Estate Planning on Zoom @ OCREIN | May 2021 | Estate Planning

Okay, um, welcome everybody, uh, to tonight's Orange County Real Estate Investor Networking meeting. Um, I hope, you know, uh, to get this meeting back live in a couple of months. Um, if you're out of town, I'm still trying to figure out how I'm going to accomplish that, whether I'm going to record the meeting live at our meeting spot again or what I'm gonna do, but I really, really would like to get back to live. Anyway, so a quick introduction on Bruce. He's gonna talk about eliminating reassessment under Prop 19, how to achieve ironclad asset protection superior to a C, S or LLC. There's a few things he's going to talk about here. The secrets of how the ultra-wealthy make and keep their wealth.

Yeah.

So I— these are all interesting topics that— and I've heard him speak before, so I'm sure you're going to be interested in what he has to say. Once he's done and all the questions are done, Then I'm going to open it back up and then we can network and discuss whatever it is that you want to discuss after his presentation. Okay, so Bruce, if you want to take it away and share your screen if you need to, go from there.

Share my screen right now. You tell me, can you, can you see my slides?

Yes, go ahead.

Fantastic. Let me bring this up full screen. I'd like to introduce, before I jump into our subject matter this evening, 2 other people that are on the call, one of which is Julian Peters. Julian is manning the chat this evening, and Julian is an enrolled agent. Briefly, an enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service. And by the way, I'm reading to you right from the Internal Revenue— site, service site. Enrolled Agent status is the highest credential the IRS awards, so we're very lucky to have Julian. He's also got a master's in accounting. He's also a licensed real estate agent. And we also have Gina Gaudio-Grace, retired attorney, fabulous individual. We've worked together for over a decade. Gina, unlike most people, who went to law school, who only took the course requirement of one semester of trust law. She took as an elective an additional 2 years of trust law, and she's also known as Dr. Gina because Gina has her PhD in entrepreneurship. She is wicked brilliant when it comes to our proprietary copyrighted trusts that we're going to be discussing this evening. I myself am a licensed financial advisor, real estate investor, In one 3-year period, I bought, rehabbed, and flipped over $92 million worth of real estate. Excuse me, I rehabbed and flipped over 160 properties and been involved in over $92 million worth of real estate transactions. I'm a business consultant, speaker, and author. I'm gonna zip through these slides this evening so we can get to the question and answer portion. And we, at the end, are gonna invite you if you wish to participate to a one-on-one consultation. It's a complimentary consultation to discuss your situation on a one-on-one basis. So who's this for? Well, heck, if you're a real estate investor or if you have assets in excess of $100,000, this is absolutely for you. You're gonna wanna stay tuned and take notes. Asset protection is a must just when everything you're working so hard for is going great, things can switch and change that quickly. I've seen it so many times. So let's get the protective mechanisms in place so that when and if bad things happen, it's not going to be a problem for you. The Titanium Vault Asset Protection Trust is the absolute right solution for you. What's a trust? Well, it's a contract. It's a contract between the grantor the trustee, and the beneficiaries. Those are the 3 parties that are involved. I like to say it's your rule book or the government will take control. It's totally up to you. What do I mean by the government will take control? Well, there's 2 basic types of trust, and many of you may have one of the basic types of trust that we're going to talk about, which is a living trust or a living will. That's the very common type of trust. Death trusts are testamentary trusts. They're created in a will. They do not exist while you're alive. They will require probate. And probate is a court proceeding. Then there are living trusts, which exist during your life. And because they are created the way that they are, they do avoid probate, whether they are revocable or whether they're irrevocable. Again, when most people that I encounter and they say, I've already got a trust, they do. They've got a revocable living trust or a revocable living will, pretty much one and the same, and they are great for probate avoidance and for naming who the beneficiaries are. Unfortunately, that's where it stops. They cannot, by design, they cannot offer either asset protection, which our trust does, which we're going to take a deeper dive into, and tax mitigation, which puts it into a completely different category. Now revocable trusts, by the very nature of what they are, do not, cannot offer asset protection. There are some irrevocable trusts that provide asset protection. Now people sometimes get the very wrong idea of what a revocable, irrevocable trust is. Irrevocable is actually a good thing when and if they're our type of trust because our trust is highly modifiable. You can change the trustee or trustees or beneficiary or beneficiaries at any time with the stroke of a pen. Frankly, if you wanna take this and extend this out, the only thing that's irrevocable is the trust itself. So if somebody woke up one day and had an epiphany, heck, I don't like operating out of the trust. Now, I've never had that happen with a client, but if that happened, they could literally buy their assets back And if you will, change things to how they were before they had the trust. The only thing that's irrevocable is the trust codicil itself. Now this is a, I feel, a really informative slide because it really shows the difference between a C entity, an S entity, or an LLC, a holding company, which we'll talk about, a land trust, which some of you are currently using For asset protection and a living trust or will and R trust. So R trust absolutely eliminates capital gains. We'll talk about that. Defers income tax, avoids lawsuits, avoids judgments and liens reaching the business, avoids probate upon death, avoids gift tax, estate tax, ensures the beneficiaries' assets are able to be transferred. is a multi-generational wealth accumulation tool, which is huge because heck, what are we doing this for, guys? We're doing this so that our offspring, our loved ones, can enjoy a better life and lifestyle than we did, and it avoids annual fees. So we'll first of all talk about asset protection, and then we'll move into the tax mitigation piece. So Let's talk about corporations and LLCs. First of all, they plain and simple don't protect you like you think they protect you just because. And the because is what we're going to focus on now, because it's easy to pierce the corporate veil. Easy to pierce the corporate veil. And what's the common allegation? And it's a 3rd-year law student allegation, very simple to prove. Alter ego. Alter ego. So let's talk about what some examples of alter ego are. The simplest one is insufficient corporate separateness, that yellow on the bottom right. And what they're really saying is you, if you're the managing member of an LLC, are acting as the puppeteer. You've got invisible strings going down to you the entity. So you are controlling you. There's not enough corporate separateness, and therefore alter ego is absolutely a viable argument. And these are also other arguments that can be made that can blow up an entity: inadequate capitalization, insolvency, lack of corporate formalities. Heck, I'm going to tell you that Roughly 50% of the corporate formalities that I see from clients, they're not being done properly and/or consistently. And if those were challenged and brought into court, that's another way to attack and pierce the corporate veil. Now, how often is corporate veil piercing successful? Well, this study that was done by this Wake Forest Law Review a couple of years back, they were able to pierce the veil at the state level 39 places. percent of the time, 41% plus of the time at the federal court level. Heck guys, that's almost a 1 in 2 shot that if they allege alter ego and want to go after piercing the corporate veil, utilizing any one of these different strategies, they're going to be successful. So obviously corporate veil piercing is not that difficult. Also, there's a newer kid on the block It's called reverse piercing. It's when a lawsuit against you personally can allow the plaintiff to recover damages by reverse piercing the corporate veil, allowing them to reach the assets in your business entity as well as your personal assets. Closely held entities are at high risk. So you may have a car accident and you may have your house or investment properties in various LLCs and to get satisfaction on that car accident, they're saying they can go into those LLCs and clean them out. Scary thought. Entity stacking doesn't really give you any more protection. That's when you may have a holding company, and the 2 states of choice these days are either Wyoming or Nevada. Pierce one, pierce them all. And you could also be opening up the door for taxation in multiple states. For instance, Many of you on the call might be investors, you live in California, but you may be investors in what I call the Rust Belt because it's very affordable housing. And that's a good play, right? Michigan, Ohio, so on and so forth. And you may have LLCs on those properties in those states. But, and you may even have a holding company for those properties in Wyoming or Nevada. But many times the person who set up that structure for you or coached you into that structure forgot to tell you that you have to also have what's called a foreign filed entity for each one of those LLCs in California. And that's $830 for each one of those entities, plus you had the responsibility of filing a business return for each one of those entities, I should say. And that's a $750 to $1,500 occurrence. If you've got 10 properties, you're looking at $8,300 annually, and you're looking at another roughly $10,000 just for doing the filings with the IRS. That's $18,000 a year or $180,000 that you're going to be spending just to support those 10 entities over the next decade and/or every decade thereafter. Very expensive proposition, very time-intensive as well. And if you don't do the foreign filing, you could be on the hook for $12,000 per entity per year. That's huge. Our trust simplifies all of that. There's no filing requirements for the trust as an entity. And with the properly constructed trust that we've got, it's like a 10-foot-thick piece of Lexan. Nobody's getting through. Therefore, all of your properties can go into one entity with the assurance that you're not going to have it pierced because it's quite literally bulletproof. We have many different combinations of what the trust is all comprised of, but some of the key components are the fact that it's dynasty, non-grantor, irrevocable, discretionary complex and its spendthrift. Almost all states have statutes that impose criminal liability on adult children. Now, this is a case of what's called filial responsibilities. And this person— and by the way, California ascribes to the filial responsibility statutes— this guy in Philadelphia ended up, because his mom got into a bad car accident She ended up racking up a $93,000 bill, and unfortunately she didn't have the money to pay for it. Well, you would think that the hospital would have written it off as bad debt, but they decided to get strategic about it. And now we're seeing things because of COVID because of so many hospitals not having revenues. And this happened, by the way, before COVID In this case, the hospital decided to invoke the filial responsibility statutes, went after the guy, And ended up taking $93,000 out of his bank account. As crazy as it sounds, he went atomic, of course, and he fought this case up to the Supreme Court in Philadelphia, where he had spent more money, more time, ended up with the same result. He ended up not getting his money back. So Again, when you're set up in a trust, God forbid, filial responsibility statutes cannot be invoked against you because you will end up having— excuse me— you will end up only having several thousands of dollars in an account that could ever be attacked and taken with a lien, levy, or judgment. So let's talk about the statistics. You stand a 1 in 3 shot of being Joe Citizen walking down the street of getting sued, a 2 in 3 shot if you are a surgeon. Heck, if you're an investor, from the studies that we've done, about a 50/50 chance of getting sued at some point in time because of your being an investor.

