The Money Advantage® Podcast | Infinite Banking Concept & Family Banking

If you’re planning to leave an inheritance to your children, there’s a new rule in the Secure Act that will probably cause your kids to pay more taxes if you pass on your retirement plan.

https://www.youtube.com/watch?v=3yQ22dT2H6I

Today, we’re discussing how the Secure Act, passed in 2019, affects your retirement plans and may front-load taxes to kids who inherit these plans. 

If you want to know what the Secure Act is, how it applies to you, and what you can do about it… tune in below!  

Table of contentsThe Key Takeaways of the Secure ActContributionsPart-time Workers Get 401(k) OptionsTax BreaksParental AidThe Secure Act and IRAsHow the Secure Act Impacts InheritanceMaximize Your InheritanceBook A Strategy Call

If you have an IRA, the following changes to the tax laws are important for you to know. These changes can affect how your inheritance is distributed from an IRA, making it prudent to reassess your financial strategy. We want to help you continue to maximize your retirement and still leave an inheritance, should you choose. Staying on top of the changes and making some smart pivots can save you and your family on heavy tax penalties down the road. 

We have designed this article as an overview of the changes so that you can meet with your CPA and financial advisors with confidence. It’s always crucial to be informed, yet work with a professional on the specifics.

The Key Takeaways of the Secure Act

Before we can dive too deep into the impact of these changes, and what you can do differently, it’s important to look at what those changes are.

Contributions

Previously, you could make contributions to your traditional IRA until age 70 ½. Now, you can make those contributions indefinitely. This also means that you don’t have to take your required minimum distributions (RMDs) until age 72. The implications could be an increase in taxes, for two reasons:

Your account has more time to grow. While growth is good, this also raises your tax liability.That two-year window (or more) gives room for tax brackets to change, and it’s more likely that taxes will increase than decrease. So if you’re taking a higher distribution, and the taxes increase, the tax hit could feel even greater.

Part-time Workers Get 401(k) Options

In the past, part-time workers were not eligible for 401(k) plans. Now, the Secure Act has created a provision for long-term part-timers to make contributions to a 401(k). This broadens the scope of who is eligible for government-sponsored retirement plans, which could entice more people to participate. 

Those who are eligible? Anyone who works 1,000 hours in a year, or who has worked 500 hours a year for three consecutive years. 

Tax Breaks

The Secure Act also rolled in some tax breaks, many specifically for businesses. One of the bigger breaks is for businesses who set up automatic enrollments for employees. This means that rather than opting into a 401(k) plan, employees may have to opt-out. 

Parental Aid

Along with other changes, a provision was added that will allow parents to withdraw $5,000 without penalties, to help cover birth and adoption fees. This can help offset some of the typical costs of new parenthood. 

This is significant, because in the past any withdrawals from a qualified plan before a certain age would incur a penalty. Similarly, parents will now be able to withdraw up to $10,000 annually without penalty from a 529 plan to repay student loans.

The Secure Act and IRAs

One of the reasons provided for the change in required minimum distributions, is that people are living longer. Often, people are working longer, too. On one hand, this allows the money more time to grow, and helps it go farther in retirement. On the other hand, it also raises questions about the tax implications in the long-run. 

We think one of the most prudent questions to ask yourself is: “If I’m not paying this tax on my income today, what will that tax implication be in the future?” Because unfortunately, tax-deferment isn’t a free pass. While there are some strategies in which a deferral makes sense, there are other factors to consider, such as:

Will your income increase over time?Will taxes increase over time?Can you afford to live your current lifestyle on the interest of your IRA or 401(k)?How much do you want to leave to your heirs? (And how much will be taxed?)

How the Secure Act Impacts Inheritance

With an inherited IRA, we can see one of the biggest changes. In the past, a non-spousal inheritance of an IRA could be taken in small distributions over the beneficiary’s lifetime. This was referred to as a stretch IRA. Now, that inheritance must be taken in full over 10 years. According to Investopedia, this will create an additional $15.7 billion of tax revenue for the government. 

Our understanding is that you can either take these distributions incrementally over ten years, or in a lump sum at the beginning or end of the 10-year window. However, this is taxed as ordinary income. So regardless of how you take these distributions, there’s a possibility that that income is taxed in a higher bracket.

What we don’t know is how those brackets will change. Because not only can the percentage change, the margins of the brackets can change as well. This means that a well-intentioned inheritance can be less impactful than you intend it to be. 

Maximize Your Inheritance

When leaving an inheritance, we all want it to be as substantial as possible. When it’s undercut by taxes and fees, the impact we intend to make might not be possible. The Infinite Banking Concept with whole life insurance is one way to pass on a tax-free inheritance and ensure that your intentions are carried out. 

This type of strategy gives you the freedom to spend and save more, while still leaving your children with a brighter future. And it works well with other assets and retirement accounts. Take control of your finances today and live a more empowered life with both freedom of time and money. 

Book A Strategy Call

Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  

Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster.

That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth  … plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Curious about how investing in raw land could help you accomplish your financial goals? In this episode, we’re talking with Mark Podolsky, The Land Geek, the raw land investor who’s completed over 5500 land deals, with an average ROI of over 300% on cash flips, and over 1,000% on the deals he sells with financing terms.

https://www.youtube.com/watch?v=AMB7SWZLyn8

So if you want to learn from a raw land investor who’s replaced his income and helped many other people do the same … tune in below!

Table of contentsHow Do You Invest in Raw Land?Doing Your Due Diligence with Raw LandWhat Happens Next?How to Make Your Offer IrresistibleRaw Land Creates ValueThe Risks of Raw Land InvestmentsPrivatized Banking and Raw LandAbout Mark PodolskyLinksFind Out Your Next Step to Time and Money Freedom

How Do You Invest in Raw Land?

In our interview, Mark starts us out with a case study, using Bruce as a hypothetical. In this instance, Bruce lives in St. Louis, yet owns 10 acres of land in Texas. He also owes $200 of back taxes. He’s advertising two things here: no emotional attachment to that raw land, and there’s some sort of financial distress.

You, as the raw land investor, would look at the comparable sales on his 10-acre parcel for the last 12-18 months. Then, you take the lowest comp divided by four, giving you what Warren Buffett would call a 300% margin of safety. Then you’ll send an actual offer. Pretend the lowest comp is $10,000. You would send an offer of $2,500. Chances are, Bruce will accept the offer, because it’s better than nothing.

In Mark’s case, 3 out of 5 people typically accept his offers. Then it’s time to do his due diligence.

Doing Your Due Diligence with Raw Land

When Mark Podolsky talks about due diligence, here’s what he means:

Does “Bruce” still own the property?

Are the back taxes only $200?

What’s the ingress and egress?

Are there any breaks in the title's chain?

Are there liens or encumbrances?

Is there legal access?

What are the neighbors doing?

How far is the property from other services?

What are the roads like?

What is compelling about the property?

It’s crucial that before you make an investment on a property, you know all the important factors. You can also enlist help: Mark himself outsources this step to his team in the Philippines, because they are connected to an American title company. It’s not costly either. For larger investments, working with an American title company directly is beneficial. Or you can even outsource through Craigslist.

Taking the time or spending the resources to vet your land thoroughly will pay off in the long run.

What Happens Next?

The trick to raw land investments, after you vet the property, is to sell in 30 days or fewer. Then, you can make it cash flow similarly to a rental property, and be ready to invest in the next plot of land. So who do you sell to?

Fortunately, with raw land, you have built-in buyers: the neighbors. Intrinsically, the neighbors are going to have an interest in this land more than anyone else to start.  They may want it to protect their privacy, or to build out their estate. Giving them the first pass can often have a huge payout.

