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Highlights from this episode include:

  • How to gift over $1 million to your heirs without it getting stolen by the IRS (even though you can only give $15,000 per person) (3:45) 
  • The “Welfare Business Model” for investing that grows your wealth faster than your taxes rise (6:09) 
  • How to avoid being financially ruined when new politicians raise taxes on the wealthy (8:25) 
  • 3 types of charitable gifts that stop the IRS from taking most of your IRA money (8:56) 
  • The “Roth IRA Secret” that floods your heirs with tax-free money (14:18) 

Ready to stop doing what you hate? Go to https://RetireNowRetireWow.com and fill out the Game Changer form to secure your financial future.

Get our 5 Year Countdown to Retirement Guide and make sure you’re on track to retire (no matter where you are in your career). Visit brightfg.info/5yearguide

Read Full Transcript

Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.

(00:20) Oh, Aloha. Every buddy, this is Carola green and it is time to stop doing what you hate. I hope you are having a fantastic day. I am doing well. And I am super excited to be sharing something with you folks

(00:37): Today. And the title of the show is called giving one Oh one. That's right. Giving one Oh one. And you have all heard that it is better to give than it is to receive. Now, maybe, maybe not. It depends on what you're giving and what you are re CV. And there's a lot of confusion around giving and how much can I give and who can I give to and all of these different things. But before I get into it, the reason why I want to talk about giving is this, or, or gifting one-on-one is this, if you are enrolled in the rapid retire program, you know that the benefits of the program is putting yourself in a position to retire five to 10 years sooner than a person normally would. And what's so important about this is you are putting yourself on a trajectory to potentially having more money than you are ever going to spend.

(01:43): Now there's no guarantees to that, but you are putting yourself on a trajectory. And here's why the goal of rapid again, is to put you in position, right? So to walk away and when you walk away, we are not talking about walking away from a job with just $500,000, and then trying to make that last for the rest of your life. We are, are talking about walking away with, well over a million dollars and finding something else to do. Hopefully we have the right type of income assets set up as generating you income. So more or less, if we are investing it the right way, the funds are potentially going to continue to grow. And I got to put that statement out there every single time investments do carry the risk of loss. And so go do your due diligence. And past performance is no guarantee for future results.

(02:37): No speculation, just due diligence. And so what we're looking at is, is really just making sure you set up your set up the right way and in doing so, you are going to create some byproducts of success that are not so comfortable to deal with. Now. I always ask my clients the question that when they move on to the next stage and they leave behind a large amount of assets, how much of those assets do they want to taxes? And then how much do they want going to their fans, family, and their loved ones. And every single time they want 100% going to their family and 0% going to taxes. Now we know that is nearly impossible, but there are some ways that you can make sure that you are leaving behind and maximize it, what your heirs will receive. So are you guys ready?

(03:41): One, two, three, let's get it gifting. One-On-One so let's start over off by talking about how much we can give for 20, 21. Right now you can gift if teen thousand dollars and it goes like this. So let's just say have a million dollars that I want to give away to my kids. Okay. And I have two kids, a son and a daughter. They have a spouse and they have two or three kids themselves. So for myself, I can give my son 15,000, his wife, 15,000 and each one of his kids, 15,000. And if my daughter, I can give her 15,000, her husband, 15,000 in each one of their kids, 15,000. And then my wife can do the same. Now that is a lot, lot of money. If done, right? You can give to your kids. And so there's many different types of assets that you can give.

(04:37): You can give cash, or you can give stocks, you can give real estate. And there are some other things that you can give that we are going to get into. So when we're talking about stocks, it's pretty simple. It's the same rule, 15, 15, 15, 15, 15, right? And if you're talking about cash, the same thing, 15, 15, 15, 15, depending on how many kids are and your family, but real estate is a little bit different. You're going to have to have some different instruments set up to be able to donate and give away real estate. Now, why is gifting so important? Well, right now we're in a situation where there's a new administration, an office, and they're talking about helping out the people who need help the most. And everyone talks about, you know, stay away from politics and religion. But however, you got to get your information from somewhere, right?

(05:29): You're not just going to ignore the fact that politics and religion exists. You are going to talk about it. You are going to hear about it. However you need to hear about it anyway, way. That makes the most sense. So you can protect yourself. So again, we're looking at having trillions of dollars passed and these bills to help out the people that need it. However, now all of the money is going to go where it needs to go. There's a lot fluff. There's a lot of stuff that packed into these bills and there's going to be a lot of changes made. And you hear them talking about taxing the rich and taxing the wealthiest 1% and all of this other stuff that they say. So I had a client call me up and we were doing a review and she was just, she was just upset.