109,000 lawsuits.

filed each and every day. Average business cost for the lawsuit, $72,500. And there are 91,000 PI lawyers out there all looking for their next case to be putting food on their table. I don't blame them. It's just, that's how it works. That's the system with which we all live. Property owners are liable for injuries. You know that. And unfortunately, slip and falls are the number one occurrence. And they've increased by 30% since 1980, roughly 25,000 slip and falls daily. This is the case of a person who unfortunately got sued by his contractor. He didn't want to pay the contractor's bill because the contractor was doing work not to code, and it ended up costing him $150,000. If he would have had one of our trusts, this could have never happened to him. Now a lot of people say, hey Bruce, I'm covered. I'm just going to insure up. I'm going to get massive multimillion-dollar umbrella policies. And I encourage you to get and/or keep your umbrella policies if you've got them. But here's a huge loophole or a hole in the boat that you may not be aware of. Let's take the McDonald's hot coffee spill. That was a $3 million award that the woman won from the hot coffee spill, but this is the part that you might not be aware of. The part is that $2.7 million of the $3 million award was in punitive damages, and because that was the case, punitive damages are never paid From an umbrella policy, let alone the underlying general liability policies. So you know who is on the hook for that? The owner of the franchise. Same thing with the dog bite. You may get a multimillion-dollar umbrella policy, but it's not going to cover $6.9 million. So that excess amount would potentially be coming out of your back pocket. Car accident, that's a multimillion-dollar accident, same thing. For real estate investors, we all know asbestos claims from cottage cheese ceilings, mesothelioma, which is a byproduct, lead-based paint, radon claims, toxic mold. I mean, these are all types of additional liabilities that we all potentially could be on the hook for as real estate investors. Big, big gains, but multiple exposures. This is when you may also have— I don't know how many of you are, but I'm going to conjecture that a number of the folks that are investors that are on the call this evening are what I call short-term buy and hold. You're either doing wholesale flips.

Mm-hmm.

