From pro-snowboarder to money mogul, Chris Naugle has dedicated his life to being America’s #1 Money Mentor. With a core belief that success is built not by the resources you have, but by how resourceful you can be. Chris is also a nationally recognized speaker, author, and podcast host. He has spoken to and taught over ten thousand Americans delivering the financial knowledge that fuels lasting freedom.

As a nationally recognized entrepreneur in his 16 years of high-level experience in the financial services and advisory industry, he managed over 30 million dollars in assets. Specializing in alternative investments, retirement strategies, and wealth accumulation both internationally and in his hometown of Buffalo, NY.  Chris has built and owned 19 companies, with his businesses being featured in Forbes, ABC, House Hunters, and his very own HGTV pilot in 2018. He is currently the founder of The Money School and Money Mentor for The Money Multiplier.

As an innovator and visionary in wealth-building and real estate, he empowers entrepreneurs, business owners, and real estate investors with the knowledge of how money works.

 

Watch the episode here:

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Combining Life Insurance with the Deferred Sales Trust with Chris Naugle

 

Brett:

Welcome to the Capital Gains Tax Solutions Podcast. I’m here with my good friend Chris Naugle with the Money Multiplier, we’re gonna kind of do a different show today, it’s a little bit like a presentation and a little bit like a podcast little bit like a discussion. But we’re gonna talk about Combining Life Insurance with the Deferred Sales Trust, in particular, Infinite Banking, as well as the concept. So I’m gonna let Chris kind of establish a little bit of the terms here, and then I’m gonna dive into a presentation. So hey, Chris, take it away. 

Chris:

Thanks for having me on. I’m really excited about this topic. This is something that will help so many people that are exiting businesses that have large windfalls that are taxable. And also allow them to do it was something that a lot of people don’t realize, by using life insurance. But you know, when I say that word, it’s like a swear word to most people. So I gotta let me go one layer deeper. So what I’m saying life insurance, I’m talking about using a specially designed and engineered whole life policy, the same way that the banks use them commonly called bully in the same way, the wealthy use this for 200 years. And when I first heard about what you do, I was intrigued, because I’m like ashes, a lot of people, accepting businesses paying tons of money in taxes, there’s got to be a way to take the deferred sales, trust what you do, and with what we do the Infinite Banking Concept, and combine them to literally get it a really powerful strategy that will help people in a lot of different ways. And that’s what I’m most excited about. So thank you for having me on. And I think not just one, but lots of people are going to benefit from what we talked about today.

Brett:

Absolutely. And I’m Brett: if I didn’t mention that before, and I’m the Founder of Capital Gains Tax Solutions. Chris and I, by the way, I think we both hate each other on each other’s podcast, in the past 6, 12 or so. So you can also learn more about our stories there, although I will cover it some of the presentations here, it’s gonna be like a firehose today, but realize we’re recording this so you’re gonna be able to replay it and pause it and, and go back and take a peek at it. So I’m gonna share my screen. If you’re listening to the podcast, you’re gonna want to go to capitalgainstaxsolutions.com and search that on YouTube to be able to really understand and see this visually, but you’re going to be able to still catch a lot of this here. So just give me a second here as I pull up my presentation, and then we’ll fire away and of course, Chris along the way asks good questions. 

The presentation is called to overcoming the biggest objection to a deferred sales trust. And then, of course, we’re gonna put the whole life life insurance infinite banking concept, as the underlayer throughout this entire presentation. This is actually my client, Steve. And it’s how I help see to finally achieve relief from retirement, when I sold his $1.7 million multifamily building happen to be here in Sacramento, California and helped him to for about $350,000 in capital gains tax by saving his 1031 exchange, of course, the magic will be where and how can the funds be invested. And that’s what’s gonna be really fun once we establish the foundation of what we’re doing here, and then what we can do with it. Okay, so like I said, I’m Brett. I’m the Founder of Capital Gains Tax Solutions up here in Northern California, but we serve nationally all 50 states. So as a legal disclaimer, Chris nor I am CPAs, nor tax professionals. And so this presentation is, we strongly advise you are just educational purposes, we strongly advise you to check out each of what we’re talking about with your independent legal counsel. Okay. So here are some of the facts right now. And I think part of what Chris and I are so intrigued by, and it’s such a big, big challenge for so many of our clients. And the facts are that 17 to $20 trillion, will pass from one generation to the next in the next 20 years. In fact, it’s about 18 years remaining of this, but it’s going to go on for a while. And it’s 17 to $20 trillion from the baby boomers, these are Christianized parents, and they’re looking at big amounts of tax if and when they sell these assets and pass them to their kids. In fact, there are about 77 million baby boomers, according to the American Bankers Association, that are starting to retire every single day and about 10,000 returning 60, 65 and they’re challenged with not only highly appreciated assets but also 1031 exchanges, where they don’t have diversification. They don’t have liquidity, and they don’t have some flexibility and freedom with their funds. And that’s a big challenge. You also couple that with a lot of business professionals and I’m glad Chris is diving into this, to provide the solution but a lot of business professionals and those who have been advising you, they don’t know about things like infinite banking, they don’t know things about like the deferred sales trust. And so every single day that they don’t know and every single day that perhaps you’re selling something, you’re paying hundreds of 1000s to millions of dollars in capital gains tax when you don’t have to. And what is that amount? Well, that amount is somewhere between 30 and 50% of your gain. In fact, most of our clients before they meet us, they’re very reluctant to sell. And this includes high-end primary homes, businesses. This includes commercial real estate includes cryptocurrency, it includes captive insurance includes anything that’s really subject to capital gains tax, we can use the deferred sales trust, so do you feel like this gentleman here, and if you’re seeing the screen, he has his arms crossed, and he’s feeling frustrated, because he’s not sure what he’s going to do if he sells because of, again, the capital gains tax depreciation recapture. So between 30 and 30%, of his gain, so a few things, Chris, I’m gonna let you know, it’s okay to dream. Although you may already be the number one in your profession or the top one, it’s okay to dream of helping your clients to for millions in tax and becoming the number one in your profession, because you’re adding so much value with a deferred sales trust. It’s also more important than ever to unlock new opportunities the challenges of the COVID-19 marketplace, these highly appreciated assets, and people looking for a new way to retire, and or invest is more important than ever to innovate and change. And so being the beat in the business of solving problems, I like to say, Chris, and let me know what you think. We’re not in the business of just providing tools or education, we’re in the business of solving problems.

