For most high paid W2 workers and passive investors able to save $30-50k a year to buy a rental or go into a syndication a deal it will typically take us less than a dozen years to get financially free!
See the math below assuming 15% IRR which is pretty attainable especially when investing the tax efficient way:
We work hard to grow our net worth and many of us want to create a legacy (after we have enough cashflow to put food on the table). Creating an endowment after getting yourself FI is the next challenge. PSA… if you have a will… that is not enough. You need at trust at least to avoid probate at very least. Email Lane@SimplePassiveCashflow.com for a referral to a good estate attorney.
Other legacy/trust ideas from our Hui:
- I once heard the rich buy multi-million dollar houses for their kids in order to burden them with six figure property tax obligations to keep their upscale lifestyle. (Not quite practical advice or the rest of us…)
- Have the talk with your kids: How do we make our money? What are our values?
- Talk about money all the time. Anything is better than nothing. 😁
- Review the concept of “ikigai” and find something that they do well that benefits the world without the need to make money in the pursit.
- Draw out your entity structure and explain how each business makes money. If they are old enough (mature) tell them real numbers. And make them take a serious non-disclosure to anyone.
- For full service family office consulting go here.
At the end of the day (our life) the message to the next generation is that this money thing is not just for you and you need to be a good steward of money to use it to create value and leave the world a little better place than we found it. In the meantime, how do we create something more meaningful and change the world (with our $313,948,000 at age 80)?
The answer is creating a non-profit and running our expenses through it while being tax exempt from many things 😉
I will also need to create a life insurance plan (infinite banking) that grows tax free within this non-profit that is also exempt from estate tax (via an ILET) and most litigation attacks.
Well the Rockefellers did this! Join us in taking this next step in setting up our estate by doing a group study of the book “What would the Rockefellers’ do?”
Sign up below via the pop up to join our book study and also get a download of the above “Net Worth Tracker Spreadsheet”.
Start planning your legacy!
Benefits to you for a public charity nonprofit:
- It can reimburse you for an accountable plan: including mileage and travel expenses for the purposes of the nonprofit
- It can reimburse you 100% of cell phone and internet that no other party is reimbursing you for.
- It can reimburse you for the home office usage.
- It can pay you for holding its corporate meetings at your home. By taking advantage of section 280A, if you do not rent your home for more than 14 days in a calendar year, you would not have to report that as income.
- It can reimburse you for medical expenses.
- It can pay you a salary.
- It can pay for a retirement plan, including the more aggressive defined benefit plan.
- It can pay for both a better retirement plan and health plan even if you have employees in other entities.
- It can help you qualify for the 199A deduction.
- It can have a deferred compensation plan for you. By having a non-compete agreement, you will not have to claim this as income in the year earned.
- It can loan you money to fund an Indexed Universal Life Insurance where your money will grow tax-free and withdraw tax-free when ready to retire. The money here about doubles every 8-10 years. When you retire you can pay back the loan from the deferred compensation in number 9.
- After qualifying, it can have first priority for buying real estate from government auctions, and loans as if it is an individual.
- Most states and counties have lower or no fees and taxes for nonprofits, including no sales tax.
- Investments inside the nonprofit grow tax-free.
- You can include a veto clause to make the nonprofit remain under you and your descendants control indefinitely. Many have used a nonprofit to leave a legacy that their kids and grandkids cannot destroy and will allow them to get benefits if they are involved with the nonprofit.
- If your kids and descendants have student loans after 10 years of student loan payments if they work for the nonprofit, they can have the balance of the student loans forgiven by the federal government. Great for having them do what they are passionate for and not work in something for the money (accounting, sales, civil engineering)
- You can have a lower United States Postal Service rate for mailings.
- You may use Per Diem for travel.
- Most radio and TV stations allow public service announcements without charge from nonprofits.
- You will receive a charitable donation on appreciation assets instead of having to recognize a capital gain.
- It gives you the ability to take out rental property from a corporation without having to pay a capital gain.
- A nonprofit can invest in your for-profit entities as part of its investment portfolio. The investment income is not taxable for the nonprofit. In a public charity there is no disclosure of ownership. In a private foundation if it owns 10% or more of your for-profit, it must be disclosed.
- It can help you raise fund for your mission through public donations, grants from other nonprofits, grants from for-profit entities, and sponsorship from corporations.
- It can help lower or zero out gift and estate taxes.
- It can receive the remainder on your Charitable Remainder Trust.
- It can use land that is close to other of its facilities for non-exempt purposes for 5 years and not have to pay Unrelated Business Income Tax.
- You can donate vehicles to it either to be used for the exempt purposes or for it to sell and use funds for its mission. For vehicles not sold, all related expenses to be paid by the nonprofit.
- Meals and Entertainment are not restricted as in for-profit entities. For instance, meals are usually only 50% deductible for tax purposes in a for profit entity.
- You can donate the Required Minimum Distributions to it so that you do not have to pay taxes on them.
- Rental properties for the exempt purpose in many counties receive exemption of property taxes.
- Shipments to other countries for exempt purposes may be taken free by the US military.
It was not till minute 23 of 48 of Penny Hardaway’s documentary was when he finally started to write his Legacy