Should that not pan out, you have several other options to find buyers. Start with your buyer's list, then you can start looking online:

Craigslist

Facebook Marketplace (or buy/sell groups)

Land sale websites

How to Make Your Offer Irresistible

How you package and sell the land makes the offer irresistible. You ask for a $2,500 down payment and recoup your investment. Then, Mark recommends this: a monthly payment of $449 over 84 months at 9% interest.

This way, you have a onetime sale, earn your capital back, and then you have monthly cash flow without renters, renovations, or rehabs. Because you’re not dealing with tenants, you’re also exempt from Dodd Frank, RESPA, and the SAFE Act.

[13:28] “The game we play is, can we create enough of these land notes, where our passive income exceeds our fixed expense, and now we’re working because we want to, not because we have to?”

Raw Land Creates Value

One of the many benefits to raw land investing is that it doesn’t just line your own pockets. You’re fulfilling the needs of the seller. In our case study, Bruce was looking for a way out—he wanted to be free of the land and get caught up on his taxes. Then, you have buyers with a need, so you’re also solving their problem. It’s a win for all sides.

Nor can you forget about the county region. The county collects more tax revenue this way, so you’re helping to improve schools, hospitals, and county services as well. There’s value all the way down the line.

The Risks of Raw Land Investments

The first risk of investing in raw land is the environmental risk. Before buying any property, there’s another component to add to your “due diligence” list. Go to the epa.gov site to ensure you’re not buying a Superfund site. A Superfund site is a site that ensures that the company that pollutes the land is liable for cleaning it up. If you buy it, it does not make you liable, however, it can complicate the selling process.

The second risk to raw land is overpaying. You make your money on the buying of the property, so if you’re not paying 25-30 cents on the dollar, you’re overpaying. People will accept offers like that because they’re often trying to rid themselves of that land. Mark equates it to selling off the clutter in your garage.

[26:20] “Close your eyes and picture your garage right now, okay? And imagine I sent you an offer on all that stuff in your garage [for] 25-30 cents on the dollar. How happy would you be to accept that offer? Now yeah, you could go and try to take pictures of each item in your garage and try to sell them on OfferUp or eBay, but you’re busy. Right? That’s not what you want to do. It’s the same thing with the people who own raw land. They don’t want to learn how to market their own land.”

Privatized Banking and Raw Land

The power of the deals that Mark structures is that he recoups his investment immediately upon selling. So his monthly cash flow is pure profit. If you combine that with the power of the Infinite Banking Concept, you can continue to leverage your cash value repeatedly and pay your initial investment back.

This means that you can do more deals more quickly, because you are borrowing against your value and not carrying the loan for long periods of time.

About Mark Podolsky

Armed with only $3,000, gut-wrenching fear, and absolutely no real estate experience… Mark bought his first few parcels of raw land in 2001.

Today Mark is the author of Dirt Rich, the ultimate guide to helping you build a passive income. He's also the owner of Frontier Properties, a very reputable and successful land investing company, and has been buying and selling land full time since 2001. By focusing on working smart, not hard, he has completed over 5,500 land deals with an average ROI of over 300% on cash flips, and over 1,000% on the deals he sells with financing terms.

Prior to his land investing success, Mark had a high-stress, soulless corporate job, and felt trapped in a state of solo-economic-dependency (i.e. his income stopped as soon as he stopped working).

Escaping solo-economic dependency changed Mark’s life in so many positive ways that he decided to teach, coach and mentor others to help them achieve their financial goals.

Even though Mark invests a lot of his time helping others, he stays actively involved in running his land investing business, and is dedicated to teaching the most current and relevant “real world” land investing methods to his students.

Links

The Land Geek , Mark's company

Mark's course, "Wholetailing" (available free to our listeners)

Mark's email: [email protected]

Find Out Your Next Step to Time and Money Freedom

Do you want to use Privatized Banking, alternative investments, or cash flow strategies to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We would love to help you.  

Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/.

By the way, to find out more about how Privatized Banking gives you the most safety, liquidity, and growth  … plus gives you the ability to have your money do 2 things at the same time, boosting your investment returns. 

Go to https://privatizedbankingsecrets.com/freeguide to learn more.

Most people never maximize their full financial potential. That means they don’t accumulate the assets they could, and what they do save and invest isn’t protected and gets eroded too quickly. Then they take distributions in a way that shrinks their income, and they’re always trying to outrun the fear of running out.

https://www.youtube.com/watch?v=L2qIGF_hwn4

Sound too close for comfort? This doesn’t have to be you. 

We’re talking with another of our stellar advisors on The Money Advantage team, Scott McCright. You’ll hear the tenured experience he’s gained in over 27 years of working with clients, and his approach as an educator, strategist, and engineer.

So, if one of your goals for the NEW YEAR is a fresh start financially, where you take ownership and lock in a plan you’re CONFIDENT will maximize your potential and do the most with your money… tune in below!

Table of contentsIntroducing Scott McCrightDefining Financial FreedomStrategizing for Full Financial PotentialMindset MattersOpportunity CostReach Your Financial Potential with Privatized BankingBook A Strategy Call

As we usher in this New Year, it’s time to think about your finances with fresh eyes. We recommend starting by zooming out: by looking at the big picture of your finances, you can maximize your lifestyle with efficiency. That means maximizing your income, your protection, your assets, and ultimately, realizing your full financial potential. To do that, you have to know how the pieces fit together. 

Today, we’re sharing with you a way to think differently. 

Introducing Scott McCright

Scott is a member of the team here at The Money Advantage and offers a really valuable perspective to our clients. What we’ve seen time and time again is that he treats everyone as he would treat his friends. And that is so crucial to our mission here at The Money Advantage and treating finance like a team sport.

After spending time in the Navy, Scott transitioned into the financial services world in 1993. He started first in insurance, and then moved to securities, when he had a realization. He was seeing time and time again that everyone was told to do exactly the same things. The advice wasn’t tailored for the individuals, and no one was really hitting it out of the park either. How could everyone expect to have different results when they were making the same mistakes? So he joined hands with other professionals, to see if there was a better way to help people. 

[7:25] “I’m a big believer in, ‘There’s not one specific product that’s going to get you where you want to go.’ It’s more in the how and the why you do things than it is the where.”

Defining Financial Freedom

The financial landscape has gone through many changes over the last few decades, though people can more or less agree on one thing: they are looking for financial freedom. We think one of the best places to start, as highlighted by Scott’s quote above, is figuring out your “how” and “why.” 

Get clear on what you want. What does financial freedom look like to you? What will you be able to do once you reach financial freedom, that you cannot do now? There are a few things that happen here when you get really clear on your vision. The first is, you can create a plan, or a strategy. If you’re working with a team of advisors, bringing your ideas to the table can be a great asset to the process.

The next thing that happens is, you create a sort of discipline, because you’ve pinpointed the future that you want for yourself. You’re motivated, rather than defeated by what you don’t have. 

This combination pulls you out of the narrow view and allows you to think about your big picture finances. It’s easier to create long-term strategies to reach your full financial potential when you’re working toward specific dreams. This is the time to make sure that all the pieces and parts of your financial life are going to work together to get you there. 

Strategizing for Full Financial Potential

[10:03] “I think everybody always says taxes, well—taxes are a big thing... I’m a big believer in thinking, well okay, if I’m going to climb the mountain, I’ve got to have a way to get back down. People don’t plan for that, they plan on going up, but they don’t plan on coming down. And that’s where people fail.”

Strategy is an important part of your financial life. From income, to taxes, to acquiring assets—you must know where you’re going. Or to pull from Steve’s analogy, you have to know how to go up the mountain and how to come back down. 

