Customizing Your Retirement Blueprint with Mark Kennedy

Customizing Your Retirement Blueprint with Mark Kennedy

Mark Kennedy is a financial advisor, he is a specialist in helping you create a blueprint that will help you grow your wealth and create and preserve more wealth in retirement. He is also the founder and president of Kennedy Wealth Management LLC, a Calabasas, California-based Registered Investment Advisor founded in 2008. 

Mark Kennedy is in the financial services business in some form or capacity for about the last 25 years. Back in 2000, was a kind of his wake-up call for everybody, because the markets took a really big hit. And at that point in time, they decided that they had to use safe money strategies with clients.  And they found that through the years, that wasn’t really the only way that they should be helping clients. And when 2008 came around, they saw another round of people losing their life savings. And he said that they need to really take on Wealth Management ourselves in a very big way.

 

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Customizing Your Retirement Blueprint with Mark Kennedy

 

Brett:

I’m excited about our next guest. He is a financial advisor, a specialist in helping you create a blueprint that will help you grow your wealth and create and preserve more wealth in retirement. And in fact, he’s with Kennedy Wealth Management. And he’s here to share a bit about his story and how he helps his current clients create and preserve more wealth. Please welcome the show with me Mark Kennedy, Hey, Mark, how are you doing?

Mark:

Hey, good, how are you?

Brett:

Hey, better than I deserve. Nice to have you on the show. And looking forward to diving in here today. For our listeners to get to know you for the first time, would you give a little bit about your story and your current focus?

Mark:

Sure. So I’ve been actually in the financial services business in some form or capacity for about the last 25 years. Back in 2000, was kind of a wake-up call for everybody, because the markets took a really big hit. And at that point in time, we decided that we had to use safe money strategies with clients. And we found that through the years, that wasn’t really the only way that we should be helping clients. And when 2008 came around, we saw another round of people losing their life savings. And I said we need to really take on Wealth Management ourselves in a very big way. And so become a comprehensive wealth management firm. And so instead of just using safe money solutions, we wanted to also bring to the table full wealth management, which we have. So since 2008, we’ve been on that full wealth management and of things. And I was recently introduced to Brett Swarts, through another counterpart. And we had talked about something called the deferred sales trust. And we actually use that on a client recently. And I’m sure we’ll share that story today. But for us, in our practice, we focus on people who are in or nearing retirement, who have some complex tax solutions. So it’s not just about trading the money, anybody can do that for you. But we have a $60 billion team that actually does the trading. We call that a tamp that tamp also works with many sub managers out there, who had been in the business for many years working on Wall Street, I deal only with institutional investors generally, that through us individuals have that same opportunity. So on the trading end, we have the institutional side that the retail investor can get involved in, then we also have our tax management and strategy, part of the practice for people who have either appreciated assets now or who want to look at a legacy plan later on for their kids from a tax perspective. And then also take a look at the full wealth planning end of it from income to long term care planning. And all in between.

Brett:

Got it. Thanks for sharing that. And we’ll dive into Yes, absolutely. The deferred sales trust story just closed in Colorado for a sneak peek. It’s around a 50 unit multifamily property for a client of Ted’s who is looking to get rid of the toilets, trash, and liability, get diversified liquid, and on the sidelines. So we’ll dive into that here later in the episode. But I want to take one more step back, Mark. And I believe we’ve all been given, you know, certain gifts in this life. And I want you to think about when you were younger, maybe was the college years and his high school years, maybe when you were a child, where some people call these strengths or gifts or superpowers, I believe you’ve been given certain these gifts are kind of God-given gifts, I believe these gifts are given to us to be a blessing for others. So I’m curious what was maybe the one or two gifts you believe you were given? And how does that help how you help people today?