Chris:

That’s our only business like first and foremost, every day, we both that is our number one mission to solve people’s money problem or their problem in general.

Brett:

And you got it. So who is this presentation for? Anybody who has highly appreciated again, business investment, real estate, primary home stock cryptocurrency, or if you’re in the profession of helping others do the same, this is for you. And now, here’s the key, the asset needs to be at least worth a million dollars, or at least have net proceeds of a million dollars, net of all debt and closing costs. And the asset has to have at least $1 million of gain if it’s too small, or fees, eat up the savings. So we want to make sure you establish those benchmarks right away. Okay. So first of all, what is a deferred sales trust? Well, the first sale is just an installment sale, it’s just a tool, it’s a strategy is kind of like a 401k. It’s kind of like an IRA. It’s kind of like a 1031 exchange. It’s kind of like a lot of things. But the main component is it allows you to defer capital gains tax when you sell a highly appreciated asset. Now it’s using what’s called IRC 453, which is an installment sale, the part known as an installment sale part of the IRS tax code goes back to the 1920s. You might know it as a seller carry-back where you become the lender on the sale. And when you do that you don’t pay tax until you receive payments, and what’s called constructive receipt cut like a 401k. Chris, if I park my funds in an IRA or 401k, guess what? When do I pay tax?

Chris:

When you take the money out.

Brett:

When you take the money out? Exactly. So when you take the money out is when you start paying tax, and in the meantime, it can be in a deferral state, and why would you need one right? Well, we think you need one more now than ever then with the diversification, liquidity, and options for what you really want. And that’s really the focus here we want to say hey, what kind of outcome you’re looking for, and what tool what strategy is going to help you get there and I want you to think about the old way versus the new way there’s the old way of doing things for a lot of people and that’s like a blockbuster. I’m gonna propose to you Chris, remember going to blockbuster back in the day. 

Chris:

Sure do man and I loved every moment of it.

Brett:

Do you remember your favorite video but the worst part was if you loved it when you’re in there, it’s exciting. It’s like being at Toys R Us as a kid, your blockbuster has seen your favorite video. But on the wall is your video that you want to get, right before you get there, someone steps in front of you and grabs that video that you want, right?

Chris:

That happened that was a real thing.

Brett:

Frustrating. So what happens then? Well, even if you got that video, you might have to return it within three days. If you’re living in the Midwest, like a lot of our clients, you’re fighting snow and traffic and who knows to get that video, right? You may be lost an hour you had fun in the adventure. But sometimes you know this a new thing called Netflix and Netflix comes out. It’s never sold out yet to pay some ongoing fees. But it’s seamless. It’s flexible. And you get movies on demand instantly. And that’s sort of like the deferred sales trust versus the old way, old transactional way of doing things like the 1031 exchange, very restrictive, not necessarily any diversification. Typically taking on a greater amount of debt. And you’re doing this all in a very, very short time period. We call it the shotgun wedding. 45 days to identify, 180 days to close versus Netflix versus the deferred sales trust. There are no timing restrictions. You can put it into insurance policies. You can put it into real estate, your own passively or actively, you can put it into stocks, bonds, mutual funds, you can diversify. And it’s a new way, it’s the better way we think it’s I think it’s the best way right now. So my goal for this presentation is to show you why the different shell stress is the number one growth strategy, that if you’re a professional need to be focusing on 2021. Or if you’re an actual client listening to this, why it’s the number one way to create and preserve your wealth. In fact, I’m taking more of a preservation play, Chris, I don’t know where you’re at with the marketplace. But I feel like now more than ever, it’s a great time to preserve, and be cautious on the creation because the values are so high, quickly, touch on what you think the marketplace is right now, why it’s such a good time to preserve your wealth.

Chris:

I am really scared. And we are 100% in the preservation mode waiting for the next opportunity. And that Wait, sometimes people don’t want to do but I think coming up in the next few years 2022, 2023 the markets are going to fall apart. It’s just patterns. And I think that’s exactly what’s gonna happen. So yes, I’m 100% preservation, but in the preservation and moving my money and allowing my money to work and make additional revenue or additional income without having to take on the risks that I used to wealth going long on stocks, bonds, ETFs, and all those things.