It’s easy, too, to put it all on paper and know what you’ll do over the next 30 years. Except life happens over that time, and you must be flexible. Scott says:

[11:09] “I always tell people, you know, life gets in the way over those next 30 years, so don’t get discouraged if the plan has to change slightly. But you do have to have goals and aspirations and some discipline to get where you want to go. And that is why working with a financial professional is like the checkup, going to the doctor all the time.”

Mindset Matters

[16:19] “I think one of the problems I see more than anything else is, for some reason, people are taught to live in a scarcity mindset. So they’re making decisions based on reaction.”

To reach your financial potential, it’s wise not to be reactionary in your approach. Often, those reactive decisions come from a place of fear or emotion, rather than logic. You can also call this a scarcity mindset—where you live in a state of “not enough,” which affects your financial decision making accordingly. Our goal is to help foster an abundance mindset, where you look for and see opportunities to reach greater prosperity. 

Operating from a state of abundance, no matter your financial circumstance, allows you to slow down and think about the best next step for prosperity. So when the stock market crashes, you’re not jumping to move money around out of fear. Instead, you can take the time to move confidently in the best possible direction.

Money is not a finite pie, though it may feel like it sometimes. Especially if you’re allocating every dollar to a place on your budget. Abundance thinking is about assessing what you have and asking yourself how you can maximize the use of it so that you can create more streams of income and more assets. 

Opportunity Cost

[21:17] “The one thing I think people miss is that every financial decision that they have to make—whether it’s daily, weekly, monthly, annually—has a direct impact on every other decision they have to make.”

You'll have to make tough calls sometimes, like buying a new refrigerator, or fixing your car, where you must pull money out from somewhere. It’s important to remember that you finance everything you buy. In Scott’s words:

[22:07] “We either spend cash and lose the earning ability on that cash, or we borrow people’s money and pay them interest for the use of it.” 

So how do you use this principle of financing what you buy to make better decisions? You do what the wealthy do—you don’t relinquish control of your money. One way to do that is to create your own privatized banking system, using whole life insurance.

Reach Your Financial Potential with Privatized Banking

[25:04] “So what does life insurance do? It gives us tax favorable places to put our money that we can tap into today for other opportunities.”

Other products make you relinquish control—a 401(k), traditional IRAs, the stock market—these are all designed with as little control for the consumer as possible. If someone asked you to play Monopoly with them, but reserved the right to change the rules whenever they wished, would you play? And yet the government designs qualified plans to change in their favor. 

We’re not saying that it never makes sense to have a 401(k) or an IRA. However, whole life insurance is an ideal foundation because:

You’re in control of your moneyYou’re not penalized for accessing itIt offers guaranteed growth and security

Whole life insurance is one of the keys we use in our own finances at The Money Advantage. That's because it creates a bridge to all other assets, and helps you to reach your full financial potential.

Book A Strategy Call

Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  

Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster.

That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth  … plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Considering Infinite Banking, or IBC, but still a little skeptical?

https://youtu.be/UNw8fUMhiNU

In this episode, we’re talking with Dr. Robert P. Murphy, a free-market economist, who has testified before Congress on energy markets and monetary policy and has given many interviews on TV and radio. He is the author of hundreds of articles and several books on economic topics created for the layperson, including one of his most recent: The Case for IBC.

So if you want to hear from a highly respected economist perspective just why Infinite Banking works … tune in below!

In this episode on The Case for IBC, you’ll hear:

How the Nelson Nash Institute came to be

Common misconceptions about whole life insurance

What Dave Ramsey gets wrong about “buy term, invest the difference”

Why IBC is about more than just the rate of return

The future of dividend rates

And more!

Table of contentsIn this episode on The Case for IBC, you’ll hear:The Nelson Nash InstituteThe Case for IBCOther Common Objections of IBCThe Future of Dividend RatesClosing RemarksOrganize Your Finances or Get Life Insurance TodayThanks for Tuning In!

The Nelson Nash Institute

[7:00] “Carlos and I wrote a book called, How Privatized Banking Really Works.... That phrase [Privatized Banking] was actually Carlos, his idea.”

[8:23] “If you’re doing IBC, you’re not contributing to the problem, because the Austrian view is commercial banking that expands and contracts the credit supply. So if you’re...financing your purchases via policy loans, then you’re not contributing to the boom/bust cycle in the Austrian view.” 

[8:58] “...Carlos and I were going around, giving presentations to the public and life insurance agents would hire us often to come do that, you know, presumably knowing that they were going to be able to sell more if we came and talked to a crowd about...the big picture here... And so over time we just realized this isn’t going to work. We need a more formal way of both, you know, training agents to make sure they know what Nelson’s principles are and how to design these policies correctly, but also so we feel comfortable… [putting] the public into the hands of certain life insurance professionals… So that was the birth of the IBC practitioners program.”

You can find out more about Nelson Nash here: Nelson Nash: The Father of Infinite Banking (IBC)

The Case for IBC

[13:30] “... often this concept clicks with [business owners] sooner than with other people, is [because of] the importance of cash flow. So for like a salaried employee, you know, they kind of know every month how much money is coming in the door, and then they have their bills. And they’ve just got to make sure… [they] spend less each month than what’s coming in.”

[15:20] "I came across a pretty sophisticated critique of IBC a while ago, from another economist, and he said, 'You know, this concept actually makes sense. What they’re really doing here is using an asset as collateral to then borrow money from some other institution to finance their cash flow. And they happen to be using life insurance or using...the cash surrender value, and a dividend paying whole life insurance is the collateral... When in principle you could take your house, as long as you have a bunch of equity, and go to a commercial bank and take out either a home equity loan or a HELOC.'"

"And so... the concept the economist was arguing was, 'It has nothing to do with life insurance, and the only reason they’re doing it with life insurance is to get the commission.'"

"So I go through and explain why, actually, that’s a perfect illustration of why Nelson was right to pick this vehicle or platform of a dividend paying whole life policy."

Other Common Objections of IBC

[19:54] “So another common one is… 'Oh everyone knows a whole life policy is a terrible place to put your money, you should buy term and invest the difference.’”

[20:47] “The way we put it is that the whole life insurance policies are the platform upon which IBC is implemented. So yeah, if people don’t want their foundation, then they’re going to be hesitant to step onto it.”

[22:06] “It’s going to be clear, we’re not arguing that you should never get a term policy... but virtually, you know, they are trying to make the other case saying that you should never get a whole life policy, it is always advantageous to buy term invest the difference...So the big issue is, it’s an apples to oranges comparison.”

The Future of Dividend Rates

[29:40] "My prediction is that the Feds are going to keep the interest rates low until the point at which the dollar starts significantly slipping against other currencies. And/or domestically, prices start rising such that...it’s too painful and they have to start ratcheting up rates to stem that."

[30:20] “They can’t just keep interest rates at one percent, if price inflation is running at eight percent. They’d have to raise rates just like they did in the late 70s, early 80s.”

Closing Remarks

[38:00] “It’s not a get rich quick scheme, it’s a get rich slowly scheme... Like it’s amazing how much the thing grows. That’s basically just the power of compound interest.”

[38:30] “There are plenty of people who were up to their eyeballs in credit card or student loans or other types of debt. And they talked to somebody who knows how IBC works…[and they see] with the same cash flow, you can just rearrange what you’re doing and dig out of this much more quickly, and be on a better foundation. So I would just say to people, don’t think this is something that only pertains to wealthy people.”

Organize Your Finances or Get Life Insurance Today

Do you want to use Privatized Banking, alternative investments, or cash flow strategies to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We would love to help you.  

Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/.

By the way, do you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth  … plus gives you the ability to have your money do 2 things at the same time, boosting your investment returns? 

Go to https://privatizedbankingsecrets.com/freeguide to learn more.

Thanks for Tuning In!