Mark:

I’ve always been interested in money. And the reason mainly why I’ve been interested in money is because I didn’t come from a family with money. So I decided early on in my life that I wanted to live my life differently. And to do that I would have to get educated in certain areas to really make that happen. I remember when I was 12 years old, and I had a paper route. I actually had two paper routes that I was delivering, that I was making back then. And this was in 1982 83 about $1,000 a month and for a kid of that age, you know, $1,000 a month that was a lot of money back then. And I remember I would take that money and I would go and I would invest it. I was really into coin collecting at that point, I collected stamps. But I also like to buy stocks. And I would research socks. And I have my famous Apple story. And to this day, I want my mother to live it down. But I bought Apple back in 1982 when I believe it was around 10 or $12 a share. And I owned it for a couple of months. And I bought $1,000 worth of it. And she told me to get rid of it because that company is going to go out of business. And I did and I wound up selling out of it. And I did a back-calculation on that stock. And that stock would have been worth over a million dollars now with my $1,000 investment. So yes, I’ve made some mistakes, you know, along the way, I’ve had some successes as well. But that’s the reason why I’m sitting in front of you know, people today helping them with their money. Because nobody ever had a coach in our family to do that. I want to be the coach to families, and make sure that they can live their retirement dreams.

Brett:

Absolutely love that. And I love the story of the humble beginnings, right? Likewise, I kind of had a dual, let’s say upbringing, dad had all the wealth mom had none of the wealth. Parents were divorced when I was young, it’s like the kind of house I live in the mom 90% of the time. And part of my financial reason to be financially successful is to not have to have that margin, not to have a small margin, but have a lot more margin, right. And we do well with money and work hard. And all of those things. And so I like I appreciate you sharing that. And that Apple stock too. That’s really pretty incredible. Too bad that you don’t own that still now.

Mark:

I put myself every day for selling out Apple stock.

Brett:

You live and you learn. And so now let’s jump into maybe some of the best-kept secrets right now as far as wealth management is concerned, and helping clients build a blueprint. So for those who are listening to this, and maybe are considering building a blueprint, what would be the first step, if they sat down with Mark to kind of map something out for them.

Mark:

So I think we really need to sit down with them and find out what it is that their concerns are right. I mean, everybody’s got a different set of concerns. And I don’t want to make this cookie cutter and one size fits all. But what we do is we do truly custom planning for our clients. And so it’s really about finding out what are their goals? What are their desires? Where do they feel right now they’re not being served? And how can we serve them better? And so we have that initial conversation, we call that a discovery call. And then from there, we migrate that into a plan. Because a lot of people today, even though they have kind of an idea of what they’re spending until they really write that down, they don’t really know what they’re spending. So we want them to get in the habit of writing that down. Do we actually have a software program that we work with them on that to figure out how much are they spending per month per year? What does that look like? And then we want to bring in all of their assets to say, okay, is this going to be enough? And could this last you the rest of your life? And I like to do what’s called age 100 planning. And the reason why I like to do that is that we have some people that call us and they go Well, Mark, just plan for me until I’m age 86. I say yeah, but what if you live past age 86, I don’t want to throw you under a bus, right? I mean, we want to make sure we have enough assets to last you for your life expectancy. And if that’s age 100, we want to have you live a good life. So we want to plan around that. So we need to look at what they’ve acquired and develop, to see how that’s going to work throughout retirement. And we also help them deal with reality. Because a lot of folks when they come into me, might not have a realistic outline of what they want their retirement to look like. because nobody’s ever sat down and done these exercises with them. So I think it’s important to first put together the plan. And then once we have the plan together, then it’s about fitting in the product or the solutions, right? And I always kind of use this acronym, you can’t just you know, every time you need to put a nail in, you can’t take a jackhammer, right? And I think that our industry takes that jackhammer approach a little bit too much, just to put a nail in we need to do is we need to find that really fine hammer to really kind of put that nail in the right way, so that they have that retirement that is sustainable, and it can last them the rest of their life. And that’s thorough planning. And that’s key. So the plan drives the retirement, not the investments themselves. The investments are catalysts to get them there. But they’re tools, but the roadmap, the blueprint is what’s most important here.

