Tax Free Wealth Transfer

Chris Bay:

Welcome to the Life Success & Legacy podcast. My name is Chris Bay and I’m joined today with the founder of Life Success & Legacy, Mike Everett. Hey Mike, last time on our podcast, we talked about the third area that Infinite Banking can address again. The first one, just to review for our listeners, the first is eliminating debt rapidly, typically three to eight years. Second is how to finance everything in your life even after you’re debt free.

The one we talked about last time was on a tax-free retirement or as Nelson puts it, passive income. What we’d like to talk about today is how do we then transfer wealth when our time on this Earth is done? This really speaks to the brilliance of Nelson Nash. He knew that banking was an unbelievable, unbelievably powerful tool. I mean, you always talk about if you drive up and down the streets in any town, what are the nicest buildings?

Mike Everett:

Banks.

Chris Bay:

The banks. So if Nelson understood that banking was really powerful, but not everybody can get into the banking business the traditional way. He actually discovered a way where you and I, common folks, common business people could actually create their own banking system. The key was where to store your money.

Mike Everett:

Correct.

Chris Bay:

Talk about that.

Mike Everett:

Well, once again, I talk traditionally first because we were taught to put our money in a savings account, or a checking account, or a mutual fund, an IRA, a stock account, or a 401k, but as most people have found out, when you start getting into tax qualified plans, like a 401k, a 403(b), mutual funds, annuities and such, having access to that money is pretty tough. So what Nelson has done is he has realized that because of the way life insurance was created and oh, by the way, life insurance was created more than 125 years prior to 1913, which that’s when the income tax law was put into place.

Everything that was created after 1913 is a part of the income tax code, but traditional dividend-paying whole life insurance with a mutual company is not a part of that. But what Nelson discovered was, was the re-engineering or the redesigning of the policy to flood it with cash versus the death benefit. Make sense?

Chris Bay:

Yeah. So typically a life insurance policy is designed for the death benefit. We want the death benefit to be as high as possible and we want the cost of that life insurance to be as little as possible. That’s why term is so-

Mike Everett:

That is traditional, that’s correct.

Chris Bay:

… yeah. But what Nelson figured out is if you decrease the emphasis on death benefit and you increase the emphasis on the cash value part of the life insurance policy, you can accomplish multiple things. One is, you can use it to finance your life and then at the time when you actually are going to need that death benefit, at the chance of when you are going to pass away, there is plenty of death benefit available. When we go back to the equipment financing gentleman that we talked about in our last podcast, by the time he needed that death benefit, he had more than enough.

Mike Everett:

Yeah, it was two to four times the amount of death benefit than if he would have just bought a traditional life insurance plan. So, just because of the engineering of the plan, what happens is not only does the cash get higher, but the death benefit outperforms even the cash as time goes along.

Chris Bay:

Wow, that’s pretty amazing. Now we say that in the fourth area is that it is tax-free wealth transfer.

Mike Everett:

Correct.

Chris Bay:

Why is that?

Mike Everett:

Well, because you, as the owner of the policy, you get the opportunity to direct exactly where you want that money to go. Most people because of their kids, grandkids, et cetera, they want the money to flow down into the family. That is part of the long-term thinking that Nelson helped us with who are Infinite Banking authorized practitioners think through, because we want that money to flow income tax-free to the next one or two generations as life happens.

Chris Bay:

So thinking long-term Nelson at one point, I believe had 49 life insurance policies.

Mike Everett:

Correct.

Chris Bay:

So talk to me about how his strategy was with those 49 policies.

Mike Everett:

Well, basically, all the policies weren’t on him. He had policies on him. He had policies on his wife. He had policies on his kids, grandkids, and now great-grandkids, but as time goes on, once the future generations show responsibility, what he’s done is, he doesn’t have 49 policies anymore. What he’s done is he’s gifted those policies over to the next generation, or even the next two generations as it has, because Nelson is now 85 years old. So he’s transferred that cash or those policies to those generations so they can begin using those policies as well.

Chris Bay:

So he signs over those policies, the ownership of those policies-

Mike Everett:

Correct.

Chris Bay:

… to his kids, grandkids, great-grandkids, et cetera, when they demonstrate responsibility and an understanding of how to utilize IBC with those policies. Now, here’s the question, when Nelson graduates, when he leaves this earth, there’s going to be a death benefit attached to the policies on him, correct?

Mike Everett:

That’s correct.

Chris Bay:

What happens with that death benefit?

Mike Everett:

That death benefit goes income tax-free to the heirs or to the beneficiaries that Nelson has determined would get that money, income tax-free, I might add.

Chris Bay:

Yeah and so for those other people who have IBC plans already working, that money can then go into those policies, correct?

Mike Everett:

That’s right.

Chris Bay:

Now, pretty amazing concept that this man has created.

Mike Everett:

It’s incredible.

Chris Bay:

Yeah, I know it’s changed my life and your life-

Mike Everett:

For sure.

Chris Bay:

… and our client’s lives as well. Well, to learn more about all of these concepts, we, again encourage you to go to our website, lifesuccesslegacy.com and get yourself a copy of the free eBook by Kim Butler, Financial Planning Has Failed, and we have other resources on our website. You can also order the book, Becoming Your Own Banker by Nelson Nash.

Our next podcast, what we’re going to talk about, a lot of times people say, “Well, how in the heck do we get started?” We use the term activator. So we are going to talk in our next podcast about how do you activate this plan? How do you turn the wind current and get that money flowing your direction? Hope you’ll join us on our next podcast. Thanks for joining me, Mike.

Mike Everett:

Thanks, Chris.