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Want to optimize your money and maximize your wealth and income for life, and curious about how we can help?  Been listening for a while and want to learn more about our company and what we can do for you? Today, we're taking you behind the scenes of The Money Advantage.

https://www.youtube.com/watch?v=pS5o1gL_vzE

So, if you want to get to know us, what we do, and why we do this work … tune in below!

Table of contents“Why” The Money AdvantageRachel Marshall Bruce WehnerWhat is The Money Advantage Philosophy?Our 9-Step Signature ProcessFoundationProtectionIncreaseFinance is a Team SportBook A Strategy Call

“Why” The Money Advantage

Today, we’re sharing more about who we are and why we do what we do. First and foremost, the Money Advantage exists to help wealth creators build financial freedom. There are three key components to this wealth building:

Cashflow StrategiesPrivatized BankingAlternative investments

We’re your team of financial architects, and our goal is to help you get into a position where you never run out of money. What we so often see is people who make a lot of money, yet aren’t being as efficient as possible. This can create a lot of financial stress.

Money is emotional, and that causes people to hold their financial state close to their chest. Yet by not talking about money, we do ourselves a disservice. So we also look for ways to help people improve their money mindset. 

Rachel Marshall 

Rachel Marshall is the co-host of The Money Advantage Podcast, co-founder of The Money Advantage, and Chief Financial Educator. The education that she provides, through podcasts and articles and videos, helps you understand your financial life so you can choose a way forward. Her role is to look for any way possible to help you understand how to keep control of your financial life. 

Rachel has been a lifelong teacher—helping others learn the concepts she was learning herself. She looks most forward to seeing that flash of inspiration and awareness when someone understands something they didn’t know before. 

Nine years ago, Rachel went into this business with her husband, Lucas. It stemmed from a desire to build their own financial freedom. And what they realized was missing, at the time, was liquidity. After recognizing the need of wealth creators to maximize cash flow and have access to capital, they recognized the tremendous value of Privatized Banking and began their own policy. Then, a near-death experience truly opened her eyes to the importance of the death benefit and helping others build the greatest legacy possible.

Bruce Wehner

Bruce Wehner is the Chief Cash Flow Strategist & Lead Advisor at The Money Advantage. Growing up in the 60s' and 70s opened Bruce’s eyes to the financial struggles of business owners like his father. After Nixon removed the gold standard, massive inflation made it difficult for businesses to stay afloat, and interest rates were continuing to spike year after year. This got him thinking about personal finance, and how businesses worked. 

He then began a teaching career of 17 years, in which he experimented with entrepreneurial pursuits. It was at this time that he became involved in the insurance business and real estate. Eventually, he landed in St. Louis, where he remains today, and works with e3 Consultants Group and The Money Advantage.

Bruce is also a certified Nelson Nash practitioner, which means he focuses first on guarantees. Wealth building is first about the money you protect, not hitting a home run. So he helps people create financial teams and protect more of their wealth through guarantees. 

What is The Money Advantage Philosophy?

The financial status quo is to build the biggest pile of money possible and then live off of that money in the future. What happens too often with this strategy, is that the money is in the control of everyone else--investment managers, banks, and mortgage companies. This typical philosophy takes the control out of the individual’s hands. Then, that money is subject to future taxes, which are unknowable. Yet taxes are likely to increase, not decrease. 

We believe that cash flow is the way to build time and money freedom. This is the money that you get to keep from day to day. This can be through regular income, business revenue, or from cash flowing alternative investments. The freedom that comes from cash flow then gives you the freedom to choose what you do with your time. 

We don’t believe in the typical philosophy of retirement, where you build a pile of cash and then stop working. We would much rather see people enjoy their lives from day one and continue to thrive well into their older age through fulfilling wealth creation. And that looks like gaining control. 

Our 9-Step Signature Process

This is the exact process that we use to help people like you master financial control and freedom. This will help you fulfill your money’s highest purpose, so you can live a life of the highest significance. We split these steps into three phases: Foundation, Protection, and Increase.

Foundation

This is where we start with anyone we work with, which helps take you out of “survival mode.” This can happen at any income level, by the way, when your money isn’t working with you and you never seem to have enough. 

Money Mindset—In the first step of our foundational process, we help shift your mindset around money. We help you recognize the thinking patterns of abundance, stewardship, and value creation. This mindset of wealth is the foundation of your success.Cashflow Awareness—Once you’ve mastered your mindset, it’s time to assess where your cash is flowing each month. Though it can be a painful process, this step moves you from confusion to clarity. The Money Finder—Once you know where you’re starting, you can identify leaks and plug holes in your financial buckets. This can look like loan repayment strategies, restructuring your insurance, or optimizing taxes. 

Protection

Once you’ve completed the first three steps, you can protect the wealth that you have. This phase ensures that if something happens to you, no one can swoop in and steal the wealth that you’ve created for yourself. It’s better to do this before you need it, because it’s often too late to put in place when an event occurs. 

Livelihood Safeguard—Insurance can protect your income in the event of disability, poor health, and death. Liability insurance can protect you from scenarios you may never dream of. This step takes you from risk to safety.Legal Security—Estate planning and business entity formation can protect your investments, business, and your entire estate from creditors. Privatized Banking—Setting up a savings strategy through Privatized Banking can protect your money in many ways. 

Increase

Finally, we have the increase phase. Typical financial philosophy would suggest this first. However, without the other phases, your money is at risk and out of your control. 

Unique Ability Investing—Once you know yourself, you can leverage your unique abilities for the right investments. This can help you choose the best investments that win, and move from aimless to focused. Time and Money Freedom—If you can maximize your cash flow through unique ability investments, you can build freedom of money and time. You won’t have to work for money, instead, you can make your money work for you. Legacy Creation—By creating a legacy through proper strategy, you can build generational wealth and expand your impact and significance. 

Finance is a Team Sport

The Money Advantage is a team. When you work with us, you work with our whole team, not just one advisor. That means we leverage the unique abilities of each team member to help fulfill your needs and nothing falls through the cracks. We feel that this helps you get more education, more access, and more expertise. 

What sets us apart is our family office model, where you access a coordinated team of experts working together on your behalf towards your goals. Our Integrated Resource Network helps you with every aspect of your finances. Tax planning, investment strategy, insurance, and much more. No one person can be an expert in it all, and when you work with us, you’ll be able to have a well-rounded strategy with all of our experts. That’s how you’ll know that every aspect of your financial life is going to work in complete harmony.

Book A Strategy Call

Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  

Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster.

That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth  … plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.

Now and then, you have the chance to meet extraordinary people and learn more from their story than you ever thought possible. This conversation with Steven Sashen of Xero Shoes is one of those opportunities!

https://youtu.be/ZxaGb90SUtY

In this episode, we’re talking with Steven Sashen about shoes, speed, and success. He’s one of the fastest men over 55 in the country, co-founder of Xero Shoes that’s creating not only a brand, but a movement, he’s also turned down a $400K funding offer on Shark Tank.

So if you want to learn from a successful entrepreneur, so you can build a life and business you love … tune in below!

Table of contentsIn the Business of Making Xero ShoesFrom DIY to Worldwide RecognitionTurning Down Shark TankXero Shoes: A Fast-Moving CompanyChance vs. ControlTaking Responsibility of Your FinanceCash Flow in BusinessXero ShoesAbout Steven Sashen

We believe that his ability to create a community and a movement is something that you can benefit from as business owners and entrepreneurs. No matter where you’re at in the journey, we think you’ll find something valuable in this conversation with Steven Sashen. Enjoy the show notes below.

In the Business of Making Xero Shoes

When you think of how a business gets its start, you probably think of all the planning, designing, and prep work that goes into a brand. However, that’s not quite how things happened for Sashen.