Or you're doing fix and flips. Either one could subject you to being cast as a dealer. Dealer status is something that the IRS invokes on a very indiscriminate basis. The classification or what comprises a dealer, well, the IRS basically says if you bought a property with intent to make a profit, which is kind of crazy because why would you buy a property unless that was your intent? I only see it being given to people who are short-term, either like I said, fix and flip or wholesalers. But if that gets cast on you, it could be a very dark day for you and big gray rainy clouds because you're now going to get moved over to ordinary income. And as a byproduct, you're going to be imposed with self-employment tax of 15.3%, Medicare surtax, likely alternative minimum tax. And by the time the whole thing is said and done, over 50% of your check could be going to the government because you got classified as a dealer. And you also get precluded from doing certain types of exit strategies. If you don't own the properties because you've conveyed and you've sold them to the trust, which is exactly what happens You can't be classified as a dealer because you don't own the properties. It's a beautiful thing when you have a trust. Our trust is not subject to tax liens and levies issued against beneficiaries or trustees, divorce and alimony, child support, creditors, governmental agencies, or third-party claims. Also not subject to court's jurisdiction for turnover orders unless And in the case of fraudulent conveyance, let me give you an example of what fraudulent conveyance is. You're in an active lawsuit, you've been served, you know it because you got served, and you come up with this idea of creating a trust in order to shield your assets from being attached. Well, that's a pretty slam dunk case of fraudulent conveyance. So We need to talk about that in a consult on how and if we can take you on and so on and so forth. But my point is, notwithstanding fraudulent conveyance, you have every opportunity to convey and sell your assets and not be cast doing fraudulent conveyance activities, which is the only way that they can crack into and overturn a trust. Properties and assets held by a properly constructed trust cannot be seized. Further, the trustees and the beneficiaries are not liable for the debts of the trust organization. In all states, a C, an S, and LLC are recognized as the equivalent of a person. Therefore, in all courts, lawsuits can be filed against people or the legal equivalent. Now, on the contrary to that, our trust is a contract, and therefore it is not recognized as a person, and therefore our specialized trust cannot be sued. And if it is sued, it has to be thrown out of court, of court, unless they can allege and prove fraudulent conveyance. That's why our trust is so gosh darn strong. Let me tell you about what a client had happen. Matt's son, 17 years old at the time, got into a very bad traffic accident, and Matt was getting harassing calls from the potential litigating attorney from the person that Matt's son hit in the car accident. He was threatening over well over a million-dollar lawsuit. Well, Matt knew what to do because we had told him he was in the process of getting sued. Matt called up the litigating attorney and informed him about the trust. And what do you know? Matt never heard from the attorney again. Now, the attorney did go after the underlying general liability that Matt had in his auto policy, and that was it. This kept Matt out of getting deposed where he had to go in for multiple visitations and recorded interviews and all the trauma and the stress and then the fear of potentially having to come out of pocket for huge amounts of money. This did not happen because he had a trust. Let's switch from asset protection And let's talk about the tax mitigation advantages of having our proprietary and copyrighted trust, and then we'll open this up to questions. First of all, we are in a time of transition, and we really have a lot of different things that are potentially on the table with the new administration. One of the things that I'm— I've heard, and you probably have too, that the capital gains tax could go up to is 43.4%. There may be an increase in personal income taxes to 39.6%. There may be a $1 million cap on real estate— on the estate taxes, I should say, not real estate, but estate taxes— down from today's $11.7, $11.4 million that it is. I will say that's not as far-fetched as you may think. Heck, I can remember back to 1996 when the estate tax cap was only $600,000. So, any assets that you had that were over $600,000 would be subjected to the highest tax rate, which were your estate taxes. There may be no 1031s allowed, or I've heard about thresholds that are very short, that are very small in comparison now, and no mortgage interest deductions. So these are all things that are being proposed. I don't know what the shakeout's going to be, but any one of them could be devastating to you as a real estate investor and won't affect you if you've got our trust. And I'll show you why and how as we move through this part of the presentation. This is something that was in the news within the last week. I don't know if any of you are crypto investors, but a lot of people bought crypto with the idea in mind that there was going to be massive privacy. Not necessarily the case going forward, says Janet Yellen. So the impacts of Proposition 19. Well, the impact is, first of all, you can now only transfer your home to your children or grandchildren without reassessment if they live in the home. Post-February 15th, if you transfer any investment properties to your children or grandchildren, they're going to be reassessed, and that could be really painful. For every million dollars worth of capital gain— so you bought the property for $500,000, it's worth $1.5 million now, million-dollar gain. The general reassessment is 1.25%, which is the average property tax. So let's just say for every million dollars worth of gain in your portfolio, you're looking at a $12,500 additional tax bill that your kids are going to have to incur each and every year. Now, again, I don't know how much gain there would be in your portfolio, but this could be, depending upon how many houses you have, this could be financially devastating to the point that the kids might have to sell the portfolio because they can't afford to pay the tax. And this is what we're seeing, and it's just, it's, it's crazy. Unless you gifted the properties to your children or grandchildren before February 15th, you now have to file a gift tax return on the fair market value of the property. We do have a solution. As long as you had the— as long as the beneficial interest does not change, there is no reassessment. When you sell your properties to the trust, as