So you let's just say you have a business, and your business makes ten
million dollars of revenue a year, and let's just say six million dollars of
net profit. A lot of people will be paying close to forty fifty percent
of that let's say two to three million in taxes if you donate some of
that. Depending on the entity structure, you could donate on general thirty to
sixty percent of your net profit and get a tax deduction for that. You're
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Carrie Let's. Hey, so you're probably in a position where you're paying
a lot of your income to your your your greedy uncle, and you want
to put a stop to that. And if you're high worth individual, it's
it's very easy to do that, perhaps easier than ever. And we've got
k C. Showhand with us. Now, Casey, you help people pass
on wealth generation generally generationally, I think I got that right, and you
use foundations to do it. The how did you wind up getting into this
area? Oh, it's a long story, but my background is in accounting
and finance, all and raised in England. I graduated university, got a
job with a big fortune five hundred company. I'm interested making cups of tea
for the real accountants, and then quickly work my way up the ranks.
Well, I said quickly eight years I was running the North American region and
started my own business. At that point, I had no idea how to
run a business, had only been a student at university and then a corporate
employee. So we got into CFO services, which is what I was effectively
doing internally for the big bugun five hundred company, and that then led to
solving the same issues or seeing the same issues on a monthly basis from lack
of financial knowledge for business owners. And then with our first few clients,
quickly realized it wasn't just financial knowledge, it was also lack of tax knowledge
as well, especially here in America. I could see both sides of the
taxation system. Coming from the UK, but there was a lot of specifically
in taxes, so we niched down into that and then figured out what all
these elites are doing to save money on taxes and pay single digit tax rates.
And Warren Buffett goes on TV and glow, so he pays a lower
tax rate than is Secretary. And you know pro Public has released tax returns
that a lot of these billionaires are all paying single digit tax rates. So
we figured out what they do, which is, like you mentioned, all
in foundations and nonprofits, and then re engineered that so that the average millionaire
multimillionaire can use those same structures, one to pass on legacy to their family,
but also make a difference in that community, all while saving money on
taxes. So I always thought, like a nonprofit, you give up control
of your money and it goes into this foundation eventually winds up like the Ford
Foundation, where the MacArthur Foundation, and that's the end of your involvement.
So how do you keep control while still putting your money into this nonprofit.
It's all to do with the subsections within sub sections of these nonprofits. So
if you look at normal business entities that most people will know, let's use.
An LLC is an example, s CORP, ander c COP. They
are all structured based on ownership, either shares or members, right, So
if you and I both owned an LLC and we were fifty to fifty,
we would both own our independent fifty percent shares. The way that nonprofits work
again, there's different subsections. So you could go into an operating nonprofit,
a non operating nonprofit, a private foundation, a public foundation. There's so
many subsets in that world, the same way they are in the LLCs,
CORP and c COP world. So the subset that we uncovered during our research
into all these billionaires was it's a non operating private family foundation. That's the
entity type that allows you to donate to that entity, get the tax deduction
at the personal the LLC level whoever's donating into it, but then, like
you mentioned on the flip side, retain control of that entity. So you
could, as an example, be the president of donate to it from yourself
and then fully control the activities of that nonprofit, which is very different to
a lot of the way other nonprofits are set up and structured, where you
have to have at least x amount of people on the board, you have
to have different subcommittees. There's a lot more flexibility with a private, non
operating family foundation. So the private, non operating foundation is the key.
That's what we found, that's what we use. All right, So you
managed to sty'll take control. But you can't get any money from the foundation
once it's set up, can you. Yeah. There's very strict guidelines and
rules on self dealing and disqualified people, which ultimately means if you've put in
money. Let's say you put in a million dollars of cash and you get
the tax done, you get the tax deduction on your personal taxes, you
can't turn around and then using So you've got to be very careful about sticking
to the rules. The key is knowing what those rules are and knowing that
these types of foundations often own multiple private jets, yachts, real estate all
around the world. So there's depend The preconceived notions that most people have are
not in fact true, and there's a wiggle room within them if operated correctly.