[3:27] “The way it actually happened is my favorite thing, which was a complete accident. So what happened was...a little over 13 years ago, I was 45, I got back into sprinting after a 30-year break, which I don’t really recommend. I was getting injured constantly for like two years. And finally, a friend of mine, who’s like a world champion runner...said, ‘Try running barefoot and see if you learn anything about why you might be getting injured.’” 

This planted the seed, and Steven discovered that running barefoot allowed him to correct his movements with more ease and fluidity.

From DIY to Worldwide Recognition

When Steven Sashen finally hit his stride, everything changed. That’s when he knew he must lock-in the benefits of this natural movement. He had heard of natives in Mexico who ran with sandals made from scraps of tire. So he created his own version.

With some rubber from a shoe repair shop and cords from Home Depot, he created what we could consider his first prototype. Here and there, friends would request their own. Then one day, he was approached with the opportunity that started it all. 

A barefoot running coach was writing a book, and said that if Sashen treated this hobby like a business and made a website, he’d feature it in the book. In the following three and a half years, Xero Shoes became a DIY sandal-kit company. Now, Xero Shoes sells a complete line of casual and performance shoes, boots, and sandals. 

Turning Down Shark Tank

Early on, Xero Shoes appeared on Shark Tank. And though they were offered $400,000 Sashen turned the money down. This sparked a lot of discussion on whether he made the right decision. 

[12:38] “People kept telling us all along that we should be on the show, we didn’t even know what they were talking about. And then we found the show.”

Steven Sashen realized that, were they to get on Shark Tank, regardless of the outcome, it would be free exposure to millions of people.

[13:37] “The thing that was really valuable is that once they told us they wanted us on the show, it really made us focus on who were are, what we did, and what we wanted.”

[15:40] "So the key moment though, was that thing with Kevin, where he offered us 400 grand for half the company, [and] we were offering 8% of the company. We had done a lot of research about valuations of footwear brands. And so we knew what the range for yes and no was, we were very negotiable. We just didn’t get that far, and so it was a non-starter.”

Xero Shoes: A Fast-Moving Company

[20:12] “You’re constantly running two races when you’re running a business. One is a speed race: velocity is important. The more you can do, the better. The faster, the better. At the same time, there’s certain things you can’t rush. And luckily, my wife and I have different skillsets and mindsets. So I’m the sprinter. She’s the detail-oriented, long-distance person.”

[20:48] “The line that I have is that all businesses rise to the neuroses of their founders.”

Essentially, combining skill sets in a business is the key to success. The more you can balance out, the greater accomplishments you can achieve together. This is the model that Steven and Lena have operated under, and found outstanding success.

Chance vs. Control

In business, Steven Sashen shares some interesting insight. He relates it back to barefoot running, where he had to analyze the information his body was giving him and make corrections, all in a split second.

[28:02] “It’s a weird thing, because you’re going to take in all that information and you’re going to make a decision, and you’ll either be right or not. It’s not like you can take it all in and you’re going to get the right answer...Like the line…’1000 miles begins with a single step.’ 

I asked a guy who translates from Chinese, I said, ‘Since there’s not a tense thing in Chinese, isn’t it as true [to] say a journey of 1000 miles is a single step?’ And that’s the way that I think it’s like; you take a step, you reevaluate. You take the next step, you reevaluate as best you can.”

He and his wife thought Xero Shoes would always be a DIY sandal company. Yet if they had stuck to this plan instead of reevaluating, their lives and their business would be completely different. This is the difference between a vision and a set goal. 

Taking Responsibility of Your Finance

Living successfully and building time and money freedom isn’t simply about finding the perfect product or advisor. At the root, it’s about finding the best process for yourself, and taking responsibility and control of your circumstance. 

[49:31] “As human beings, we’re looking for the things that will get us what we want. And if someone says, ‘Here’s a simple thing that will do that”...off we go. It’s rarely that simple. But when it comes to running or walking or hiking, you do become your own best coach.” 

Finance is the same. The better education you can give yourself, the more you can learn and then trust your gut and take control, the better outcomes you’re likely to have. Without the education and the confidence, there’s no perfect product.

Cash Flow in Business

[50:50] “If you don’t know what’s happening with the money in your business, you’re not going to have a business. End of story.”

[51:15] “We used to have what Lena referred to as the February problem. We had to pay for our product in December/January, it was going to land in February, and we weren’t able to sell it until March. So we had this February dip in income that we had to cover somehow...And if you don’t know things like that, if you can’t project--'Here’s when I don’t know how to make payroll”--then that dip is going to be even worse.'”

Xero Shoes

xeroshoes.com 

About Steven Sashen

Steven Sashen is a serial entrepreneur who has never had a job, a former professional stand-up comic and award-winning screenwriter. And a competitive sprinter—one of the fastest men over 55 in the country (maybe the fastest 55+ Jew in the world!). He and his wife, Lena Phoenix, co-founded the footwear company Xero Shoes, creating "a MOVEMENT movement," which has helped hundreds of thousands of people "Live Life Feet First" with happy, healthy, strong feet in addictively comfortable footwear. Steven and Lena also appeared on Shark Tank, where they turned down a $400,000 offer from Kevin O'Leary.  

Find Out Your Next Step to Time and Money Freedom

Do you want to use Privatized Banking, alternative investments, or cash flow strategies to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We would love to help you.  

Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/.

By the way, to find out more about how Privatized Banking gives you the most safety, liquidity, and growth  … plus gives you the ability to have your money do two things at the same time, boosting your investment returns. 

Go to https://privatizedbankingsecrets.com/freeguide to learn more.

Like a business, churches and other non-profits have a need for financing. Today, we’re discussing options to keep the church financing in-house.

https://www.youtube.com/watch?v=cSnti9l_C40

So, if you want a strategic financing strategy that guarantees your church or other 501(c)3 would never lack the funding to accomplish the most important mission of all… tune in now!

Table of contents* Funding Not-For-Profits* Infinite Banking Concept for Churches* Will Infinite Banking Work For Every Not-For-Profit?* You Don’t Need to Operate on a Razor-Thin Budget* Who Should Be Insured for Church Financing?* Book A Strategy Call

Funding Not-For-Profits

If you’re running a church or other not-for-profit business, chances are you need funding. Funds allow you to create more good for your community and accomplish what is likely a big mission. Without the proper funding, especially consistent funding, those goals can seem out of reach.

Donations are a common source of funding for churches, as well as bank financing, yet relying solely on these methods of financing can be unreliable. If you’re seeking to achieve big goals and take care of a broader community, control of financing is crucial.

Fortunately, you can use Infinite Banking for church financing. However, in a church or other not-for-profit sector, it’s likely that much of what you do must include collaboration. In other words, there has to be some consensus. This can mean educating your peers and other church leaders, as well as discussing how privatized banking can benefit your church or not-for-profit. (Note: We recommend having your board or administration speak with a financial professional, as the conversation can be complicated.)

Infinite Banking Concept for Churches

Why might a church want to use infinite banking? If you’re considering the Infinite Banking Concept for your organization, this is a great question to ask. For many institutions, we believe the answer might be that funding a life insurance policy allows you to save money and finance projects without a third party, such as a bank. This can add more stability to your organization’s financing, beyond the tithe, donations, and banks. 

“If you have large reserves, and you’re trying to store that cash as effectively and efficiently as possible so it can do the most good for you, then infinite banking would be an ideal storage place.”

That’s because the cash value of a life insurance policy allows your cash to work as hard as possible while you’re waiting to use it. Not only this, but the death benefit of the policy will help you plan in the long-term for your church or organization. When that benefit is paid out, it can be used for ongoing financing for the church or organization.

Will Infinite Banking Work For Every Not-For-Profit?