long as there's no change in the beneficial interest that occurs, there is no reassessment fees. Because your children and grandchildren become beneficiaries, they can benefit from your properties after your death and also get great asset protection. And no reassessments. Now let's change gears. Let's talk about Medi-Cal. Now you may not be thinking about Medi-Cal today, or you might be— have thought about Medi-Cal because you've seen what happens to people and what could be happening maybe to your parents, and therefore your estate, because your parents are going through this. There's a thing called spin-down. And in California, I believe it's 30 months. Anything— if you have to get Medi-Cal, which can pay for $7,000, $10,000, or more a month for your long-term care, if you make over $1,700 a month, I believe is the current number, anything over that you're going to have to get rid of and it's going to go To— it's going to go to pay for your Medi-Cal. Therefore, your houses and/or other assets, they all go hasta la bye-bye in what's called this spin-down, and you have to declare all your assets. The only time that you don't have to is on assets that you have sold that are over 30 months or prior to that. So this is a huge, huge problem. Now, in the case of the marital residence, it would be the last to die. So if you are the wife who needs to go into the, into the long-term care, the husband can stay in the marital residence, but upon the death of the last sole survivor, Then they will take that house too. And guess who doesn't get it? That's you. Or if you— if it's you, then it's your kids that will lose virtually everything that you've worked so hard for that you want to transfer because of this insidious problem with Medi-Cal. So income received to the trust is excluded from qualification calculations. Therefore, Once you get your trust and you convey and sell your assets to the trust, they're off limits. It's just that simple. Assets in Platinum's trust are exempt from the asset recovery program, which is just what we were talking about the last couple of minutes. This can be huge. We have the ability to legally reduce taxes. We utilize a one-of-a-kind registered copyrighted trust to defer taxes legally per IRS trust tax The trust document is written to defer and minimize income tax and estate taxes, in most cases between 78% to 97% on an annualized basis. Zero gray area, zero capital gains until distributed. Which brings up the question, when does the trust distribute so the taxes are due that were being deferred? Well, we all know about deferrals, right? A 1031 is a deferral. It's a deferral until you sell that last house that you rolled forward, and then all the taxes are due. And if you sell it tomorrow, all the taxes are due. An IRA is a tax deferral instrument. It's a deferral until you have to start taking RMDs. You have to start taking RMDs, required minimum distributions, at age 72 and must complete the distribution process on your IRA by age 82. So an IRA, these self-directed IRAs that many people are using, they're great. They're kicking the tax can down the road, but for several decades. And not like our trust. Our trust has a much longer deferral mechanism. The trust distributes, and that's when the trust taxes, if there are any, are due. The trust distributes In concert with the laws of perpetuity. It's actually written into our trust that the— that the— upon the death of the last sole surviving heir to the last sole surviving beneficiary, once they die, then that starts a 21-year period. At the end of that 21-year period, the automatic distribution provision kicks in and the trust distributes. But the beauty of that is, pursuant to the way the trust was constructed, every one of your heirs and their heirs and their heirs and their heirs, times to the end of the family tree— everybody has died and gone to, to wherever they're going to, heaven or heck, by the time the trust distributes. Because that 21-year provision kicks in. So at the time of distribution, there's nobody available that's connected directly or indirectly to the trust that is going to incur the tax burden if there is a tax burden upon the distribution of the trust. This was done by design, and it's part of what I think is the pure genius of the trust creation. People ask me, is this much more complicated? Actually, I consistently get told 30 to 45 days into the trust formation and utilizing the trust that it simplifies and streamlines the accounting process, which it absolutely does. So a lot of people think at this particular point, well, this sounds too good to be true. Well, Let me point you to an article that's a reprint from Forbes magazine, 2014. The masthead was, How the Billion-Dollar Kennedy Family Fortune Defies Death and Taxes. And an extracted statement from the Forbes article said, capital gains taxes could potentially be deferred forever. They used dynasty trust. One of the components of our trust is the dynasty provision as well. Let's talk about a subsequent article from Forbes. Talked about how the $11 billion estate of the Rockefellers has stayed mostly intact due to the fact that they had trusts. And let's talk about something much more relevant to you because it's much more recent, and I'll show you that in just a moment. Our trust does not conceal or misrepresent all income and expenses are shown to be 100% tied to the following tax returns, whether it's a business return, whether it's a trust return, whether it's a personal return. None of the tax professionals we work with, having prepared countless thousands of returns over the years, have ever been audited. Heck, we have one guy alone who's prepared over 25 years' worth of trust returns and over 8,000 returns and never had one audited. Now, tax avoidance is legal, tax evasion is illegal. Let's talk about the difference between both. First of all, the Special Agent's Handbook speaks about the fact that any attempt to reduce, minimize, or alleviate taxes by legitimate means is permissible, and that the Edison case showed that— ruled that persons may adopt any lawful means for the lessening of the burden of income taxes. And in the Weeks case, the courts ruled that a spendthrift trust organization is not illegal, even if formed for the express purpose of reducing or deferring taxes. Now, Jeff Bezos, he makes $11 billion and receives a refund check. I'm not here passing judgment on what's right or what's wrong. I'm just here to disseminate and give you the facts. Conversely, 60 of the largest companies in the USA paid zero taxes on the staggering pre-tax income of $79 billion. Again, what do I attribute that to? Well, obviously they had good lawyers and they also have very good tax strategists. Now, this is a brand new— this was— I took this snapshot a couple of days ago.