Brett:

Very well said. So the discovery phase, the planning phase, gathering the assets really important in the planning phase is really budgeting and clarity on what they’re spending what you’re not what your living expenses are going to be and then plan for Adrian 100 planning versus just 86. Because what can live live live longer, we are living longer. So in Okay, great. And then what’s the next step after that? Or what are some of the questions that clients should be asking but they’re not? What would be maybe a couple of those that come to mind?

Mark:

So clients always should say prospects right before they become clients? The first thing that always usually comes out of their mouth is well, what’s your fee? Well, what I tell people is that’s kind of like going to the doctor and without the doctor Taking x rays blood pressure, blood work, you know, you go to the doctor and say, Well, how much is this going to cost me to fix? My medical problem? Well, first of all, the doctor doesn’t even know what your medical problem is until they do the test, right? Like I had a hip replacement two and a half years ago, well, if I hadn’t ever gotten an X-ray for that, or an MRI, I mean, it would have been pretty inappropriate for the doctor to tell me, Hey, you need a hip replacement, without really doing this factfinding. And so I think it’s important that we need to take the temperature and do the fact-finding first to see how we can even help the person out. So it’s, it’s not about fees, it’s about how can we help you out? Because on the other end, if you’re in the wrong strategy, and you lose 20 3040 50% of your wealth, then maybe you wished you’d paid us a fee. So we really have to get clarity on what does that means, in terms of fee? What are you going to get for that? with us, it’s going to be a lot more than just a trading relationship, we’re going to be really helping you handle your whole entire life, financially. And so that’s what we can kind of bring to the table on that. So that’s what I would say one of the first questions that shouldn’t.

Brett:

Let’s get into that. Yeah. So I think that’s it’s really important to establish or build your dream team, right? And your dream team or, you know, the CPA, tax professionals, the financial security professionals, the real estate professionals, all those folks who collectively as a team can help you achieve your goals. And I love how you put that fee part, right? Instead of asking, what is the fee? It’s really what is the value and we don’t know what the value is until we establish whether or not there’s a problem or concern or a challenge, right? And, and that’s like the doctor going to, you know, going showing up and then to say, Oh, you need knee surgery, you’re like, well, you haven’t even tested my ACL yet. Like, we maybe need to get an MRI and find out before we open up and do things. Is that a fair summary, Mark?

Mark:

Absolutely. Yeah, you’re spot on?

Brett:

Excellent. So okay, so that’s the first question right, that maybe they’re asking that maybe it should be a little bit shifted? Is there a second one that kind of comes to mind?

Mark:

Yeah, I would say the big one we get all the time is “Do I have enough money to retire?” People don’t realize how much money you need to retire. We’ve had people that come to us with very meager accounts, and they want to retire. And I’m just playing upfront with them. And I’m like, it got to work. You haven’t saved enough. And people say, Well, how much should I save. And again, this is why we do custom planning. So I think it’s different for everybody. I mean, look, if you’ve got, you know, $100,000 pension coming in, right, you probably don’t need quite as much out of your investments that you had saved, or maybe you need to save as much. But if you don’t have that, we need to help you create a pension because the cost of living is just going to go up, it’s not going to go down. So we have to have money in order to be able to do that. And so we need to help you determine, can you even retire? Do you have enough money? So that’s the conversation that we also need to have with those people? And that’s the question we get asked a lot.

Brett:

Excellent. Well said, Now, I’d like to pivot now to the deferred sales trust and how you’re able to help your client in a custom plan based upon a real problem, right? And had a, you know, a clear outcome. So would you just first start without giving of course, any competition information away? Just what was the pain point for the client? Right? What was the challenge they were facing? Let’s just start right there.