Brett:

Excellent. Love it. Yep. And all of those things can be structured inside the deferred sales trust and that way, which is great. So two things, we’re going to cover how to grow your business or create and preserve more of your wealth with a DST even if you don’t have any capital gains tax knowledge or a ton of time, and then how to use the deferred sales trust to drastically increase your sales and conversions if you’re a business professional. So let’s dive right in. By the way, this is a little bit about my background. When I first started out it was in 2006, I worked for a company called Marcus and Millichap. And it was one of the largest most prestigious kinds of firms and still is one of the best in the world and especially in the US specializing in real estate investment sales. I’m currently a multifamily broker, EXP commercial and I help clients still sell multifamily properties and do deals across the US. But my main focus is capital gains tax solutions. I’ve closed about $200 million in deferred sales trust and multifamily retail office land and investing in commercial real estate syndications valued at over $200 million. I love senior housing, mixed-use, retail, mobile home parks have also closed countless 1031 exchanges, Delaware Statutory Trust, and deferred sales trust. And I have held my series 22 and secondary licenses. I’ve been featured on a bunch of cool media like Christian shows and a few others like Shark Printer Podcast. That was really fun one, but it wasn’t always easy. You know, I started out at Marcus and Millichap not knowing much. I wasn’t the person who was closing the deals. In fact, I was just trying to figure it out. In my first year in the business, I was not the successful guy celebrating these big, big, big deals. I was one of the guys in the back trying to figure it out scratching my head saying how are these guys doing this thing. And I had a really successful mentor cousin who was teaching and coaching me at the time. And that was great because I started to grow. And I started to learn something new. But just when I started to get some success a big thing happened. It was the 2008 crash. So I went from making just a little bit of money and getting my business off the ground and brokerage By the way, it’s 100% commission sink or swims. I went from making just a little bit of money to like zero overnight. And I don’t know Chris, have you ever been so scared and frustrated and pouring something your heart and soul into something just to see it not really succeed, and not knowing how you’re going to support your family. You see growing up, my parents were divorced, I saw wealth on one side. And I saw, let’s say scarcity or just a very low income on my mom’s side, I was moving on 90% of the time 10% of the time with my dad. And so I’d go to the Bay Area, build these houses with him in the summer times and understand the real estate and entrepreneur world. But then I would go live with my mom. And then mom didn’t get along. And let’s just say my dad didn’t share much with my mom and so so I knew growing up that I want it to be able to provide for my family have a lot of margins. And so during this time, I loved real estate. I loved helping clients, but I wasn’t really succeeding financially speaking, okay. So I did what every good entrepreneur does, and I wouldn’t get a side hustle. I took some steps to really change the way I approached the business as well. And so by day, I’d be working at Marcus and Millichap making cold calls. And by night I’d be working in a place called Cheesecake Factory. It was our favorite restaurant, my wife and I, and you know and I and we moved in with my brother, it was so tough. And I said you know, I’m gonna do whatever it takes. If you’re willing to support me I want to continue in this business, but I want to I we have to keep food on the table. So she was staying home full time with our daughter. And I was hustling and I was pushing, it was a struggle. It was a challenge. And just at that time I had my manager at the time brought in a gentleman who spoke on the deferred sales trust. And see I was going through my challenge but so were a lot of my clients you see they were fighting with the banks. They were losing half their wealth and lost all of their wealth. And they were climbing out of a crash because they weren’t diversified. They took on too much debt and back to that old 1031 blockbuster, they were stuck trying to rent those videos and having to return them in three days. And this scenario they’re having to renegotiate with banks. And we kept identifying that the 1031 exchange was one of the biggest challenges. But beyond that what they really needed was diversification. They needed predictable income streams, they need it to be out of debt, they needed to be able to take more control of their wealth, and not be holed into just the real estate marketplace. And as I taught them how to do this, my business grew, why, because I was solving problems for them. And it was speaking to their main focus, which was creating and preserving more wealth. So that’s what I did. And fast forward, it’s been over 10 years and 10,000 hours, blood, sweat, and tears. Fortunately, the Lord has blessed the business and I’ve been able to succeed. And my wife and I have five kids here in Northern California. And she’s been able to stay home full time, which has been our number one goal for us with our children and our family. And enough about that, though, I want to teach you the after 10 years, I discovered the hard way, but I want to teach you the easy way as much as I can in the next 30 minutes or so. 

By the way, if you’ve been struggling, this is probably why the perfect storm, if you’re a baby boomer, listen to this you may perhaps create a lot of wealth, and you don’t see a clear exit plan without having to stay in real estate or stay in the business or not sell your cryptocurrency or not sell your stock, because of the capital gains tax is the perfect storm that’s happening right now. By the way, it’s not your fault. Your CPA probably doesn’t know what I’m telling you about, although we do have lots of CPAs that have joined us. And we certainly want their blessing. But also the 1031 exchange companies, they don’t want you to know about this, they want to keep you in the shotgun wedding, right? Where you’re getting engaged in 45 days, and you’re getting married in 180. Those are the 1031 rules. And really, we want our clients to be able to establish having freedom from the capital gains tax, the toilets, the trash, the employees, the tenants, the liability, and not just kick it down the road, you want to be able to diversify and surely be able to retire or buy or invest on your terms. So here we are, what are the hard way is 1031 exchanging, okay. By the way, the 1031 exchange only works for an investment property, doesn’t work for a primary home doesn’t work for stock doesn’t work for a business sale. In fact, the gentleman that emailed Chris and I have talked to us, he will remain nameless, but he’s actually selling a business. Chris, do you want to touch on his big challenges as well, while I continue on this conversation here?

Chris:

Well, his big challenge is the big challenge of many people, he doesn’t want to give up 40 to 50% of his heart, he’s put blood sweat, and tears into this business, he’s exiting the business for a very large profit, a hell of a large gain. And when he looks at the gain, although it looks big on paper, when he factors out all the taxes, it’s not so big anymore. And he just does not feel comfortable giving up all of that money to the government in taxes. And he’s coming to us saying there has to be another way. I know my CPA doesn’t have the answer. I know my advisors don’t have the answer. But there has to be something. And he stumbled upon a podcast that you and I did a while ago. And he says this could be it. But, can this work using the privatized banking policy, the infinite banking concept, can I own that inside of this deferred sales trust, which is where he was struggling because he’s very risk-averse. He doesn’t want to take your hard-earned dollars from selling his business and put them into something that potentially could go down stocks, bonds, mutual funds, ETFs, he wants to diversify, and have this money in his safe place, which is privatized banking, commonly, the concept that we talked about is the infinite banking concept. And it’s funny, Brett, as you mentioned, your CPA may not know about this. Well, that makes two things now because your CPA probably doesn’t understand the infinite banking concept and how we use whole life insurance not just any whole life specially designed and engineered whole lives with this client is very passionate about, very much in love with the wants to use that strategy for this. So that’s our story. That’s who we’re trying to help solve the money problem for.