Kamala Harris.

Keeps assets in a tax-advantaged trust. There you have it. So obviously, if you're somebody with means and you're somebody who wants to exercise and get the best tax advantages that you can, it's right here in black and white on Fox News several days ago. Tax-advantaged trusts are the way to go. History of our trust. Formed from 58 copyrights granted going back to 1999. We have over 39,000 instruments in place designed by a collaboration of some pretty sharp people as well. And payment of taxes is deferred, as I discussed with you earlier, until sometime in the future when the trust assets distribute. Trusts were written with 2 primary purposes. One, asset protection, and 2, for tax mitigation wherever possible. We're in full compliance with all the trust laws, and it conforms with all contract and trust and tax laws in all 50 states. Registered based upon 58 copyrights. We have the irrevocability, non-grantor, complex discretionary, spendthrift, and dynasty provisions. Yes, you will have complete control of the trust. And one of the key provisions is the spendthrift provision, because there has never been a properly constructed spendthrift provisioned trust that's been overturned. Again, the only time you can overturn it if it's not properly constructed, and it wouldn't be properly constructed if it was constructed with willful knowledge that there was fraudulent conveyance, i.e., a lawsuit or Knowing that there was a lawsuit coming down in the next couple of days. Hey, the beauty of it is very simple. As soon as the ink is dry on your paper of the trust, any subsequent things that could happen, you're in the complete clear. So let's talk about a tax reduction strategy. Our copyrighted trusts are designed for the benefit of the beneficiary or beneficiaries, as that may be. And beneficiary expenses paid directly from the trust bank account to a third party considered expenses versus money paid to beneficiaries directly is a taxable distribution. I like to use this example. Let's just say you have 2 kids. Let's say they're both 18. You want to pay for one's college tuition and you want to buy the other one a car. Great. 2 ways to do it. You can either give them the money and tell them to put the money into their checking account and then go to the college and pay for your tuition at the admissions office, go to the car dealership and buy your car. And if you do that, that would be a taxable distribution. So let's do it the trust way, and it's probably the way you'd want to do it anyhow. You pay from your trust bank account to the office of admissions for the child who's going to college for the tuition. It's a trust expense. And likewise, you buy the car from the trust bank account, let your son or your daughter go down, pick out the car, test drive it, and you just cut the check and boom, it's a trust expense. Therefore, it is not a taxable distribution. Now, one of the things that happens should you decide to get started with us is you'll get assigned to one of our trust experts. And for the balance of the calendar year, which you get started, meaning December 31st, 2021, you'll, you'll be able to ask any question at any time. And that comes included. You can either call up or you can email, and you're going to be likely, if you have questions, asking How is this— can we couch this? And is this a trust expense or taxable distribution? And the simple answer is, unless it's personal food, personal fun, and/or personal fashion, we call that one of the 3 Fs, it's going to be a trust expense, whether that's for you business-wise or personally. There's even exceptions to the food, fun, and fashion rule. I'll show you in a moment. We talked about the taxable distribution with college. And how does this all happen? Because of Rule 643, the IRC, which is the Internal Revenue Code. The trustee has the sole and absolute authority to designate income as extraordinary dividends or taxable stock dividends, and that it is paid to the corpus of the trust and therefore not subject to distribution. It is not income to the trust according to Rule 643. So what does this mean? Well, here's a few examples, and let's talk about room and board at college for a moment. Well, I told you, if you're paying this out of the trust, it becomes a trust expense. But there's even more. If you have children that are under the age of 21— and that's not just college, that goes for high school, that goes for elementary school, even preschool— those are all viable trust expenses, and it also goes for graduate as well as postgraduate work that you can also pay for as viable trust expenses. And also, I know I told you that food, fun, and fashion is not— is considerable— is considered an expensible item, and it is, except there's an exemption for children. Children under the age of 21, 100% of their food and 100% of their fashion, i.e., clothing including Nike sneakers that may cost $150 or whatever, those are all considered to be viable trust expenses. Falls under the provisions for taking care of your offspring. But let's drill down really quickly to home expenses. I love that one. So you live in a home, and today you have one expense that you can write off, and that expense is the mortgage interest portion of your mortgage payment. Well, how about with a trust, the entire mortgage payment? But let's add a few other items onto that. Your homeowner's insurance is a trust expense. Your landscape architect or gardener is a trust expense. Your pool maintenance person, that's a trust expense. Your entire utility bills, including your cable bill, is a trust expense. Any repairs or replacement of furnishings, trust expense. And lastly, if you do a remodel, even in the hundreds of thousands of dollars, That is a viable attributable trust expense. So, what I'm wanting to exemplify here is the fact that the corridor for trust expenses is significantly wider and deeper than it is for tax write-offs. Now, how do I fund the trust? Well, you sell assets to the trust through a notarized bill of sale. It's a nontaxable event, whether it's equipment, computers, intellectual property. Some of you guys have websites. for selling your houses and/or customer lists that you keep. These are all considered to be intellectual property and that all have a value, which we will work out what the value is with you and go into what we're going to affectionately call the demand note, which we'll talk about in a moment. How do you fund the trust? Well, you've got rental or lease income from properties. You may have a side business. You may have W-2 income. These are all ways to fund the trust. And/or you can quitclaim or warranty deed assets and property right into the trust. And then you've got rental and lease income that's being paid directly to the trust. And because you've got rental and lease income being paid directly to the trust, you now don't have to follow and use your 27.5-year depreciation tables. Heck, some of you who are more seasoned investors, you may have depreciation tables that are exhausted or about to exhaust. and you're looking at some big taxes staring you in the face as the years progress. Well, 100% of your lease and rental income that comes in, 100% of the lease and rental income that comes in becomes deferred in perpetuity. That is a huge asset and component that the trust has to offer to investors. And zero capital gains. when the property or business is sold. Now, some of you may have a dental practice, or you may own a car wash, or a consulting business, and at some point in time, you likely will want to retire and sell that business for whatever multiple you can sell it for, and 100% of that would be capital gains, correct? And when capital gains— just the federal capital gains currently If it's long-term capital gains, which means a year and a day, right, then you're looking at 20%. Well, if you make $1,000,000, that's $200,000 that's going directly