If, however, your organization does not have a lot of cash reserves or has a lot of debt, you may not want to start a policy right away. That’s because you must still have a way to fund the policy,

Want to shelter your assets from the prying eyes of the IRS, claims of creditors, or the public? Can creditors take life insurance proceeds after death? In many cases, the answer depends on how your policy is structured.

https://youtu.be/yu7D09hTe3M

Cash surrender value and life insurance proceeds are exempt from creditors in most states. In this episode, we’re talking about the privacy and creditor protection of life insurance.

So, if you want to know how to protect your wealth from future risk of creditors taking life insurance proceeds through litigation, civil suits, bankruptcy, or even divorce … tune in below!

Table of contentsWhat You’ll LearnWhere Creditor Protection of Life Insurance Fits In The Bigger PicturePrivacy and Protection LiabilityLiability Insurance and AutoThe Privacy of a Life Insurance PolicyCreditor Protection of Life Insurance Cash ValueFederal LawHow Creditor Protection of Life Insurance Policies Varies by StateWhat States Protect Life Insurance Cash Value from Creditors?When Life Insurance Exemptions Don’t ApplyOther Types of Asset ProtectionFor More Information on Protection From the Claims of CreditorsBook A Strategy CallFAQs About Life Insurance and Creditor ProtectionCan creditors take life insurance proceeds after someone dies?Does life insurance have to be used to pay the deceased’s debts?Is life insurance cash value protected from creditors?Can debt collectors take life insurance money from beneficiaries?Do federal laws protect life insurance policies?Sources

What You’ll Learn

Whether creditors can take life insurance proceeds after a policyholder’s death

How life insurance cash value is protected from creditors in many states

Why some protections vary depending on state vs. federal law

When life insurance may not be safe from creditor claims or bankruptcy

How privacy features in whole life insurance work in your favor

Where life insurance fits into a broader asset protection strategy

Where Creditor Protection of Life Insurance Fits In The Bigger Picture

Life Insurance is just one step in the greater Cash Flow System. But where does it stand when it comes to asset protection? Can creditors take life insurance proceeds after death, or does this financial tool offer legal safeguards?

While it’s nestled into Stage 2, Protection, it also improves everything else around it. Infinite Banking helps you keep more of the money you make in Stage 1, amplify your cash-flowing asset strategy in Stage 3, and accelerate your Time and Money Freedom.

Privacy and Protection Liability

Privacy and protection liability are never something you need until you actually need them. In other words, most of us operate as if “it won’t happen to us,” and when an event occurs, it’s too late to protect against it.

This is where life insurance can quietly offer protection from legal claims or judgments that threaten your financial security. For protection from creditors and protection in bankruptcy, it’s not the wealthiest who need protection the most, although they’re the most likely to protect their wealth. The people who should be most interested in asset protection are those who have fewer assets and cannot afford to lose them.

Understanding how life insurance protects against creditor claims is essential for anyone looking to keep their assets intact under pressure. Asset protection isn’t the most exciting topic, yet it is something that the wealthy think about. Success leaves clues–follow these clues that the wealthy leave and see how they grow and protect their assets. 

Liability Insurance and Auto

A Property and Casualty insurance agent once said, “People don’t think about liability until after the fact”. So much so that many people think that their auto insurance covers all liability. It doesn’t. 

So, if your dog bites somebody at the park and causes an injury that lands them in the hospital, those hospital bills can come back to you. If the bills are above your liability coverage, a creditor can take this debt and potentially use your assets to cover it. 

Small or random incidents like this can happen, and they do happen all the time. Then, because we don’t think we need protection from them, we don’t have it in our times of need. It’s one thing to have an emergency or opportunity fund; it’s another to have a protected asset like a whole life insurance policy to act as this fund that creditors cannot garnish or seize. 

That’s the key distinction: liability insurance covers specific risks, while life insurance offers broader, long-term asset protection that can’t be tapped by creditor claims in most states. 

The Privacy of a Life Insurance Policy

Life insurance is an incredibly private asset, meaning no one can really see past that insurance barrier and know how much wealth you have. This level of life insurance privacy from creditors and outside parties is one of its most underrated benefits. Privacy, especially around finance, is a significant concern in our society.

Privacy is a huge advantage of whole life insurance. You don’t need to report your life insurance policy’s earnings to the federal government. It’s so private, in fact, that you need not report it as an asset when applying for federal aid.

If your child is applying for college assistance through FAFSA, you don’t need to include your life insurance policies on the form. This can help your student receive better funding. Nor are you required to list it as an asset on loan applications, although sometimes it can help you secure better loans.

The non-public nature of life insurance assets gives you the ability to grow and access wealth discreetly, without making your financial position vulnerable to outside scrutiny.

Creditor Protection of Life Insurance Cash Value

As a living asset, whole life insurance has tremendous benefits in the way of Privatized Banking. It’s a tool for legacy and estate planning, via the life insurance policy proceeds, which provides peace of mind. 

It won’t drop in value, it’s accessible to you, and it improves every other area of your financial life. We often focus on these aspects of life insurance, but we haven’t really addressed creditor and bankruptcy protection before. One of the most overlooked advantages is how life insurance cash value is protected from creditors in many states.

Life policies offer a private safety net that benefits society as a whole. By contract, the life insurance company is obligated to pay policy proceeds to the beneficiary. Because the proceeds are for the beneficiary's benefit, life insurance offers protection under both federal and state law. This benefit to society is why these exemption laws exist.

Like all insurance, life insurance transfers risk away from the policyholder. At the highest level, creditor and asset protection is about keeping your wealth safe from events that could cause loss. These events include:

lawsuits

divorce

bankruptcy

or overdue debts

When events like these occur, your assets can be garnished or attached to a claim. The protection varies widely; however, having your life insurance cash value protected from creditors can offer a legal buffer that many other financial tools lack.

Federal Law

The Federal Bankruptcy Code protects the actual insurance element, the life insurance death benefit proceeds, and up to $13,400 of dividend, interest, or loan value in the life insurance policy. The government adjusts this value every three years, though it remains modest. Additionally, the debtor must be the policy's owner.

In most cases, federal protection of life insurance proceeds applies only in federal bankruptcy cases. Otherwise, you must comply with the regulations of your state. Some states allow you to choose between federal and state bankruptcy exemptions, so understanding both is important when evaluating your protection level.

How Creditor Protection of Life Insurance Policies Varies by State

What States Protect Life Insurance Cash Value from Creditors?There are wide variances in the state code regarding life insurance and creditor protection. Some states protect life insurance from creditors, others don’t — and the rules around bankruptcy may differ entirely. In some states, they protect cash value from bankruptcy but not creditors. In other states, it’s protected from creditors but not from bankruptcy. Some states have a limit to their protection, such as the first $10,000, while other states are much more generous.

Furthermore, state law often protects both cash value and life insurance death benefits in non-bankruptcy contexts. Otherwise, exemptions are often only extended to the beneficiaries of the debtor. In some states, the exemption only applies to the insured’s family members.

When Life Insurance Exemptions Don’t Apply

Unfortunately, life insurance isn’t a viable solution for creditor exemptions in every instance. There are situations when life insurance proceeds may not be safe from creditors — especially if intent or timing raises legal concerns. As we said earlier, it doesn’t work well if you’re already in hot water with a creditor. For example, if you paid your premium to defraud a creditor, the protection won’t apply.

You’ll find that you won’t have protection if you assign your policy to secure a debt, either. These exceptions are why it's important to use life insurance proactively, not reactively, when planning for asset protection.

Other Types of Asset Protection

Aside from life insurance, there are other ways of protecting your assets. One simple and affordable way to protect yourself is with umbrella insurance or liability insurance. You can add this to your homeowner’s or renter’s insurance, and it’s very cheap. Most times, you can get up to $1 million in coverage for as little as $200-$300 a year.

Accidents happen, and if they happen on your property,...