(06:16): And she said, I, yeah, I voted for the new administration. I want to change. I want to Trump gone and all of these different things, but I can't understand from day one. Now they want to turn around and give more welfare to the people that are already getting enough. Well for anyway, and on and on and on and on and on. And I said, I'm going to share it with something, share with you something that I want you to, to understand, and to keep with you for the rest of your entire life. I want you to understand how this system works. He said, I'm listening. And I said, here's the deal? Okay. So these laws and these bills are going to get passed and these people are going to go and they're going to get this money. And I said, what do you think they're going to do with this money?

(06:58): Do you think going to save it or they're going to spend it? She said, no. And I said, where do you think they're going to spend it at? And she said, probably displaced that place, a Walmart target, Amazon and on and on and on. And I said, well, doesn't it make sense for you to go and buy stock in these companies? Because this is where the money is going to go. Yeah, you're talking about taxing the rich and the wealthy, but guess what? The wealthy and the rich, they own these companies and they're getting tax breaks and so on and so forth for employing millions and millions of people. So therefore they virtually pay not as much tax as people think that they pay. So what we need to do is figure out how to protect your assets or how to get in on the game and take advantage of it instead of complaining about it.

(07:40): And she said, yeah, that's right. That's what I have you for. And I said, exactly, my job is to help protect you from all the foolishness that's going on. And when you, when you die, you are going to give your family a lot of money based on how you're investing right now, you know, unless we do something crazy and we lose it. All right. And she said, yeah. And I said, so therefore, that's how you have to look at it. Yes. They're going to talk about taxing the rich. I said, but what happens is the middle-class is going to get hit more because you make more, you've got the payroll tax that they're going to look at increasing. And you have the income tax that they're going to look at increasing. I said, so you have to figure out on the backend side, how to make the most out of this situation.

(08:17): And she was fine and she laughed and she chuckled. But that is a very true thing. And this is what I look at every single day is how do we maximize what we have? Because when they do pass these laws and they do pass these bills and they do raise these taxes, guess what? They can't get out of the rich, because the rich have their assets protected. Okay. They have them in different types of trusts. They have them in different types of charitable, remainder trust. They have them in charitable lead trust. They have them in charitable gift annuities. They have things set up the right way to protect themselves against all of these different taxes that are going to be coming up. So let's talk about something that happened that really is going to hit hard at the heart of the middle-class, who don't have their assets protected.

(09:01): Don't have their IRAs protected and they want their kids to get more. But most of us are going to go to the IRS. So let's talk about the three types of charitable gifts that you can set up and you can structure number one. Oh, well, let me backtrack and talk about the secure act. And a lot of people don't understand the secure act and what, and what happened with it. So the secure act was passed and what it, what it did is it eliminated the stretch IRA for many non-spouse beneficiaries and they replaced it with a 10 year rule. What does that mean? It means that if you have $3 million in your IRA and you wanted to say, I want to skip my wife, she doesn't need the money. She has $3 million in her IRA, and I want to give them money directly to our kids.

(09:44): Have you got three kids? So before what happened was when you died, the IRA was set up so that it was paid out over the lifetime of each one of the kids that were left based on their life expectancy. Okay. And what that did, was it eliminated, or it reduced the amount of taxes that they would pay. And also the funds could remain inside of that. IRA split three ways. And the growth inside was not taxed until they, until they received it. Right? So you can have exponential growth in these things over your kids' lifetime. So say it grew a thousand percent over the time you had it. And another 2000%, depending on what you have in over your kids, like say 40, you know, 40 years of life that they have left after they received this thing. But the stretch IRA said, no, hold up now also fast what's going to happen is you are now required to take all of that money out of that IRA over a period of 10 years, that's right.