to Uncle Sam. I think it would be much better off in your back pocket than Uncle Sam's. And the fact is, with our proprietary and copyrighted trust, 100% of capital gains become excluded when that money goes into the trust, which we will discuss exactly how that happens in a moment. You can expense all interest payments related to assets. How do I get money out of the trust? Well, once your assets are sold to the trust, it's going to create a demand note, and the demand note is going to be a byproduct of selling your properties, your cars— I call it your planes, trains, and automobiles— your stamp collections, your crypto, Everything has a value, and the value is going to be— if it's real property, it's going to be at basis, and if it's personal property, it's going to be at book value. And we'll help you through that. We, we do that exercise with you. And whatever that amount is, you're going to convey and sell those, bill of sale, to the trust. And in exchange, you're going to get an IOU from the trust. And it's called a demand note. Now, the nice thing about the demand note is this: at any time and for any reason whatsoever, including personal food, personal fun, and personal fashion, you can use any amount of that money for anything that you want, and it is a non-taxable event. I have some people that sell their portfolio, and sometimes they have $1 million or more. millions of dollars, in which case this is a huge win for them. So you sell assets to the trust, whether it's $1 million, $5 million, $50 million, makes no difference. You get the demand note, and you can use that demand note or any portion thereof at any time for any reason, and it's going to be a tax-free utilization. So you can use your money in the trust Even on your capital gains side and the deferred rent and lease income for purchasing any asset that you want, you can purchase cars, houses, mobile homes, jet skis, yachts, anything at all, as long as it doesn't fall into personal food, personal fun, and personal fashion. But if it's a hard asset and you're having fun with it, it's still an asset, therefore it does not fall into fun. You may have fun using a jet ski. You may have fun using an RV, but it's an asset that has a liquidatable value. Therefore, it is an attributable asset of the trust that you have the ability to use. Therefore, it is a permissible activity and it is not a taxable event. You have the ability to have expenses that the trust pays for, for managing the business trust. You can pay expenses for beneficiaries, as we discussed before, education, medical, maintenance, and support. You have access, total access to the trust assets including cars, properties, yachts, and more. That's up to you. Actually, the initial investment in the trust is also a trust expense which goes right into the demand note, which is kind of a cool thing. Now seizures on the demand note, they can't happen. As assets are sold to the trust, the basis in the assets are added to the demand note of the person selling the asset to the trust. And the demand note is not subject to seizures or claims by any court or jurisdiction. Let me tell you about a story. It's a short, sad story. A dear friend of mine got into a very bad traffic accident. He had a million-dollar-plus umbrella. Unfortunately, they got the umbrella. Well, that wasn't bad because he had paid his premium, but as I told you, punitive damages are not covered on umbrella policies or GL policies. Therefore, Steve had to pay $250,000 out of his back pocket. Now, in the event that you had one of our trusts, you're going to keep a few thousand dollars in a personal bank account for your incidentals, but the rest of it is all going to be behind that impenetrable trust wall. So they're not going to get that $250,000. It's just that simple. I personally lost $175,000 on a bad house deal. We don't have time for me to go into it this evening because I want to do some Q&A, but I can share with that story with you when we have a consult. Suffice to say that if I would have had a trust at that time, I would have never have had that $175,000 loss. So this is a recap slide. Stocks, bonds, currency trading, Bitcoin, crypto, selling assets to another trust, real estate acquisitions, buying and selling of businesses— no federal or state probate, no gift tax, zero capital gains on the growth or sale of trust-owned assets. The sale of assets to the trust are non-taxable events, which is a good thing again because you're selling at book or basis. And there's no cap. Sometimes people who have larger estates say, well, is that too much, or what's the maximum I can sell to the trust? There is no maximum. And let's talk lastly about 1031 exchanges. Pursuant to 643, capital gains and losses or exchanges of capital assets shall be excluded to such extent gains are allocated to corpus. So, why would you ever do a 1031 exchange again when you have the trust as the logical option? Because with capital gains and with 1031 exchanges, you have that unfortunate reality when you want to get into a more liquid position and you sell that last property, you're going to have an accrued tax hit from all the previous properties that you might have rolled over into a 1031. Our capital gains solution is superior, as you now well know. Therefore, we're the anti-1031 company. Actually, we have 1031 companies who have referred deals to us in the past. So, I always like to ask a conjecture question. What would you do if you're able to control what you earn. If you'd like to get more information about this, let's talk about what the trust package includes. It includes the binder with all documentation, soft company copies of— with all the forms for your administration, unlimited tax advice until 12/31/21. You get individualized coaching from the tax person that we assign you to, trust return preparation for both your basic 1040 1040 and 1041, trust-specialized strategist assigned to you for your implementation, ongoing access to trust document library, ongoing access to trust reference Q&A calls that we do. By the way, that is a huge, huge benefit. I'm going to talk about that just briefly. Many of you are in masterminds with real estate. Some of those cost $10,000, $15,000, $20,000, $25,000 a year. Well, over 80% of the clients that we have, which go up to over $100 million in assets, are able to get to our password-protected conference calls that we have a couple times a week. We call them Q&A calls where you can bring questions and answers and voice them in an open forum and format. And I'm telling you, some of the information that's traded has been life-changing to people. I'll give you one really short one. How do you protect an account that has over $250,000 that's FDIC insured? That was a question that was asked at one of the calls this last week, and we have the solution. And when you become a trust client, we'll provide that solution to you so that in the event that your liquid and you've got a lot of funds, there's a way to insure all of that monies and have it be safeguarded, and it's an elegant, simple solution. So how do you get your complimentary consultation? Simple. You either go to platinumtrustgroup.com/joeh. That's platinumtrustgroup.com/joeh. forward slash Joe H, and they'll ask you to just register, and that will then take you to the interactive calendar so you can pick a time that's convenient for you, and you'll get one of us to sit and work with you on a one-on-one consultation to discuss your specifics and confidence. If you are having problems with the calendar, yes, feel free, you can call This number, 702-371-2345. Again, that's 702-371-2345. But the best way to get your complimentary consultation is to go to theplatinumtrustgroup.com/joeh. So I'd like to open this up for a couple of questions. I know we're really running behind this evening. So I've got Gina here and I've also got Julian. Let me turn it over to you guys.