Should you be concerned about asset protection? What types of risk should you know about? What you don’t know about protecting your assets CAN hurt you. In this episode, we’re talking with Douglass Lodmell, one of the nation’s leading asset protection experts and founder of Lodmell & Lodmell about asset protection and how it works.

https://youtu.be/d173g5beiU8

So if you want to learn about the keys to asset protection, why insurance isn’t enough, and how to protect real estate, other physical assets, securities, and liquid assets … tune in below!

Table of contentsWhere Asset Protection Fits into Your Cashflow Creation SystemHow to Keep Your WealthWhat is Asset Protection?Life Insurance as Asset ProtectionLLCs and Limited Partnerships as Asset ProtectionSetting Up Your LLCMisconception of LLCsThe Next Level of Asset ProtectionAsset Protection TrustFraudulent TransferAbout Douglass LodmellContact Douglass LodmellFind Out Your Next Step to Time and Money Freedom

Where Asset Protection Fits into Your Cashflow Creation System

Protecting assets with legal planning will maximize your peace of mind.  But it’s just one small step of a greater journey.

That’s why we’ve put together the 3-step Entrepreneur’s Cash Flow System.  

The first step is keeping more of the money you make.  This includes tax planning, debt restructuring, cash flow awareness, and restructuring your savings so you can access it as an emergency/opportunity fund.  This step frees up and increases your cash flow, so you have more to save, and consequently, more to invest.

Then, you’ll protect your money with savings, privatized banking and legal protection.  This is where estate planning fits in.  You’ll know that no matter what happens to you, your wishes will be carried out, your assets will remain intact, and your wisdom will empower generations after you. 

Finally, you’ll put your money to work and get it to make more by investing in cash-flowing assets to build time and money freedom and leave a rich legacy.

How to Keep Your Wealth

Once you’re wealthy, the trick is to stay wealthy. One of the number one reasons that a person's wealth comes crashing down is a lack of proper asset protection. Unlike other countries, the United States is very litigious. To put it bluntly, people don’t sue the poor, so you have additional risks to mitigate when you build wealth. 

Douglass Lodmell, of Lodmell & Lodmell, is one of the nation’s leading asset protection attorneys. His firm handles $4 billion worth of assets. He shares with us the pyramid of asset protection, and why it matters.

What is Asset Protection?

Asset protection comes in many forms. If you don’t have any assets, that’s asset protection. Similarly, having assets that are exempt from creditors acts as protection. For example, you could have a $15 million home in Texas, and $100 million in debt, and no one could touch your home because of Texas' homestead exemption. 

Another protected asset? Retirement funds, because under the ERISA (Employee Retirement Income Security Act), the government decided not to allow people to lose retirement money through lawsuits. Otherwise, the burden would be back on the government.

True protection begins with a review of all your assets. Then you can identify what's exempt, and where to strategize. Asset protection strategies take your assets back off the table and away from creditors and lawsuits. 

Life Insurance as Asset Protection

Life insurance is another asset that typically falls into the exempt category, however this varies from state to state. In some states, your entire policy could be exempt from creditors, while in other states, only a portion is exempt. 

When you’re looking to protect your life insurance, first you must look at your state. If you have 100% exemption, you don’t need to do anything else. If it’s not, then you look for other ways to protect it, either through holding companies or directly into asset protection stocks.

LLCs and Limited Partnerships as Asset Protection

Limited partnerships and LLCs have charging order protection. They protect assets because creditors cannot foreclose on a limited partnership and get the underlying asset. All they can get is a charge, which you can think of as a lien against the debtors interest in that limited partnership. This is the foundation of an asset protection strategy.

Setting Up Your LLC

When setting up your LLC, you must consider jurisdiction. If you do not establish your LLC in the jurisdiction where you’re investing in, it has no value. For example, you wouldn’t invest in California real estate, and then set up your LLC in Wyoming because you like the statute better. Otherwise, if you get into trouble in California, California law applies to your case. You’ll just end up paying more fees.

LLC is great for most assets, especially real estate, which reduces your liability as a landlord and protects the value of a property. Your inside liability is protected to a certain amount through an LLC, which is why you must appropriately spread your properties under different LLCs. The distribution depends on your risk tolerance. LLCs also protect from outside liability, or events that don’t occur directly inside the property. 

Other assets you can put under an LLC? Rare and expensive cars, boats, planes, and other similar assets. 

Misconception of LLCs

A common misconception is that you must have an LLC for every property you own. However, this only really applies to inside liability. If you own an LLC on every property, you’ve just created more paperwork and more fees for yourself. 

Instead, consider separating properties under LLCs based on equity value rather than property number. That way, instead of 12 LLCs for 12 properties, you’re more likely to have one or two LLCs. 

Of course, it's important to refer to your jurisdiction when making such decisions.

The Next Level of Asset Protection

LLCs are like the base layer on the pyramid of asset protection. The next layer is a holding company that contains all of your LLCs. While the base-layer may comprise single-member LLCs, you’ll want to have a multi-member LLC at the holding company level. This is also where you do get to choose your jurisdiction for your holding company. 

Good jurisdictions include: Nevada, Wyoming, Delaware, Arizona, and Alaska. These states are much better at protecting assets.

Asset Protection Trust

After the holding company, you have the third and final layer: the asset protection trust. Sometimes, the holding company may be enough to cover all of your assets. $600,000 or less in assets means you can probably stop at the holding company layer, with significant umbrella insurance.

Once you go upwards of $1 million, those entities may not be enough. That’s because your assets may block a creditor from foreclosing on the asset, but they won’t eliminate the creditor. They can still get a lien or charge against the holding company. 

To eliminate the creditor, you’ll need the asset protection trust. This trust, set up with special provisions, blocks creditors from reaching assets within the trust. It’s also called a self-settled trust, which means you’re creating the trust for yourself, and you’re the beneficiary.

In order to keep these assets safe from creditors, you must also make the trust irrevocable. That way, you cannot reverse the trust and put all assets back under your name and within your creditors' reach. Otherwise, a judge could compel you to reverse your trust.

Fraudulent Transfer

Fraudulent transfer doesn’t refer to a physical move. It refers to legally transferred titles. If you sign your house over to your brother right after losing money in Vegas, that’s a transfer. However, because it’s done with the intent to delay, hinder, or defraud a creditor, it can be reversed. 

In some cases, it doesn’t even matter if the event has occurred or not. If there’s mold on a property, and you fear you’ll be sued and make title transfers to protect yourself, the courts can interpret that as a hindrance. 

The trick to asset protection is that you have to do it before anything happens, otherwise it can be fraudulent. You must protect assets before you have a creditor, so that in the future no one can say you’re dodging a specific event.

Douglass’ philosophy is that as soon as you need your first LLC, you should build your asset protection structure. Be cautious of a do-it-yourself protection plan. It’s an extremely complicated structure, and it’s too easy to make your assets work against you. Even calling and getting an analysis can leave you better off. 

About Douglass Lodmell

Douglass Lodmell is Managing Partner of Lodmell & Lodmell, P.C., one of the nation’s leading Asset Protection Law Firms. Originally from Geneva, Switzerland, Douglass stood out at an early age as one of the brightest minds of his generation. His capacity to make the complex simple allowed him to excel during law school, receiving the Jacob Burns Medal, an award given to the single student with the highest GPA. He completed his Legal Masters (LL.M.) in taxation at the nation’s leading tax program, New York University School of Law. 

Today, Douglass’ law firm protects over $4 Billion in client assets. Douglass spends much of his time teaching, speaking, and leading thousands of business owners, corporate executives, investors and other professionals who have often worked most of their lives to accumulate wealth of various types, including real estate and securities. Douglass is also author of the book The Lawsuit Lottery: The Hijacking of Justice in America. 