Brett:

Perfect, and we’re gonna definitely answer those questions as we establish this deferred sales trust here as the first part, okay. So I’m going to walk you through now basically how, what it is and a few deal stories, okay. And that’s really the key here. So this is again, my client here. His name is Steve.He lives in Sacramento. And by the way, he grew up in a family, multifamily family, real estate family, real estate brokers, and they live in Napa and they grew up thinking breathing, selling real estate owning real estate, 1031 exchanges, and so that’s kind of all he ever knew. And all of a sudden he finds himself in a 1031 exchange, I’m selling this property we’re looking at another one and the deal just falls apart. Part. Because his partner had a family emergency how to take those funds. But the other part of it was the deal had a little bit more improvements that needed to be made than he thought beforehand when he went into contract. And so instead of paying all this tax, he had about a $350,000 tax to defer, he was able to defer all of it, and then also pay off a bunch of debt. And he goes, by the way, he’s he, he’s a very skeptical person, by the way. And I’ve known him for years. And he goes, but I can tell you, it wasn’t easy. I had to really dig in to understand the deferred sales trust, I had to somehow pivot and trust someone else. I’m a very skeptical person. So it’s my wife is even more skeptical. And you can hear his full story. So he sold his property deferred his capital gains tax and has diversified into multiple product types right now. And he hasn’t ruled out insurance he’s still learning about, I’m still kind of introducing them to folks like Chris to teach him about insurance. And so this kind of goes both ways. I’ll make an introduction there. But essentially, he’s diversified out one single asset and put it into multiple asset types, including stocks, including real estate. And right now, he’s been completely passive, but he might go back active as well. Here’s another deal we recently did. And this was in the Santa Cruz area. And this particular client sold this property, they had it for over 20 years, for 7.9 million. Now, they first had their bases of around a million. And so with their liability and the basis at basically zero, they sold and deferred about $2.6 million in capital gains tax. And it’s right now diversified and liquid investment-grade securities, and also looking at insurance. Okay, here’s another one, an $8.3 million primary home sale, this gentleman really was pretty much trapped. And this is out of the Silicon Valley and was looking at selling and didn’t have whole, really any kind of option for a 1031 exchange because it is a primary home. So he used the deferred sales trust is another one in Colorado, we just closed for a client. Now, this client was interesting, they had a $25 million net worth or so and they close these properties in the deferred sales trust. And this 5 million not only deferred capital gains tax, they had a basis close to zero, but they were able to move this outside of their taxable state, which is also really interesting. That’s gonna save them 40% for their heirs. Here’s another one we just closed last week in Oroville. It’s near Sacramento, California, it’s like two and a half million dollar sale. And this gentleman is on these properties for over 30 years. And he’s planning on paying the tax he’s he had over a million dollars of liability. And he’s like, I’m just gonna pay the taxes, I will definitely wasn’t going to overpay and I was tired of everything with all the rent control and all the eviction control. I was ready to be retired. So we came in and we talked to him about 30 days before closing educated them on the deferred sales trust. And guess what, that’s an extra million dollars. It’s working for him right now as we speak. Here’s another one and we save another 1031 exchange in Sacramento a $3.1 million sale for gentlemen, this gentleman has about a $40 million net worth. And likewise, he goes bread, I have tons of wealth, I just don’t have the time and energy. like everyone’s outcome is a little bit different. As you see these deal stories. He’s just, I have so much real estate and so many LLCs. And you know, and I just really want to just be retired from this. And so he’s planning on building a nice Hill up property up in Tahoe. And this was just kind of taking stuff off of his plate. Here’s a client where we saved his failed 1031 exchange out of Georgia’s $7.6 million sales. And he’s been a multifamily complex owner for 30 years. And we saved his 1031 and saved about a deferred about 1.1 million of tax. Here’s a couple of apartment syndicators, they sold a couple of deals in Nevada out of Arizona, some really big units, they got about 2500 units. And they’re very sophisticated. They use the deferred sales trust. Here’s a broker that used it for his clients. So it goes on and on financial advisor. But here I wanted to talk about one of the biggest objections to this. And then we will apply how and where the funds can be invested. Okay, so there are really three big objections. We’re only going to cover really one today, and then you can we don’t have time to cover the other two, but the number one is, the DST the deferred sales trust sounds amazing, but I need my trusted advisor to say yes before I move forward, I don’t understand how my CPA doesn’t know about this and Chris I’m gonna pass this to you by the way because I imagine you get this with the infinite banking clients as well. Right, Chris? Well, infinite baking sounds amazing, but my CPA doesn’t know about it. Can you tell me? Why wouldn’t they tell me about it yet?

