regardless of my insurability. I'm uninsured.

How about them apples?

Who runs the show? Policy owner. Policy owner. What is the insurance company administering? The policy administrator of your system. The Gophers. Yeah, yeah.

Yeah. I've had the privilege of calling a number of presidents of life insurance companies gophers. And they understand. Yeah. Because that's the problem. You know, they're care. They care enough that the administrative part of this whole system. And they do a fantastic job. I mean, you can't get better efficiency than what I see out of the insurance industry. All right, now.

Let'S see here. Come on. Okay, so that was 2009-right? Now, you notice that I only have 1, 2, 3, 4. That's.

I have about.

$2,400 in that policy. That's all my cost basis at this point. $2,400.