Mark:

I had explored the deferred sales trust about two or three years ago, but I didn’t really know anybody that was using it. And I’m a very careful advisor, I own a registered investment advisory firm or fiduciary. And so we have a lot of legal responsibility there. And I don’t want to just go into something that wasn’t proven. And I kind of stayed away from it for about two or three years. And consequently, we had a prospect about three years ago that wanted to sell their business. And it was a pretty large scale. And I was unequipped at that time. And like I said, we had explored deferred sales trust, but I didn’t really roll forward with it, because I didn’t really understand the strategy, and I had never seen anybody use it. Then what happened is my associate advisor in my office, we just like to, you know, get in touch with CPAs introduce ourselves, and the one CPA we got in touch with, he happened to be involved with deferred sales trust and told us about it. And now coming from a CPA, I felt a lot more confident about that strategy. But we had some deep conversations, and I felt really totally comfortable. But at the same time, this was happening, one of my really best clients called, and he said, I and my wife are selling our apartment building in, in Colorado. And we need some help with this. And so we got into discussions of value, and we found that there was going to be about a $4 million or so gain on this property, three and a half to $4 million. And then on top of that, he was going to have all this recaptured depreciation, you know, because he had depreciated the property over its life expectancy. So all of that’s going to happen if he just went ahead and just sold it outright. There are a couple of options here. It’s like, Okay, you can stay in real estate. And if you want to do a 1031 exchange, you can do that. But then you got to go find the property right, then you’ve got to find out whether or not you’re going to get the rents that you want to get. And then what if there are vacancy rates? And what if there are all these other problems? What if we could do something And similar with a deferred sales trust, where we can get you to cash. And we can just defer this tax out for years and years and years so that you’re earning a lot of money on your money, and at the same time, that’s bringing you in income, maybe even greater than what you were earning in the building. And that’s exactly what we did with them. So his pain points, the reason why I wanted to get rid of the property is, you know, the property needed some repair work, it was getting a little bit older, especially with COVID, going on last year, with all the different changes and rent, moratoriums, and you know, evictions and all that he wanted to not really be exposed to that anymore. And he wanted to have his cash, you know, so he could do other things and help his kids and just be more liquid. And so for him, that was the reason why he wanted to sell. And it was a good sale. He got what he wanted, actually, he got a little bit over the asking price. But now he’s got all that cash, he can do something with instead of sending a million or a million and a half dollars to the IRS in the state of California.

Brett:

Excellent. Let me see if I can kind of encapsulate that and amazing story. First of all, I actually started with you three years ago, right, and you vetting the deferred sales, trust, and betting, whether it’s legal, or whether it’s work, it’s something you want to bring in, because you’re a registered investment advisor, and you want to be very cautious with any new strategy. So I think that’s the right way to approach it. I had a similar experience. When I first learned about it about 11 years ago, Marcus and Millichap, were sitting there going, Oh, is this thing too good to be true? Like I thought a 1031 exchange was the only way to go and maybe a TIC or a Delaware?

Mark:

Well, one thing I want to say on that is, unfortunately, we did not help that particular client out, because I wasn’t equipped at that time with the DST to really understand it. And, and I hadn’t bought it yet, because again, I didn’t know and anybody who used it. And unfortunately, you know, that person we were unable to help at that time. And then when this opportunity came around again, and this happened with us, with a client in Colorado Springs with property, we were really able to help them in a big way. And so I didn’t want him to miss out, you know, on this opportunity.