Julian, do we have any questions that have been asked?

We do. The first one that I see that's relevant to everyone, it asks, does the trust have an annual maintenance fee? If so, how much?

There is no annual maintenance fee on the trust. The only fee per year is just you need a 1041 return for the trust. That's it. And even that is not super expensive. We're talking about $300 or so per year for the tax return.

Great. Well, that question was from Keith Chuang, and the next one is from him as well. He asks, can you do a cash refinance or a cash-out refinance on the properties in a trust?

Cash-out refinance, yes, you can. So it will just depend upon your lender. You're going to want to make sure that you get a lender that is friendly towards the trust.

Great, great question. That is all that I see in the chat.

Fantastic.

Okay, I see one more from Allison Driscoll. She asked, what if we sold a business already in 2021, would we have any retroactive benefits? Great question.

Oh, we get asked this all the time, and boy, I wish we could do that. Yeah, but honestly, Allison, There are companies out there that will tell you, oh yeah, you can backdate the trust and oh yeah, you can amend things based on that. But honestly, if we did that to you, it would raise so many red flags with the IRS. You do not want us to do that to you. It's not worth the savings. Yeah. Would you agree, Julian?

Oh, I would definitely agree. It would just be best to— well, Bruce always says the best time to get a trust is yesterday. And so I think that— I agree, that's kind of the feeling Allison may have, is like, now that I'm listening to this, I should have had— I should have had this in the trust before I sold it. Well, the good news is, is that as soon as you, uh, have the trust, you can experience the asset protection and tax savings moving forward.

Yep, absolutely.

We're getting a few more in. Do you have time for more questions, or would you rather they just book with you, Bruce?

You know, it's getting late and I want to turn the meeting back over to Joe and thank him so much for the time, for letting us come on to his group call this evening. And I think any other questions, guys, just book a one-on-one. Normally it's a $250 event. We're waiving it because you're part of Joe's group and we're delighted to talk about your specific situation and the relevant key components of the trust and how it'll work for you and with you.

Yeah, I agree. We'll have much more time to go over your particular questions, and everyone's situation is different. So it's very flexible, and it doesn't— it can work with many different situations. So I suggest everybody book a consult That way we can get you one-on-one and answer the questions that you may have.

And it's also not right for everybody. And frankly, we've turned away people. If it's not right for you, we're going to let you know that as well.

Correct, Bruce. I'll turn it back over to you.

Thank you. And likewise, I'm going to, I'm going to turn it over to Joe. Joe, again, I can't thank you enough for having an opportunity to speak to your group. And, and, uh, I, I think we're there. Hopefully we, we did a good job for you.

Thank you. I appreciate it, Bruce. Um, anybody have any, uh, like a quick question they want to ask before, um, we let him go? Okay. Um, oh, I, I guess I'm kind of interested in this one. Yes. Has there been a court case where the asset protection strategy has been tested?

