1 00:00:00,400 --> 00:00:05,000 So you let's just say you have a business, and your business makes ten 2 00:00:05,040 --> 00:00:09,519 million dollars of revenue a year, and let's just say six million dollars of 3 00:00:09,560 --> 00:00:13,279 net profit. A lot of people will be paying close to forty fifty percent 4 00:00:13,320 --> 00:00:17,839 of that let's say two to three million in taxes if you donate some of 5 00:00:17,879 --> 00:00:22,440 that. Depending on the entity structure, you could donate on general thirty to 6 00:00:22,519 --> 00:00:26,480 sixty percent of your net profit and get a tax deduction for that. You're 7 00:00:26,519 --> 00:00:31,879 listening to Carrie Let's Financial Survival Network, where you get valuable information you just 8 00:00:32,000 --> 00:00:37,640 can't find anywhere else to thrive in today's trying times. You need the Financial 9 00:00:37,719 --> 00:00:43,840 Survival Network now more than ever. Go to Financial Survivalnetwork dot com and get 10 00:00:43,880 --> 00:00:53,840 your free newsletter and gift. Financial Survival Network now more than ever. And 11 00:00:53,880 --> 00:00:59,000 welcome. You are listening to watching the Financial Survival Network. I'm your host, 12 00:00:59,079 --> 00:01:03,679 Carrie Let's. Hey, so you're probably in a position where you're paying 13 00:01:03,759 --> 00:01:10,439 a lot of your income to your your your greedy uncle, and you want 14 00:01:10,439 --> 00:01:14,719 to put a stop to that. And if you're high worth individual, it's 15 00:01:15,519 --> 00:01:19,359 it's very easy to do that, perhaps easier than ever. And we've got 16 00:01:19,680 --> 00:01:26,760 k C. Showhand with us. Now, Casey, you help people pass 17 00:01:26,799 --> 00:01:33,480 on wealth generation generally generationally, I think I got that right, and you 18 00:01:33,640 --> 00:01:37,159 use foundations to do it. The how did you wind up getting into this 19 00:01:37,319 --> 00:01:41,760 area? Oh, it's a long story, but my background is in accounting 20 00:01:41,959 --> 00:01:47,680 and finance, all and raised in England. I graduated university, got a 21 00:01:47,799 --> 00:01:53,040 job with a big fortune five hundred company. I'm interested making cups of tea 22 00:01:53,040 --> 00:01:57,719 for the real accountants, and then quickly work my way up the ranks. 23 00:01:57,439 --> 00:02:02,680 Well, I said quickly eight years I was running the North American region and 24 00:02:05,040 --> 00:02:07,879 started my own business. At that point, I had no idea how to 25 00:02:07,959 --> 00:02:12,560 run a business, had only been a student at university and then a corporate 26 00:02:12,599 --> 00:02:16,800 employee. So we got into CFO services, which is what I was effectively 27 00:02:16,840 --> 00:02:23,560 doing internally for the big bugun five hundred company, and that then led to 28 00:02:23,919 --> 00:02:29,199 solving the same issues or seeing the same issues on a monthly basis from lack 29 00:02:29,199 --> 00:02:34,400 of financial knowledge for business owners. And then with our first few clients, 30 00:02:34,680 --> 00:02:38,199 quickly realized it wasn't just financial knowledge, it was also lack of tax knowledge 31 00:02:38,199 --> 00:02:42,479 as well, especially here in America. I could see both sides of the 32 00:02:42,479 --> 00:02:46,919 taxation system. Coming from the UK, but there was a lot of specifically 33 00:02:46,960 --> 00:02:53,039 in taxes, so we niched down into that and then figured out what all 34 00:02:53,120 --> 00:02:57,400 these elites are doing to save money on taxes and pay single digit tax rates. 