Chris:

I get this all the time. You know, they take it to their CPA, they take it to their trusted advisor and the person says, I’ve never heard of that. That’s got to be a scam. That sounds too good to be true. And the biggest thing I always tell people is you can either believe that that is all that there is or you can really believe what quote Will Rogers one of his most famous quotes he said this The biggest problem in America is not what people don’t know the biggest problem in America is what people think they know that just a show. There are so many things that the wealthy know that you know, elite, whatever you Want to call them that you can use, but for some reason, that knowledge isn’t mainstream. And that knowledge isn’t something that all CPAs and all trusted advisors know about. And unfortunately, in those professions, because I used to be an advisor or financial advisor for over 16 years, and we thought we do everything we were that we think we know what we don’t know. And because of that, because of our profession or licenses, we were unwilling to change their mindset and open our mind to new possibilities when those new possibilities have existed for hundreds of years in the case of the infinite banking concept in privatized banking, but sometimes your advisor just doesn’t know. And therefore what they don’t know, hurts you makes you pay more in taxes like that one case study, that guy said, I was just going to pay the taxes really, is that really what we’ve come to, to the point where that’s acceptable? I’m just going to pay the taxes because you’re unwilling to go out and find the solution. Well, the client that we’re doing this training for, wasn’t willing to accept that that’s all there was contrary to what other people told. So here it is. Now he gets to see the truth about how he can solve his money problem. And that only problem is simple, he doesn’t want to pay taxes.

Brett:

Yeah. And to that point, sometimes you got to put yourself in the CPAs’ shoes, right? Or the trusted adviser who doesn’t know, right, let’s walk through what they’re thinking. It said, since the A, they don’t know, maybe at first, they’re a little bit embarrassed or B, they’re just not a specialist in that area. like they’ve been focusing on the general practitioner, I liken it to like a doctor, right, you go to your doctor Chris. And that doctor for 20 years has been your family doctor. And but then all of a sudden, you’re playing basketball and you’re going up for that slam dunk, and you blow your ACL, right? Now, if you go to that doctor and say, Hey, Mr. Doctor, can you repair my ACL? Now, imagine ACL surgeries had never been done before. Right? Or they have, and there’s been 1000s of but he just didn’t know about it. Right? And he goes, Well, I don’t really know about that. I think you should just ice it and just rest it and your doctor, I think there’s something really wrong here, right? Well, you’re gonna go get a specialist to get that done, right. So just because he doesn’t know how or even like maybe something that’s like extra especially like, like cancer or something like that, that that hasn’t been solved before. You can either live with that. Or you could try to go find a solution. And the cool thing is the track record 1000s of closes billions under management. And also what I’m going to share with you right now, the best way to understand this is looking at people who’ve actually done this before, right? So how to tell a few deal stories or in the case of if you’re looking to sell how to tell us you deal stories, or understand if you deal stories, even if you have no DST or tax deferral experience. So this is the top deal story for this. And in fact, I also had my series 22 and 63. I don’t practice that anymore. But does it mean that these trusted folks and a lot of them are great folks? In fact, this is one of such folks who’s one of the most respected guys, and he with Bill Gross and a few others. They took PIMCO from a company and PIMCO for those who don’t know, it’s one of the largest, most-respected money managers in the world. And they took it from about 90 billion to about 1.2 trillion.

Chris:

A smart man right there. I’ll tell you that for anyone that doesn’t know this man coming from the inside, that is one smart human being right there.

 

 

Brett:

Yeah, his name is David Young for those who are listening to on the podcast, okay. He’s the Chief Financial Officer at Anfield Capital now. He used to be the former executive at PIMCO, Vice President PIMCO, and Chief Investment Officer, and now he is the leader of one part of our strategic alliances with the Deferred Sales Trust to provide what’s called the New Asset Allocation Advisory team, so they kind of oversee and option an option for folks. Okay, it doesn’t have to be. But it’s just an option for folks to oversee the entire portfolio and allocations. And we like to build a Dream Team. They’ll have folks like Chris helping to build a dream team when it comes to all things infinite banking, right, but a client might have $5 million sale, and he may want to put a million in real estate a million into insurance, a million into stocks a million into his next business. Right? Diversification is powerful. And so anyways, David Young’s story is this. He took about two years to study this, meeting with the principals, the founders of the deferred sales trust, who were my business partners, and he went and he said, You know what, I want to meet with everybody, I’ll look at everything. He’s been approached with a lot of things over the years and they have a whole legal team that looks at different strategies. He actually flew back to meet with the tax attorney, and they spent like two days in an office like signed the NDA said everything is just breaking this all down and he brought his legal team with him. And these guys walked out of that room, they said this. That might be the smartest person we’ve ever met. Who’s that person that’s the person who created the deferred sales trust. His name is Todd. He’s a tax attorney. And he’s brilliant. He’s a CPA and a tax attorney. So they join what’s called the Estate Planning Team, which is actually is the co-founder of the deferred sales trust along with the tax attorney. By the way, Capital Gains Tax Solutions are one of the exclusive trustees for the estate planning team to offer this. So it’s a whole team effort here. Okay. And this is David’s, quote, I have worked with many of the best investment advisory firms in the business. But EPT, Estate Planning Teams do deferred sales trust unique approach to creating tax-advantaged investment structures allows my team and me to invest in the same way we do for large endowments sovereign wealth and pension funds. Okay, so the question really is this and it’s really, really simple. And this is good enough for David Young and his legal team. Is it good enough for you and your client’s legal team? Okay, so David Young after two years of looking at this being skeptical at first, doing his due diligence, looking at everything, he’s all in and he’s offering this and he doesn’t just jump in with anybody, right? If he and by the way, you can hear his story capitalgainstaxsolutions.com you can see his full interview with on this exact topic, but it’s good to for David Young. Is it good enough for you and perhaps your clients’ legal team, and this is his, this is us talking here and he’s now become, he’s becoming more and more of a good, really good friend? Okay. 