(10:44): 10 years. And so people were looking for ways to avoid that. And one of the ways you can do that is by creating something called a charitable remainder trust CRT for short and there's rules to setting up a charitable remainder trust. First of all, you got to have a hundred thousand dollars, okay. And you can fund it with IRAs. You can fund it with cash, you can fund it with stocks and you can also continue to add monies to your charitable remainder trust all the time. However, you must pay out anywhere between 5% and up to 50% of that charitable remainder trust every year. Okay. And you must pay out between five to 50% of the annuity every single year. Now that is a lot of money, depending on how much you set up inside of that charitable remainder trust. However, the term limit of that is basically 20 years. Okay. So, and so the neatest thing about the charitable remainder trust is this when you are no longer here or you're the stream of payments coming from the charitable remainder trust are done, basically the balance

(11:54): Of the trust goes to the charity, sorry, therefore the name charitable remainder trust, all right. The next type of trust that you could give money into is the charitable lead trust. Now I'm not talking too much about the tax benefits of these, but they can be quite substantial to your estate. And it makes sure that the money goes where you intended to go versus to some frivolous hot, and then they can pretty much do whatever they want. So on the charitable remainder trust, you must pay income taxes on the payments that are coming out of that trust. And then on the charitable lead trust, the trust basically generates income and it gives it to the charity first. And then you get the tax deduction for those payments that go to the charity. And once that period of time is done, the balance of the charity goes to your heirs, which is very interesting.

(12:54): The next one would be the charitable gift annuity. And this is a very simple thing to do mean you can set one up with as little as $10,000, and basically it will generate payments to the charity as well. Or at the end of the stream, basically a lump sum goes to the charity. You can set that up I believe any way you like, and you can set up as many of those as you want. You know, there is a charitable gift of life insurance. And this one I like to call a leveraged gift. And what it does is let's just say, you want to leave behind, I don't know, maybe $5 million to your favorite charity. And so, so you have a substantial amount of IRA money coming in, every single from like say age 72, and you're getting 107, $180,000 a year, depending on how much you have in your IRA.

(13:49): Well, you can use part of that money to set up a life insurance policies where the premiums are tax deductible, the bowl to you. And once you pass away, the balance of the life insurance policy goes to your charity. And then your estate also gets a tax deduction for the amount of the life insurance policy that went to charity. I believe that's correct. And so these are a couple of things that you can look at in regards to, you know, if you are going to be leaving behind a sizeable amount of IRA money, that's a very important thing. And another thing I talked to clients it's about as this, you can convert your IRA over to a Roth IRA, and then your beneficiaries will receive that money tax free. That's something else you can do, but you're going to have to start doing your Roth conversion pretty early due to the fact that they have a, your role.

(14:46): So if you do set up the Roth IRA, you pay taxes on the conversion, and then you can't touch the money inside the Roth IRA for five years. So you have to make sure that you are not going to be needing that money and the Roth IRA over the next five years. And of course, if you're looking at just leaving it behind to your kids, a large portion of it, then that's not important. You don't have to worry about the five-year. But if you need to touch the money in the five years, basically, you're going to be penalized on the gain coming out of that Roth IRA and not the principal that you put in side. And one of the neatest benefits of setting up say, charitable remainder trust, or charitable lead trust is this a asset protection component is immense. Okay. So once the money goes into that charitable remainder trust, it's in there, okay?

(15:35): No one can Sue you for it. They can't come after you bill collectors, can't come up to you. They probably can come after you for the monthly payments or the annual, I'm sorry, the quarterly payments off of it, but they can't come after you for the balance inside of that charitable remainder trust. So these are some very important things to think about in regards to what you would want to potentially do with all of the money that you're not going to need, you know, for the rest of your life, right? So you have the amount that you you've set aside for yourself, and maybe that's 2 million or 3 million. And then if it grows to five or 10, you have to begin to think about, I don't like the word dispose, but how do I distribute the wealth? And one of the things you can do is through the annual gifting of $15,000 a year.

(16:19): And I think this is one of the most enjoyable ways to do it because you get to see how the money is being used while you're living. And so I had someone come in and they began to share with me how they've been gifting so much money to their family members every single year. And I had another client come in and they said, well, my mom has been giving us money every single year and hurting anything wants to see us enjoy it while she's alive. Versus, you know, when she's not here, she can't, she can't see us enjoying it. So I said, that's a very, you know, amazing thing. So they traveled, they go all over the world to do all these things. And it's pretty amazing. So I wanted to talk to you guys a little bit today about gifting and I just called it gifting one Oh one, because we can get way more advanced in how we set these gifts up.

(17:03): But if you are in the rapid retire program or are you wanting to deep in the rapid retire program, it's something that when you're inside, we look at and we began to dream plan and accomplish these types of things. So thanks for tuning in today and letting me chat with you about the future and what it could potentially hold for you. And if you want to know more, you can check out my website, retiring all retire, well.com or give me a call eight five two one four four zero one. And until next time, everybody, one, two, three,

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