35 00:02:57,400 --> 00:03:00,960 And Warren Buffett goes on TV and glow, so he pays a lower 36 00:03:00,000 --> 00:03:06,039 tax rate than is Secretary. And you know pro Public has released tax returns 37 00:03:06,159 --> 00:03:08,960 that a lot of these billionaires are all paying single digit tax rates. So 38 00:03:09,000 --> 00:03:13,960 we figured out what they do, which is, like you mentioned, all 39 00:03:14,000 --> 00:03:19,879 in foundations and nonprofits, and then re engineered that so that the average millionaire 40 00:03:20,000 --> 00:03:24,560 multimillionaire can use those same structures, one to pass on legacy to their family, 41 00:03:24,680 --> 00:03:29,639 but also make a difference in that community, all while saving money on 42 00:03:29,680 --> 00:03:32,400 taxes. So I always thought, like a nonprofit, you give up control 43 00:03:32,400 --> 00:03:38,400 of your money and it goes into this foundation eventually winds up like the Ford 44 00:03:38,479 --> 00:03:44,319 Foundation, where the MacArthur Foundation, and that's the end of your involvement. 45 00:03:44,759 --> 00:03:49,439 So how do you keep control while still putting your money into this nonprofit. 46 00:03:49,759 --> 00:03:54,199 It's all to do with the subsections within sub sections of these nonprofits. So 47 00:03:54,560 --> 00:03:59,840 if you look at normal business entities that most people will know, let's use. 48 00:03:59,879 --> 00:04:02,080 An LLC is an example, s CORP, ander c COP. They 49 00:04:02,080 --> 00:04:06,319 are all structured based on ownership, either shares or members, right, So 50 00:04:06,439 --> 00:04:10,360 if you and I both owned an LLC and we were fifty to fifty, 51 00:04:10,840 --> 00:04:15,319 we would both own our independent fifty percent shares. The way that nonprofits work 52 00:04:15,399 --> 00:04:21,079 again, there's different subsections. So you could go into an operating nonprofit, 53 00:04:21,279 --> 00:04:26,839 a non operating nonprofit, a private foundation, a public foundation. There's so 54 00:04:26,920 --> 00:04:30,480 many subsets in that world, the same way they are in the LLCs, 55 00:04:30,519 --> 00:04:36,560 CORP and c COP world. So the subset that we uncovered during our research 56 00:04:36,600 --> 00:04:44,560 into all these billionaires was it's a non operating private family foundation. That's the 57 00:04:44,759 --> 00:04:49,720 entity type that allows you to donate to that entity, get the tax deduction 58 00:04:50,319 --> 00:04:55,800 at the personal the LLC level whoever's donating into it, but then, like 59 00:04:55,879 --> 00:05:00,360 you mentioned on the flip side, retain control of that entity. So you 60 00:05:00,439 --> 00:05:05,480 could, as an example, be the president of donate to it from yourself 61 00:05:05,800 --> 00:05:12,279 and then fully control the activities of that nonprofit, which is very different to 62 00:05:12,360 --> 00:05:15,279 a lot of the way other nonprofits are set up and structured, where you 63 00:05:15,439 --> 00:05:18,639 have to have at least x amount of people on the board, you have 64 00:05:18,680 --> 00:05:25,439 to have different subcommittees. There's a lot more flexibility with a private, non 65 00:05:25,519 --> 00:05:30,000 operating family foundation. So the private, non operating foundation is the key. 66 00:05:30,839 --> 00:05:34,920 That's what we found, that's what we use. All right, So you 67 00:05:35,000 --> 00:05:40,800 managed to sty'll take control. But you can't get any money from the foundation 68 00:05:40,959 --> 00:05:44,720 once it's set up, can you. Yeah. There's very strict guidelines and 69 00:05:44,839 --> 00:05:49,560 rules on self dealing and disqualified people, which ultimately means if you've put in 70 00:05:49,680 --> 00:05:54,600 money. Let's say you put in a million dollars of cash and you get 71 00:05:54,639 --> 00:05:58,360 the tax done, you get the tax deduction on your personal taxes, you 72 00:05:58,399 --> 00:06:03,959 can't turn around and then using So you've got to be very careful about sticking 73 00:06:04,000 --> 00:06:09,879 to the rules. The key is knowing what those rules are and knowing that 74 00:06:10,160 --> 00:06:15,319 these types of foundations often own multiple private jets, yachts, real estate all 75 00:06:15,360 --> 00:06:21,600 around the world. So there's depend The preconceived notions that most people have are 76 00:06:21,639 --> 00:06:29,319 not in fact true, and there's a wiggle room within them if operated correctly. 