The next one is actually another gentleman from the same industry. And this is so interesting that Chris says you’re in the industry for so many years. 16 years, right? Yeah. This gentleman was in the industry for 35 years. His name is Cal Garvin. Okay. And Cal Garvin said this after 35 years in the financial service business and considered an expert, I thought I knew everything. But I learned something new. And this is here’s his story. He’s in Los Angeles. He’s a financial advisor. He’s one of the top advisors for LPL. And he is he’s looking to retire. But his gold number Chris is here meaning like 10 years away, versus were his book of business was right? He had it to grow to a certain number. So he gets approached with a deferred sales trust. And he’s like, well, this sounds like it’s too good to be true. However, he had an ace in his pocket. He’s like, you know what? My wife’s really smart. And his wife is actually even smarter than him. His wife was a treasury attorney. And she worked for the United States government, she worked for the Secretary of State, she, I think she’s like a g a g five. She’s really, really respected and high up there. So he brought it through, he says, look, honey, we got married years ago, and I told you, I would never do anything that you didn’t say yes to and you felt good about. He goes, I heard about this deferred sales trust thing. I know, you probably get approached a lot of this stuff. But I want to give you this information. And can you go and just kind of check this out on your end and talk to the people that you know, to see if this is something that we want to take advantage of because if it’s true, I want to sell the business in the next 90 days, and I want to retire and I want to you know, live the rest of our life with our grandkids and travel and do what we want to do. So she took it to the powers that be in the people she knows. And she made a few calls. She came back 48 hours later. He said she came home from work a couple of days later. I don’t if you’ve seen the movie or the show Suits, Chris, I have not No. So suits are pretty cool. These are two attorneys in New York. And there they’re like really hot shot attorneys. And every time was a big moment. They come in and they throw the papers down on the table. And they say and they sit to make a big statement. He goes that’s what it was like slow motion she came in, she threw the papers on the table. And she says the two words that changed my life. It’s legit. And he says it’s all up here. He goes, I call the the the business broker who had the offer for my business. We closed the business in 90 days. And the rest is history. So here’s the question for you. If it’s good enough for Cal Garvin, after 35 years in the business and his wife being a G5 Treasury Attorney, is it good enough for you? Right? I don’t know, maybe it’s not. But maybe it is. And hopefully, it is, by the way, once you understand that there are really smart people who have done this and that will break it down for you too. And after your signing NDA is we can give you basically just as much as you need to really get this and you look at the track record, it becomes actually very easy, it becomes very clear. And because there’s a consistency to what we do, it’s just this an installment sale. And it’s actually kind of like a 401k there’s also audit defense built-in there are 1000s of successful closes billions under management. And so step one is just simply sitting down with us mapping out a wealth plan with me and this case also with Chris and, and and and also bring in your trusted advisors who want to get educated, we’re happy to educate Okay, and then step number two is just selling the asset. This is the asset that was sold and use the deferred sales trust here $7.9 million deal, defer the tax fund the trust, and then you can find insurance policies right and that’s really where you can enjoy your wealth and have a lot of freedom our deferred sales trust restructures 10-year installment notes and they’re about 8% is the target net of compounding rate of return over a 10 year period of time and you can renew as long as you want for Every 10 years or 10 years, you pass it to your kids, you got to cash out and, and pay the tax if you want to. So with that being said, we are going to shift now to focusing on the insurance part of this on the investments now. Okay, so now that hopefully, you understand how the deferred sales trust is legal or why it’s legal. And now we’re going to see how we can combine this with life insurance. So the first thing to understand what the deferred sales trust is, nothing gets invested without your approval. Okay? So whether you’re, whether you’re selling and wanting to put into real estate, whether you’re selling one putting into insurance, everything we try to do his mathematical meaning, we felt what’s called a Risk Tolerance Questionnaire. And Chris is really familiar with this. And we’re going to assess your wealth goals, your wealth needs, your income needs, your tolerance for risk and different investments, your understanding of those things. And that’s a two-page questionnaire that takes about maybe 10 minutes to fill out. And if you have a spouse, they’re going to fill that out. And we’re going to take that, and that’s going to be like the constitution for how and where the funds are invested. Now, by the way, can insurance for us absolutely, insurance is a great way to create and preserve more wealth and try to hit the 8% target. But it’s flexible along the way, nothing is set in stone, meaning that’s the constitution until that changes, nothing changes, and nothing gets moved without your approval. So what can we do? Well, we can sell with the funds into the trust, now they’re sitting at a bank. From there, you can get with Chris and Chris would say, Hey, how are we going to design this infinite wealth, banking, a whole life insurance policy to fit your needs? And so I’m gonna, I’m gonna pause there, like Chris, kind of jump in and ask me questions now as if his client is sitting there, and I’m gonna do my best to answer them. So here we go. Go ahead, Chris.

Chris:

So you know, a client sells or exits their business, they’re sitting on this large chunk of money, and they don’t want to pay taxes on this. So they want to defer those taxes to a later period. But the biggest problem that most people see is when they when they’re trying to protect the money or not pay taxes, they always think I lose control, I can’t use this money, I got to put it into this, this vehicle. And now all of a sudden, I can’t use it, wherewith the infinite banking concept, and what we do and what my client does let’s just pretend I don’t care, you can add some zeros, I’m holding $100 bill. So let’s just say this is a million dollars in my hand, and I put this money into this specially designed and engineered whole life, which is inside of this deferred sales trust, now that million-dollar is in this vehicle. Now, why would people do that? Well this money that people use, the privatized bank is not money that would be otherwise allocated into riskier assets. It’s literally this simple. Before your money goes into riskier assets, real estate, or stocks, or bonds, or ETFs, anything, whatever your flavor is, you change one thing, and that one thing is the money goes into this policy first. Why? Because of the policy, and this is only for 2021. And transparency will change in 2022, because of some rule changes. But this policy, which is specially designed and engineered whole life pays a guaranteed 4% Plus it pays you dividends. So if you’re looking at your money, and your money’s in a bank account, or money market account a CD, because of the word g the guaranteed word, then it’s really not making much. But if we just change where that money goes first, the dollars, instead of going into a checking account goes over into this privatized banking account that’s specially designed whole life, it’s now earning eight guaranteed 4%. But that we got to complicate this even more. And this is my question, sorry, I wanted to help people understand why somebody would do this. Now the money’s in this policy. Now the goal and the objective of a lot of people doing the infinite banking concept would be to take this million dollars and move this money because money in motion is how people really build wealth. So we don’t want to just park it in this stupid, specially designed and engineered whole life, we want to put it in there and take it out and go do fun things with it, like make more money with real estate, maybe invest in another business, maybe when the market goes down, we buy deeply into stocks, undervalued assets whatever your flavor is. Now, in doing that, my question to you is if they do that they put the million dollars through this deferred sales trust, it goes into this specially designed whole life policy, can they then take the money from that plan and start moving it and then take it out and move it into another asset all within the confines of this tax-sheltered vehicle? If I said that properly, correct me if I’m wrong, but can they moved the money inside of this vehicle over and over?

Brett:

So to give the attorney answer, right, it all depends. Okay. It all depends on how we’ve structured how we set it up. And let me just let me try to encapsulate the options here, right. And I’m not an insurance professional. But this is my understanding of how we might be able to combine the two. And the biggest thing would be the ownership of the policy versus, who is at the trust, or is it the client In this scenario, by the way, this gentleman again, who’s connected with Chris and I, to $5 million sale, he’s looking at about a million and a half of liability. So if he does nothing he just sells, he’s gonna have 5 million minus one and a half, right, so about three and a half million, or if he uses the deferred sales trust, he’s going to have the full 5 million. And so in this scenario, from what I’ve gathered the best way, or one way, I think, which is likely the best way is to use the funds from the trust to fund the brand new policy, right, and this is this, this is the example of arbitrage, right, so on one and a half million five, an extra one and a half million, and our stuff is making about not guaranteed, but we have to go make the money 8% or so over net fees, let’s just say an extra 8% of the money, that’s an extra $120,000 per year, of which would come to that individual of which he would owe tax depending on his circumstance, depending on where he lives. And depending on if he, by the way, has any depreciation to offset some of that as well, which is also another topic we can dive into. But that 120,000 extra could be used to purchase a policy. So I’m gonna pause right there and see if that makes sense so far.

Chris:

Yeah, absolutely. So we got this extra money. Now you want to purchase this policy. So what was the 8%?

Brett:

So the 8%, by the way, what could be done, the full 5,000,008% can be in real estate can be, it can also be insurance too, right? It can also be in the key is what’s the outcome that we want for the individual, what did they want. So it could be in a number of different things. Basically, anything that trades on the New York Stock Exchange can be passive or active real estate, I have a client who’s building 72 units, multifamily units in Tennessee, he sold his business for 2.6 million. So that is very flexible, considering the bank going to hard money lending, it can basically go to anything that’s business or investment purpose within the United States. And the goal would be to make the 8%. And we also clarify this as well, the full 5 million making 8%, that’s $400,000. Okay, so he could also take all $400,000, not just the extra 120, from the 1.5 million, the full five million in there. Let’s say it’s producing that it might only take 5%, you might get a little bit of arbitrage there, and then use that to fund the policy. So depending on the outcome, and maybe you can correct me if I’m wrong, if he owns the trust, I’m sorry, if he owns the policy versus the trust owning the policy. Do you see the differences there, Chris?

Chris:

Yeah, absolutely. So would it be possible hypothetically, if this gentleman made the money from the sale of this business now, not all of it can go through the banking policy the privatized banking policy, and just so everybody knows, when I say that, I mean that specially designed and engineered whole life, you can’t put all of it through there. But what if he wanted to take one or 2 million of that money and put it directly into the whole life policy, and then immediately take the money out of the whole life all owned? The trust, okay, the trust owns the life insurance contract, and then buy real estate or put it into stocks? Or buy into whatever or another company? Can that be done? If the trust owns the life policy? Can he then move the money from the life policy into other assets? titled under the trust?

Brett:

Yes. So let me answer that with a couple of things. Because that’s still like, almost like, it’s really kind of above my head, because I’d have to see the specifics. But this is what I did find out. When I talked with my business partners, there’s a thing called split-dollar performance insurance, absolutely called premium finance, right? Using the trust, right, and there’s a thing called a UIL or Universal Index Life.

Chris:

Okay, let’s not talk about that at all, because that doesn’t fit what we’re doing.

Brett:

Okay. So it’d be split-dollar performance insurance, or premium finding strategies. So there are some advanced strategies to perhaps use that can maybe achieve what you just said. Okay. So that being said, every deal is specific. And I want I would want to explore that with that individual. right not to because we’re broadcasting this a lot of places, I want to make sure that we’re not getting into spots where we’re messing the thing if that makes sense.

Chris:

I think we’re talking the same thing. I mean, whether it’s a split-dollar premium finance, I mean, there are different strategies within the insurance world of how to use these and structure them. But essentially, if you don’t really all we’re talking about is changing one thing, and that’s where the money sits first. So if the money went into, let’s just say a checking or savings account inside the trust, it would be making next to nothing, okay, but then if we just changed where that money went first and went into this specially designed and engineered whole life. Now that money’s making, let’s just use the guarantee of 4%. But you know, he’s probably not going to be super pumped about making 4% he might want to make eight. So if we just changed where the money went first, we now make a guaranteed 4% plus dividends. Now if he then puts the money there is full control and access to use that money like the insurance contract allows him to put the money in and Then take loans out and take a loan out and go, he could take that money could put a million in, let’s just say he takes 900,000 of the million out immediately. And he puts it into a real estate deal that he finds all within the deferred sales trust, you know. So what I’m saying is, it’s just another asset class. So if you can take the money and put it into a checking account, I don’t know why you wouldn’t be able to put it into this special design whole life, and then from there, then figure out what you’re going to invest in.