Number—

let Gina take— let's have Gina take that one because she's the retired lawyer.

Yes. Going back to the 1600s, spendthrift trusts have been around. And in fact, long before the Internal Revenue Service or the Internal Revenue Code was ever written in the early 1900s. Old money families like the Kennedys, the Carnegies, the Rockefellers, the Gettys— they all set up trusts similar to this one specifically for asset protection, to protect their family's wealth. The Kennedys' family still operates today out of more than 25 similar trusts. So are there court cases on this type of asset protection? Dozens of them, and they're all old cases because it's been litigated so much in the past, and it's just not necessary today. It's really a well-known strategy for asset protection. Okay.

Thank you very much, everybody. I'm gonna, I'm gonna thank Bruce again and his guests, and I'm gonna open it up for whatever questions you have. We were talking about a few things before we started the presentation, but I'm just going to open it up. So if anybody has any particular questions, please unmute your mic and let's get those questions answered. No questions?

Joe, you've got a great group. I think we exhausted them this evening. I'm going to take off. I want to thank you again so much. It's been wonderful. And look forward to working with your folks.

Okay, thank you. Take care.

Good job, guys.

Thank you so much, Joe.

Later.

Thank you, Julian.

Take care.

Okay, anybody have anything? Hello?

Oh.

Bassam, I can't hear you.

Can you hear me now, Joe?

Yeah, I can hear you. I can hear you now, Joe. Yeah, go ahead.

Oh, perfect. So Joe, I wanted to ask you, because I remember you do, uh, land trust for each flip, let's say. How does it fall under this one, under the trust that Bruce was talking about?

I think, I think from my understanding, and I, and I've sat through a couple of these with Bruce, is that his trust is just an overall encompassing trust, um, and not the land trust that I use. I use land trust for privacy reasons. Um, his is like way different. Um, to tell you the truth, honestly, I, I don't understand 100% of it. I'd probably have to sit down one-on-one with him and, you know, say, this is what I have, how can I get more protected than I am now? It's very interesting what he says. You know, I have, I have a C corp and I run a lot of my expenses through my C corp, which I pay for all my medical, I get credited for like renting. You can rent out your house for 14 days a year, and I reimburse myself for that, that credit for renting out because I manage my LLCs out of my office here in my house. So there's a lot of expenses that you can take in a C corp. And it sounds a lot similar to what his is, but maybe even more because I can't pay for college education, you know, things like that, which is, you know, my kids are grown, but I do have 3 great grandkids. So that might be interesting for me to actually look into and see how that works. But, you know, your question, it's totally different than what I do with land trusts.

I see. Thanks, Joe.

Anybody else? Someone said, at what stage of our career should we look into a trust? I don't think it's a stage. I think it's a monetary achievement. He said $100,000. Or more in assets. I might, I might say maybe half a million dollars in assets or more, but that's really kind of up to you. And that's, that's a question that you should probably ask him on a free one-to-one. Anybody else have any questions real estate related? Or not real estate related. I'm hoping we open back up June 15th, which is what the governor has to say. And once that's done, I'll check with the pizza place in Lake Forest where we used to have our live meetings and start putting them back together again. I always like to talk to people in person. Zoom was a good second choice, but I'm hoping to come back live hopefully in July or August of this year. We'll see what happens. Thank God the pizza place is still around. It's Round Table Pizza, and you know, it's a big organization, so I drive by it every day on my way to work, so they're still there. So hopefully, hopefully that'll work out. The meetings in Lake Forest are going to be scheduled through Meetup like they were before.

Yes.

And you can actually unmute and talk if you'd like. Anybody else?

I'll say hi.

I don't have any questions, but I like you. I like your haircut.

Thank you.

Yeah, it's ready when I wake up in the morning. Yeah, one of the other young men in the office came in today, one of my wholesalers, and he had a short haircut like that. And, um, yeah, it reminds me of me at your age.

Low maintenance.

Very low maintenance.

Yes. Yeah, I used to call it the summer cut, you know.

Yeah.

Felt like it today too.

Somebody asked, would you consider live broadcasting your meeting on YouTube or such for those who can't travel that far? Um, you know what, I, I am going to think about that. And John, uh, is, is, uh, the co-host Of the meetings. And so, John, you're the young guy here, and if you think that we can do that technology-wise, to do that, that would be awesome. So put your thinking cap on and let me know if that's possible. If you need any camera equipment or whatever, I'm happy to buy for you. And, you know, if we could get that done, that would be awesome.

Yeah.

Okay.

Anybody else before we sign off?

No?

Okay.

That's it.

So I have a quick question. I mean, like, it's a long question, but like, how do you assess inflation, its effect on the real estate market right now, given what we're talking about, like how much we think there will be inflation in the near future?

Um, I think that after September, October, you're going to start seeing interest rates going up, um, and, and that's really when you're going to start seeing inflation go up as well. The interest rate is going to calm the market down, uh, but the other problem is that, um, You know, we've got so much money circulating around that, you know, it's, it's gonna— there's gonna be some inflationary pressures on there. Uh, so instead of taking 1 day to sell your property, which is what about what it takes nowadays, uh, it may take you, you know, 30 days to sell it. But the, the market in my— the market, in my opinion, is gonna— it's gonna continue to go up.

I see. Thanks, Joe.

Anybody else?

No?

Going once, going twice. Have a great evening. Thank you for, uh, joining the meeting. I appreciate it, and I will see you next month.