77 00:06:29,959 --> 00:06:33,279 Interesting. Interesting, all right, So give us an example of how 78 00:06:33,319 --> 00:06:39,720 this works. So you let's just say you have a business and your business 79 00:06:39,759 --> 00:06:44,759 makes ten million dollars of revenue a year and let's just say six million dollars 80 00:06:44,800 --> 00:06:47,279 of net profit. A lot of people will be paying close to forty fifty 81 00:06:47,279 --> 00:06:51,800 percent of that, let's say two to three million in taxes if you donate 82 00:06:51,920 --> 00:06:57,040 some of that. Depending on the entity structure, you can donate on general 83 00:06:57,279 --> 00:07:00,319 thirty to sixty percent of your net profit and get tax deduction for that. 84 00:07:01,160 --> 00:07:04,879 So then in argument's sake, it's a million dollars just for round numbers, 85 00:07:05,240 --> 00:07:09,959 you can get a million dollar tax deduction in your business, so you don't 86 00:07:09,959 --> 00:07:14,480 have to pay that personally. And then that million dollars isn't just given away, 87 00:07:14,959 --> 00:07:17,560 it's donated to a charity, where on the other hand, you fully 88 00:07:17,600 --> 00:07:23,759 control that charity. So you can invest the market, in real estate, 89 00:07:24,079 --> 00:07:27,319 in pretty much anything that you see fit, as long as it isn't classed 90 00:07:27,319 --> 00:07:30,560 as too risky. So don't go for petty stocks, go for the big 91 00:07:30,600 --> 00:07:36,079 blue tib stocks as an example, but you fully control those funds. Now, 92 00:07:36,360 --> 00:07:41,560 the beauty about it is with a private family foundation, you can hire 93 00:07:41,600 --> 00:07:44,680 other family members, so you can hire your kids on payroll, your wife, 94 00:07:44,839 --> 00:07:47,319 your uncles, cousins, brothers, sisters, whoever you wish, and 95 00:07:47,360 --> 00:07:53,040 they can all take an active part in that foundation. You can then also 96 00:07:53,160 --> 00:08:00,439 do foundation retreats and foundation activities all around the world wherever you wish to make 97 00:08:00,480 --> 00:08:03,560 an impact. So if you wanted to go to Australia and take all of 98 00:08:03,600 --> 00:08:07,439 the members of the foundation with you to go do a retreat in the outback, 99 00:08:07,560 --> 00:08:11,120 or the go on safari somewhere in Africa, or whatever it is that 100 00:08:11,160 --> 00:08:15,600 you want to do to help make an impact for your charity, then you 101 00:08:15,639 --> 00:08:18,360 can do that. So that's some of the common ways. And then I 102 00:08:18,519 --> 00:08:24,240 touched done a second ago where assets can also be owned by these foundations, 103 00:08:24,319 --> 00:08:26,319 So a lot a lot of the time, what you will see is that 104 00:08:26,439 --> 00:08:31,840 foundations have lots of real estate. The reason real estate is used a lot 105 00:08:31,919 --> 00:08:39,519 is because there's something called the property tax exemption. So if in certain circumstance, 106 00:08:39,720 --> 00:08:43,440 if your property is fully paid off so you have no mortgage, you 107 00:08:43,440 --> 00:08:46,799 can get a property tax exemption, which is a huge deal for the right 108 00:08:46,879 --> 00:08:52,279 type of people, because you could be paying one percent, maybe one and 109 00:08:52,320 --> 00:08:56,399 a half percent of the property value in property tax. So if you've got 110 00:08:56,919 --> 00:09:01,200 let's say one hundred million dollar portfolio of real estate it and you're paying one 111 00:09:01,200 --> 00:09:03,720 percent, that's a million dollars a year you'd be paying just in property tax. 112 00:09:05,240 --> 00:09:13,759 There's a lot of different advantages of having a foundation that type of person. 113 00:09:15,480 --> 00:09:22,879 Don't any towns and the counties fight these property tax exemptions to foundations. 