Brett:

Yeah, I think that all sounds like in the confines of it I mean, I just want to make sure that the benefit of the outcome of the exit of it is maximized for the client. And that might mean the other way. So that being said, I know premium finance, my understanding of that, is actually you getting a bank to basically say the collateral is the trust, and therefore we’re going to loan against the trust with the person individual to get a brand new policy, right. So they’re going to finance it or leverage against, let’s say that millions. So, however, we end up there, and what you just said, I believe that is exactly the case.

Chris:

Yeah, Split-dollar is very common in the banking world. That’s a lot of what banks do. But yeah, so I think either way, and you know, there’s going to be different people that are going to use different strategies, whether it’s split-dollar, or whether it’s premium financing, either one would work, but I guess this the second part, is once the money is there, and he wants to diversify and keep it. Here’s the other thing, a lot of people don’t understand what the specially-designed whole life when you put the money in and you take the money out, you’re not actually taking your money out, the insurance company’s making a loan to you, and using your money inside that contract as collateral. So your money never leaves the account, which means if you put a million in, and you take 900,000 out, your million is still earning 4% plus dividend, but you’re now holding 900,000 in your hand. So hypothetically, let’s just say that that insurance contract with dividends is paying you, let’s just use 6%, for simple math, very that company’s doing that, and you take the money out as a loan, that loan wasn’t your money, it was the insurance company giving you money from their general account, and taking that 900,000 away from your death benefit that that insurance contract had. So you’re now holding 900 grand, but now I want to buy a multifamily apartment complex with that 900 grand, and that multifamily I buy with the $900,000 loan is money that came from that insurance contract, but I’m still making full interest. So I want to make money twice, not just once, if I put the money into the real estate, I’m making money once on the real estate. But now doing it this way, by changing that one thing, I’m making money two times, because the insurance company’s paying me an interest in dividends, I’m taking the money as a loan, which the insurance company is charging interest or simple interest on let’s call it 5%. So if you take the six I’m earning with dividend minus the five the insurance company pays, I have an arbitrage of one in the first year, that’s before any compounding happens, the 900,000 goes into real estate, say I make 10% on the real estate, I didn’t just make 10% in that transaction, I made 10 plus the arbitrage from what my money is earning in that contract that specially-designed whole life, and what the insurance company is charged me on that loan. So just to kind of take it full circle, that’s the whole idea of what he’s trying to do is not just make money one time, but make money two times and have a big g in front of his name, or in front of the money.

Brett:

And then we would add to that we’d call it we call it triple arbitrage. Okay, I like that of paying the capital gains taxes on the one and a half million, right? We’re gonna move all of that there and then apply what Chris just said. And as you can tell, I’m not an insurance specialist, right. I’m the deferred sales trust specialist. So we want to encourage you to get with Chris and me and to sit down and get on zoom and break down your scenario and give you the exact details of all of that. But ideally, it’s all for you to create, preserve more wealth, give you options, even diversification, give you tax deferral and customize a plan for you. So that being said, Chris, what are the best places for people to reach out to if they want to connect with you right now?

Chris:

Yeah, so just my website, it’s chrisnaugle.com. And then they can just go in and schedule a time or watch any of the videos on what this concept is. And I’d be happy to discuss it. And then we can kind of bring you know, Brett, and talk about the deferred sales trust and how this could possibly work. And I’ll make magic.

Brett:

Exactly, excellent. And those who want to get in touch with me as capitalgainstaxsolutions.com, just make sure when you do and you’re watching this, you mentioned, Chris so that we can get everything connected. Well, we can all work together and all of those types of great things, you go to capitalgainstaxsolutions.com for that and look up the deferred sales trust. That being said, Any final thoughts or questions, Chris, before we wrap up the show?

Chris:

No. I just think back to what we said earlier, don’t always think that things are exactly what you’ve been taught your whole life because there are things out there being done that can save you A ton of money whether it be in taxes or whether it be safer ways to actually move your money and be in control of money, but that all comes down to that you all need to be in control of your money and this provides like you said triple arbitrage or I’ll call it triple control of your money without having to give up all the money like you think you might have to.

Brett:

Very well said Thank you, Chris, for co-hosting this with me, and also want to thank our guests for listening to the episode of the Capital Gains Tax Solutions Podcast. We’re also streaming Expert CRE Secrets. And if we can be of any service to you, please reach out. Thanks so much for watching. Bye now.

 

Important Links:

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• Money Multiplier

 

About Chris Naugle

As a nationally recognized entrepreneur in my 16 years of high-level experience in the financial services and advisory industry, I managed over 30 million dollars in assets. Specializing in alternative investments, retirement strategies, and wealth accumulation both internationally and in my hometown of Buffalo, NY.

He has built and owned 16 companies since 1992. From a $500 loan and in my mom’s basement, to a 10,000 sq ft incubator office space and a multi-million dollar real estate business that has done over 200 transactions since 2014.

Using his expert knowledge in finance, He was able to successfully buy, renovate and sell hundreds of properties. Through his passion and success in real estate, He became co-founder and CEO of FlipOut Academy, a business that teaches people how money works in real estate.

 

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