Brett:

That’s the key, right, just having a guide and having somebody who can walk you through who’s actually done it before, right. And then as soon as you’ve done it for one client, and it’s a successful outcome, then you can help more people. And that’s part of it you’re listening to this and reach out to Mark, and he can connect you and get you educated on the deferred sales trust. Of course, we’re the trustee as well, as Mark and I work together full disclosure, this client is now a co-client of ours since I’m the trustee on that side. But now focusing back on that, so you learned about it, first couldn’t use it because you weren’t equipped, ready for it. Fast forward to another client, now he’s in pain. And by the way, he’s facing the toilet to trash liability, the challenges with COVID evictions and all of the other things, he’s getting older and he’s made as well, my understanding when we collectively talk, he’s ready to kind of enjoy it right and have something where you can spend more time and energy on something different, but also have the option to have income coming in. Right? And to be passive if he wants to be right to be active if he wants to be. It’s really a nice way I like to say it’s transformational for clients, because it gives them freedom, so to speak to the flexibility of the different sales trust. And what about it that made it so attractive for your client?

Mark:

Well, here’s what made a really attractive for this particular client. So this particular client didn’t really even need the income from the apartment building in Colorado Springs, both he and his wife are very successful medical doctors, they’ve had a great career, they save quite a bit, and they have a lot of qualified accounts. Ira Pension Plan type accounts, and both of them within the next two, five years are going to need to be taken required distribution on all those accounts. And it’s a pretty large sum of money. So this is going to bring them all the money that they really need. So they really don’t need the income necessarily from the deferred sales trust right now. So what we were able to do is we were able to build in basically a kind of a faucet mechanism, where they don’t need to turn on the income for a period of three years. And that deferred sales trust, which is great, is going to keep their income down because he has to take a required distribution. By that time, she’ll be winding her practice down, and then they’ll need some more retirement money. And that’ll be perfect coming out of the DST at that point. So we were able to control the tax a lot more through the DST than we would be if we were just to do, let’s say a 1031 exchange, and then all of a sudden, they just have these checks coming in, you know, every month from the property that they can’t control that just go right back on their 1044.

Brett:

Make sure we get the listeners to capture that, okay, and I’m going to restate it because it’s really powerful. And it’s what’s called what we call the net income tax advantage. In other words, you want to receive income when it makes sense for you to pay the tax, not when you have to receive and pay more tax because every dollar especially if you’re an ultra-high net worth individual or ultra-high net worth, income earner, every dollar at a certain point, you’re just paying more and more in tax. And so what the deferred sales trust is able to do and what this client has been able to do is is take the cash flow that was coming from, by the way, a very low basis property that was already I think close to fully depreciated or if not really low, and he was already having to pay tax on that cash flow. Now he’s moving that to a liquid asset That’s okay. And he’s delaying any of the income. Therefore, he’s not having to pay tax on that right now. It’s, it’s, it’s building up and sending referrals, they call like a 401k, right? Or like an IRA, you say, Hey, I’m gonna forego this amount, in this case, a very large, you know, multi million millions of dollars. And I’m gonna park it in this deferred sales trust and want to keep it growing in a tax incentivized tax optimized way. Is that a fair summary, Mark?

Mark:

I would say so. The tax play here was was really incredible. And I think that was a huge benefit to the DST over, say, 1031. Exchange. And, and so I think it’s different, you know, again, for each client. Now, if they, if they just want to own real estate, and their whole thing is, you know, I want to own and control real estate, maybe maybe not, you know, deferred sales trust could or couldn’t be for them. Because you can still do that within the deferred sales trust.

Brett:

Our listeners know, so Mark’s client, although they’re they own multiple things, and they’re probably not going to be wanting to get a real estate lease anytime soon, right? They still have the option to get back into it, should they want to at a future date, oh, by the way, with a brand new depreciation schedule, not confused with the Delaware statutory trust, which just charges the deferred sales trust. So it is different. It’s definitely different, right? It’s completely different tax codes. But what they can do if they choose to in the future is to purchase real estate by partnering with the trust and buying real estate at a discount with the brand new appreciation. So in fact, one of the best deals and made me a believer was in 2006, Mark, a gentleman used the deferred sales trust he sold at the peak, it was a $20 million asset in Minnesota. And instead of doing 1031, because he thought the prices were too high. He parked the funds there and the trust. And five years later that a bank that had financed the deal for the new buyer, call them to say, Hey, we just foreclosed on the property you sold five years ago, do you want to buy it back? And he said, Well, maybe what’s the price? And he said, Well, 60 cents on the dollar. Okay, he used the funds in the trust all tax-deferred to buy it back with a brand new depreciation schedule. And I heard that for the first time. And I said, Well, I’ve done 1031 exchanges, I’ve done multifamily investing, I owned real estate, you can’t do that. You have to do 1031 180 days. And I go No, no, we’re not doing 1031 doing a deferred sales trust. And the more you learn about it, the more you go, Oh, this is why it’s transformational. And this is why you can it’s going to help more and more clients. So you want to speak to that at all. Mark, are any thoughts there?