114 00:09:24,360 --> 00:09:26,399 No, you're just got to apply and you've got to get the exemption both 115 00:09:26,519 --> 00:09:31,080 at like you said, at the city level and then also at the federal 116 00:09:31,200 --> 00:09:35,639 level as well. But as long as you're not using that property as a 117 00:09:35,000 --> 00:09:39,960 person is actually used as part of the foundation, there shouldn't be any issues 118 00:09:39,960 --> 00:09:43,120 with that. What you what you tend to find is a lot of the 119 00:09:43,200 --> 00:09:48,159 bad press that has happened over the years is people are putting their primary residents 120 00:09:48,200 --> 00:09:52,519 in the founder the same deductions, which they shouldn't be doing, and that 121 00:09:52,559 --> 00:09:58,399 can actually lead to losing your tax exempt status. So i'd highly recommend not 122 00:09:58,440 --> 00:10:01,279 doing that. Yeah, So you got to and be very protective of your 123 00:10:03,000 --> 00:10:07,440 tax exempt status, right, So absolutely, yeah, because that's the key 124 00:10:07,480 --> 00:10:11,840 to getting zero capital gains because within these foundations there's no capital gains tax as 125 00:10:11,879 --> 00:10:16,840 well. They have something instead of capital gains tax. It's called net investment 126 00:10:16,879 --> 00:10:20,720 income, and that's only taxed at one point thirty nine percent, Right, 127 00:10:20,759 --> 00:10:26,919 now. So it's a much lower rate at one point three nine percent compared 128 00:10:26,960 --> 00:10:31,519 to capital gains tax, which can be anything above thirty percent usually, So 129 00:10:31,600 --> 00:10:37,559 what's the what's your minimum income required or assets to take advantage of something like 130 00:10:37,600 --> 00:10:41,679 this? Can you see generally speaking, when you go to the likes of 131 00:10:41,799 --> 00:10:45,720 UBS or any of the big banks that they're looking for you to have a 132 00:10:45,759 --> 00:10:50,480 twenty million plus portfolio, take your full relationship over to them and be locked 133 00:10:50,519 --> 00:10:54,120 in with them for the long term. Or a multi family office will produce 134 00:10:54,120 --> 00:10:58,679 something similar. But what we're trying to do is get to that lower level 135 00:10:58,759 --> 00:11:03,120 of million ad that is successful. It doesn't want to tie up everything. 136 00:11:03,200 --> 00:11:07,840 So if you're making about five million dollars a year in your business, or 137 00:11:07,960 --> 00:11:11,440 if you're paying over five hundred thousand a year in taxes, this usually makes 138 00:11:11,440 --> 00:11:18,039 sense to look into this as one of your options in your overall strategy. 139 00:11:18,320 --> 00:11:22,919 Right, all right? Really interesting? Hey, any millionaires out there, 140 00:11:22,919 --> 00:11:24,600 if you want to get in touch with KC, how do you do that? 141 00:11:24,720 --> 00:11:30,279 Case? Yeah, just go over to together CFO dot com. That's 142 00:11:30,320 --> 00:11:33,279 together cf or dot com. All right, Well, I could talk with 143 00:11:33,320 --> 00:11:37,720 you for quite a while on this. I find it fascinating, really interesting 144 00:11:37,759 --> 00:11:43,559 that these things are available. Hey, you got a question for KC or 145 00:11:43,600 --> 00:11:48,240 myself, Shoot me an email kl at Carrie LUTs dot com and you'll find 146 00:11:48,279 --> 00:11:50,879 a link to kse site and the show. It's to this interview on Financial 147 00:11:50,960 --> 00:11:56,000 Survival Network dot com. Please sign up for your free newsletter. Got a 148 00:11:56,000 --> 00:12:01,720 lot of money saving ideas, money making ideas. You don't necessarily have to 149 00:12:01,759 --> 00:12:05,360 be a millionaire for them, but it doesn't hurt either. In casey appreciate 150 00:12:05,399 --> 00:12:07,399 you coming on talk to you said, welcome, Thanks for having me, 151 00:12:07,519 --> 00:12:13,679 Thanks for listening to Carrie Letz's Financial Survival Network, your solution to today's trying 152 00:12:13,799 --> 00:12:20,519 times. For the latest, go to Financial Survivalnetwork dot com. Financial Survival 153 00:12:20,559 --> 00:12:22,000 Network now more than ever.