Interesting. Interesting, all right, So give us an example of how
this works. So you let's just say you have a business and your business
makes ten million dollars of revenue a year and let's just say six million dollars
of net profit. A lot of people will be paying close to forty fifty
percent of that, let's say two to three million in taxes if you donate
some of that. Depending on the entity structure, you can donate on general
thirty to sixty percent of your net profit and get tax deduction for that.
So then in argument's sake, it's a million dollars just for round numbers,
you can get a million dollar tax deduction in your business, so you don't
have to pay that personally. And then that million dollars isn't just given away,
it's donated to a charity, where on the other hand, you fully
control that charity. So you can invest the market, in real estate,
in pretty much anything that you see fit, as long as it isn't classed
as too risky. So don't go for petty stocks, go for the big
blue tib stocks as an example, but you fully control those funds. Now,
the beauty about it is with a private family foundation, you can hire
other family members, so you can hire your kids on payroll, your wife,
your uncles, cousins, brothers, sisters, whoever you wish, and
they can all take an active part in that foundation. You can then also
do foundation retreats and foundation activities all around the world wherever you wish to make
an impact. So if you wanted to go to Australia and take all of
the members of the foundation with you to go do a retreat in the outback,
or the go on safari somewhere in Africa, or whatever it is that
you want to do to help make an impact for your charity, then you
can do that. So that's some of the common ways. And then I
touched done a second ago where assets can also be owned by these foundations,
So a lot a lot of the time, what you will see is that
foundations have lots of real estate. The reason real estate is used a lot
is because there's something called the property tax exemption. So if in certain circumstance,
if your property is fully paid off so you have no mortgage, you
can get a property tax exemption, which is a huge deal for the right
type of people, because you could be paying one percent, maybe one and
a half percent of the property value in property tax. So if you've got
let's say one hundred million dollar portfolio of real estate it and you're paying one
percent, that's a million dollars a year you'd be paying just in property tax.
There's a lot of different advantages of having a foundation that type of person.
Don't any towns and the counties fight these property tax exemptions to foundations.
No, you're just got to apply and you've got to get the exemption both
at like you said, at the city level and then also at the federal
level as well. But as long as you're not using that property as a
person is actually used as part of the foundation, there shouldn't be any issues
with that. What you what you tend to find is a lot of the
bad press that has happened over the years is people are putting their primary residents
in the founder the same deductions, which they shouldn't be doing, and that
can actually lead to losing your tax exempt status. So i'd highly recommend not
doing that. Yeah, So you got to and be very protective of your
tax exempt status, right, So absolutely, yeah, because that's the key
to getting zero capital gains because within these foundations there's no capital gains tax as
well. They have something instead of capital gains tax. It's called net investment
income, and that's only taxed at one point thirty nine percent, Right,
now. So it's a much lower rate at one point three nine percent compared
to capital gains tax, which can be anything above thirty percent usually, So
what's the what's your minimum income required or assets to take advantage of something like
this? Can you see generally speaking, when you go to the likes of
UBS or any of the big banks that they're looking for you to have a
twenty million plus portfolio, take your full relationship over to them and be locked
in with them for the long term. Or a multi family office will produce
something similar. But what we're trying to do is get to that lower level
of million ad that is successful. It doesn't want to tie up everything.
So if you're making about five million dollars a year in your business, or
if you're paying over five hundred thousand a year in taxes, this usually makes
sense to look into this as one of your options in your overall strategy.
Right, all right? Really interesting? Hey, any millionaires out there,
if you want to get in touch with KC, how do you do that?
Case? Yeah, just go over to together CFO dot com. That's
together cf or dot com. All right, Well, I could talk with
you for quite a while on this. I find it fascinating, really interesting
that these things are available. Hey, you got a question for KC or
myself, Shoot me an email kl at Carrie LUTs dot com and you'll find
a link to kse site and the show. It's to this interview on Financial
Survival Network dot com. Please sign up for your free newsletter. Got a
lot of money saving ideas, money making ideas. You don't necessarily have to
be a millionaire for them, but it doesn't hurt either. In casey appreciate
you coming on talk to you said, welcome, Thanks for having me,
Thanks for listening to Carrie Letz's Financial Survival Network, your solution to today's trying
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