Mark:

I think it is transformational. I think, especially with the huge increase in real estate prices over the last few years. What I find is that when people come into us, they want to sell out of certain assets that they feel hand-tied, because of the tax, right. So they feel obligated to keep the asset because of the tax versus selling the asset, going to cash doing something more with it than they’d like to do. But they feel that their hand-tied because of that tax. This is a way to untie the hands so that you can do what you want to do and live the dream you want to live it live and not have to take care of the toilet and tenants in the property you didn’t really like, right?

Brett:

100% right and diversify, right? Because a lot of times, let’s say someone’s selling a 50 unit apartment complex, they’re just going to go buy maybe an 80 or 100 unit in the same town. And so they’re, they might have more tenants, but they’re and so it’s a little bit more diversified. But it’s the same asset class. And it’s not necessarily it’s more of a transactional type of deal. 1031 vs transformation where you can get out of that completely right? North release trash liability, you get the funds liquid, you don’t have to be illiquid, you don’t have to fight with the banks, or rent control or eviction control or any of that stuff. Right? Although if you ever want to get back in you can right all tax-deferred. So I liken it to blockbuster and Netflix right there used to be a way to rent movies, right and as a blockbuster, he had three days to return it. If it was actually in right you had to drive there Park, if you didn’t rewind, you got it, you got channels with a fee, you got another fee, that’s like the 1031 very restrictive 45 days, 180 days to close 45 to identify, or does the thing called Netflix now like where you can literally deferred sales trust, you can, anytime you can, you can have the funds distributed to pay the tax, or keep it deferred, you can put it in multiple asset classes, there are no timing restrictions to go back into real estate, you get a brand new depreciation schedule. So what I like to do is in what Mark and I like to do is really create a plan if you’re looking at the deferred sales just for the first time right now and just put a line down the middle of the page and say, What is your blueprint for your retirement and your capital gains tax deferral and find out what strategy works for you. And by the way, if you find a great deal, by all means, do 1031. We just found that the prices are so high in inventory. So low-interest rates are so low, it’s driving prices up when you think it’s not a good time to buy real estate. It’s a great time to sell it and be on the sidelines. So any last thoughts on that Mark?

Customizing Your Retirement Blueprint with Mark Kennedy

Customizing Your Retirement Blueprint: “Preparation for old age should begin not later than one’s teens. A life which is empty of purpose until 65 will not suddenly become filled on retirement.” – Arthur E. Morgan

Mark:

A couple of things I wanted to bring up that I think are also very important that people understand. There’s a couple of variations of the DST depending on the net worth of the client. So in this particular client, they’re a high net worth client, we were able to do the DST plus version that removes that whole asset out of their estate. So now with the new administration, the estate tax exemption limit is probably going to go down quite a bit. And that’s going to subject a lot of people who over the last two or three years have not been subject to estate tax will be subject to estate tax. So now there’s DST plus, that’s going to remove that whole entire 5 million out of their estate, which is pretty incredible, right? Because if your heirs had to pay a state tax on that 5 million, they’d be looking at about 40% or $2 million in a state tax. So that’s gonna save that to the family.