Contact Douglass Lodmell

Lodmell & Lodmell

800-231-7112

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Financial Strategy Call – Discover how Privatized

Are you considering whole life insurance and want to know which is better: Direct vs. non-direct recognition life insurance companies? What does it mean? Why does it matter? How does it impact your policy's average rate of return? And should it be a part of your decision-making process?

https://www.youtube.com/watch?v=y1UZ_EYIns0

In this episode, we discuss the why, how, and what of direct recognition vs. non-direct recognition so you have the knowledge you need to decide.

So if you want to know how a life insurance company's treatment of dividends when you have a policy loan affects your policy's cash value growth over time and your future ability to borrow against your policy for Infinite Banking, this episode is for you.

We'll help you find out whether it matters and, most importantly, tune out the biased opinions of some who say you should ALWAYS have it one way, and NEVER the other.

You’ll really understand it, so you can get the best dividend-paying whole life policy, tune in below!

Table of contentsWhat You'll Learn Where Whole Life Insurance Policies Fit Into the Bigger PictureWhat Does Direct or Non-Direct Recognition Mean?How Direct Recognition WorksHow Non-Direct Recognition WorksWhy the Comparison Isn't Always ClearDirect vs. Non-Direct Recognition CompaniesHow Policy Loans Affect DividendsFixed vs. Variable Loan RatesShould You Choose Direct or Non-Direct Recognition?Check Company Ratings & Customer ServiceChoosing the Best Life Insurance CompanyReady to Start Your Life Insurance?Frequently Asked QuestionsHow do I find out if a company uses direct or non-direct recognition?Will one recognition type always outperform the other?Besides recognition method, what loan terms should I compare?Can I change my mind about the recognition method after I buy a policy?

What You'll Learn 

Here's what we'll cover:

Direct vs non direct recognition explained - What these terms actually mean and why you should care

How to identify recognition method before policy purchase - The right questions to ask your agent

What does direct recognition mean for policy loans? How does it really affect your dividends when you borrow

Direct recognition life insurance companies - How to size up different insurers and their approaches

Choosing between direct or non direct recognition - Which one makes sense for how you'll actually use your policy

Where Whole Life Insurance Policies Fit Into the Bigger Picture

When you're building a solid financial foundation, the details matter. That's why dividend strategy matters in life insurance, especially when you understand how recognition methods affect your long-term results.

Privatized Banking with whole life insurance is just one part of the bigger journey.

That’s why we’ve developed the 3-step Cash Flow System. It’s your roadmap to go from just surviving to a life of significance, purpose, and financial freedom. 

The first stage is the foundation. You first keep more of the money you make by fixing money leaks, becoming more efficient and profitable. 

Then, you protect your money with insurance and legal protection and Privatized Banking. 

Finally, you put your money to work, increasing your income with cash-flowing assets.

What Does Direct or Non-Direct Recognition Mean?

When you’re shopping for a life insurance policy, you’re likely going to hear an insurance agent use the terms direct and non-direct recognition thrown around often.

The terms have roots in the relationship between dividends and policy loans. Whole life insurance dividends are the non-guaranteed part of the life insurance contract, though historically, companies have an excellent track record of paying dividends. Each year, companies will declare their dividend rates. 

How Direct Recognition Works

Companies handle dividends differently depending on whether you have an outstanding policy loan. Direct recognition companies directly acknowledge outstanding policy loans and will pay dividends accordingly. This often means that they have a different, unpublished rate for any money that is being borrowed against. 

How Non-Direct Recognition Works

On the other hand, non-direct recognition companies pay dividends at the same rate, regardless of any policy loans. The trade-off is that Non-Direct Recognition companies only have one dividend rate, which often seems lower than direct recognition dividends. 

Why the Comparison Isn't Always Clear

However, companies all declare dividends differently, so it’s not an apples-to-apples comparison. It’s tempting to see a higher dividend and jump on it, but these rates are projections.

Factors such as the age of your policy and your paid-up additions can affect whether you get more or less than the projection. Whether or not you will use your policy as a family bank will also change which option you go with.

Direct vs. Non-Direct Recognition Companies

With non-direct recognition vs. direct recognition insurance companies, there are strong opinions on either side of the argument. We truly believe that there is a middle ground, and caution you against anyone who explicitly states that one or the other is ALWAYS or NEVER better. This simply isn’t the case.

If one of these things was truly better by a significant margin, they would not both exist today. And yet both models are going strong. In truth, there are no deals in the life insurance industry — it’s all a balancing act. If a company projects a dividend, there’s always a trade-off to balance it out.

A whole life insurance contract should be mutually beneficial. You benefit from having lifetime coverage, a compounding cash value, and other guarantees. However, the company can only offer these guarantees because of premiums, dividend structures, and other balances.

You should want them to be successful and stable, too, because it directly benefits you. Would you want a company that can’t hold up their end of the contract?

How Policy Loans Affect Dividends

The ability to be your own banker by taking loans against your cash value is the cornerstone of Infinite Banking strategies created by Nelson Nash. The value is that you never reset your compounding interest because you’re not making a withdrawal. So your money can grow uninterrupted, while you can still use it. 

With policy loans, the direct versus non-direct argument comes into play. Direct recognition means that although you have cash value accumulation, any collateralized portion will have lower dividends paid. Non-direct recognition means that the cash values are not impacted by policy loans. 

Say “Insurance Company A” declares a 5.5% dividend, and “Insurance Company B” declares 4.5%. It is tempting to think that Company A has a better deal. However, that company could be a direct recognition company, and that loan interest rate may not accurately reflect your rate if you plan on borrowing against your policy.

To understand this, we have to step into the shoes of the company. They want to get the highest rate while remaining conservative, so they have longevity. So it makes sense that to project higher dividends, they balance it somewhere. 

Fixed vs. Variable Loan Rates

When you're evaluating whole life policy loans, you'll find that recognition type often correlates with the loan rate options companies offer. Some give you flexibility, others prioritize predictability.

The rate at which you’re loaned money correlates to the dividend rates. Some companies will offer both fixed and variable loan interest rates, which you can decide at the time of your loan.

Often, a fixed rate is higher than a variable rate, yet offers certainty that your rate is locked in. A variable rate tends to be lower, yet gets adjusted each year based on costs. 

It’s important to note that the dividend rate will usually stay higher than the loan rate. The dividend and the loan are both interest-rate environment-driven components, and one won’t change independently of the other. This means that even though your loan rate could change from year to year, it will almost always be lower than the dividend rate, stabilizing your policy.

Should You Choose Direct or Non-Direct Recognition?

When you look at direct vs. non-direct recognition, neither is significantly better than the other. 

Direct recognition companies may offer slightly higher dividends. However, they compensate with a lower rate by offering a direct recognition loan. 

Non-direct recognition companies often have lower projected dividends, but all of your money, collateralized or not, will earn the same rate. 

It’s also important to note that companies won’t advertise whether their dividend projections are gross or net. In the grand scheme of things, the performance of your policy will be more or less the same no matter what you choose.

Companies don’t guarantee dividends, and the projections don’t fully represent how your account will grow. So, though a non-direct recognition company may make more sense from a privatized banking strategy, research shows accounts will average about the same, regardless.

Check Company Ratings & Customer Service

There are no deals in the life insurance industry; everything is a trade-off, and everything balances out. When looking for the best company, we recommend looking instead at financial ratings and their dividend history. Current dividend rates and future projections won’t tell you much—they’re not guaranteed. 

However, you can learn a lot from what has happened and how companies manage their finances and dividends accordingly. 

Check the company ratings through Standard and Poor's, Moody's, and other rating companies. Research the overhead costs of each company, which can tell you a lot about a company.

Look at customer service, as you’ll be working with this company for life. A trustworthy company will be worth more to you in the lo