Brett:

I want to share cotton, everyone’s kidding, I cuz you and I are on the same page. But they might be hearing about it the first time or I haven’t thought about it in a while. So if you are married right now, and you’re worth more than $22 million, as it stands today, until 2025, you are exempt for that first 22 million inside of your state. But anything above and beyond, you’re going to be hit with a 40%, what’s called a death tax, okay, or a state tax, it has nothing to do with the stepped-up basis that a lot of folks believe there’s really the end all be all with 1031 1031 and swap until you drop, then you get the stepped-up basis. And then your kids can walk away capital gains tax-free. As that stands right now, that is true. However, it has nothing to do with the estate tax. So let’s say this particular client, let’s say they were worth 52 million, and let’s say all 52 million was inside of their taxable estate, well, if they were to die, you know, today or tomorrow, and pass that to their kids, they’re going to be hit with a $12 million, which is 40%, of 30 million death tax. And this scenario, if they sell a $30 million asset tomorrow, before they die, moving to the DST, we’re going to save that 40%. So applying that to the client, the deal that just happened here recently, they took 5 million out versus just doing a 1031 and it still stays in, so we immediately save 2 million from their state. Now 2025, it’s gonna go set to go down to 12 million married and 6 million single as far as most, most, I think most think it could even maybe be 5 million married 1 million single that was also at one point, the same thing.

Mark:

We’re hearing in the advisor community is, I always call that a moving target right with clients, because it always depends on the administration and senate the time and the Congress that we have, right. And it’s likely that we’re not even going to get to 2025. Right to even allow that to sunset back, we could be getting into a new tax bill over the next year to two years, which means that we’re dropping out of state tax exemption way, way down. And, you know, I don’t know what that’s going to be at that, you know, I’m hearing kind of figures if anywhere from three to $6 million per person exemption, which could be an incredible drop right for most people. So for high net worth families, that could be very impactful. But done right, the DST can avoid a lot of that. The other thing I want to mention too, is you don’t need to use the DST just for real estate assets. If you have appreciated stock like I’ll give you an example, you know, Michael, who’s with the group bought Tesla stock years and years and years ago, and now that Tesla stocks worth $12 million, you know, well, if he goes and sells it today, he’s gonna probably pay a capital gain on $11 million, you know, the Tesla stock. So if you have appreciated assets, you want to pay capital gains on that much money through the deferred sales trust, we can make that basically a tax-deferred sales so that you’re not paying tax on all that money right away. We have 100% of that money, we can reinvest for you now and get that working. So we can use it on stock, we can use it on real estate. There’s a lot of different applications that DST has.

Brett:

100% also recognize that it also works for primary homes, we just did an $8.3 billion primary home sale in Palo Alto. Remember, primary homes do not work for 1031 exchange. 1031 exchange, in fact, only works for investment property. So it doesn’t work for business sales, and we do lots of business sales, it doesn’t work for stock, it doesn’t work for primary homes, right. Whereas the deferred sales trust works for all of those also works for artwork and collectibles. So lots of applications there. Here’s the key. We want you to connect with both of us. Okay, reach out to mark go to Kennedy wealth management.com to learn more, and how we can help walk mgmt.com Yeah, I’m sorry, a Kennedy wealth mgmt.com mgmt.com You can find that in the show notes. That being said, we’re running out of time, Mark. So are you ready for the lightning round? 

Mark:

I have. 

Brett:

All right, here we go. So knowing what you know, now, Mark, if you could go back to your 25-year-old self, what’s the one Golden Nugget that you would make sure you would tell yourself to do?

Mark:

Buy Apple stock and then use the deferred sales trust when you’re this age? Right.

Brett:

Apple stock? 

Mark:

That’s right.

Brett:

Awesome. Question number two, what’s the one book you’ve recommended or gift the most in the past year?

Mark:

I haven’t read a lot honestly, in the last year because I’ve been so busy trying to read a strip construct our practice for COVID. But I’ve read a lot of different books. I wouldn’t say I have anyone in particular that I could think about.

Brett:

Okay, fair enough. It might come to you later on and be the last 10 years. It doesn’t have to be last year. Next question, what’s the best investment you’ve ever made?

Mark:

The best investment I’ve ever made is square stock. That’s been a pretty good investment.

Brett:

What’s the best negotiation strategy that you found to help you grow your business?

Mark:

Go a little bit further on that.

Brett:

It could even just be your personal wealth, right? Just negotiating what have you found is a negotiating tip to help help you with it can even be negotiating with your family like doesn’t have to be this?

Mark:

Well, I would say we’re actually right in the middle of a negotiation right now for our office space. Okay. So I would say never pay full price. That’s what I would absolutely say. And I would say that you need to go as low as you can possibly go without insulting, right. Because otherwise, you have no room to move up.

Brett:

Fair enough. Very good. What are you curious about right now?

Mark:

What I’m curious about is, is just how everything’s gonna play over the next 234 years and I’m excited about it. We’ll see how that all plays out. And but as I tell clients, you know, these have, we’ve been through many changes in the past, from a tax aspect through a ministration aspect, through whatever it might be. And it’s always worked out, right. It’s just that we have to embrace certain planning opportunities. And we can’t just ignore, you know, the inevitable, meaning that there is going to be death and taxes, we know that those are two things that are the inevitable, right. So we have to plan for those. And those are going to be changing things all the time, depending on the administration or the Congress. But we just have to plan for those so that we were planned in any type of situation.

Brett:

100%. And by the way, a part of that planning is binding is proposing to take away the 1031 exchange. Right? And the answer is to have a plan in case he does that right? basis. Yeah. And even the stepped-up basis, right. So the thing that a lot of real estates investors have just, you know, held as doctrine as a part of the commercial real estate religion was this 1031. And the stepped-up basis, well, guess what, all of these years, even working for can be taken away. So you want to have an alternative. The deferred sales trust is a great alternative because it’s not a 1031 exchange, okay, it’s an installment sale based on IRC 453. And that’s what we’re talking about this in this episode, as well. So have a plan, get educated, we always say be early, right, because here’s the thing, if you close on escrow, or you go too far down the road on your deal, we cannot help you. So you need to be with this early prepared and insert the trust at the right timing. So that is very important as well.

Mark:

One thing I will say, and you brought up a very valid point because we go through this a lot with people, they tend to call us at the very last minute and want us to do all this work, and they think we can move mountains. And what I tell people is, you know, these things take time to put together. So you need to give us adequate time, you don’t want to wait until two weeks before closing to call us. Right. I mean, if you can call us before listing, that’s really when we need to know this stuff. So we can plan adequately.

Brett:

And on top of that, too, we can help find you the best professionals to list and sell the properties, right? Because I’ve also found that when you have someone and you’re on your side of the table for negotiating even for commissions, with real estate brokers, and commercial real estate brokers and finding the best investment for a client right now in Tennessee, he’s a deferred sales trust client, and he’s building 80 units of multifamily. And he’s like Brett, I need a good broker and I go look at let me go find the best three, I’m gonna interview 10, bring to the table and help you get better representation. So again, this team aspect of helping everyone build a team to help you create and preserve more wealth when you put that together with a deferred sales trust can be transformational.

Mark:

Here’s why I would say that is with your background, people may not know but you know, you come from that commercial real estate world. And so you know, a lot of the right questions to ask that a typical trustee or a typical person might not know. And so really, it’s important to talk to Brett about that as well, because he has a deep, deep knowledge of commercial real estate.

Brett:

I appreciate that I absolutely appreciate that plug-in. And that’s my love and my passion where it made me made the majority of my wealth with me and my family clients. But that’s also why I want to partner with folks like Mark who has the expertise there. And again, build that dream team for every one of my clients as well. That being said, this is the last question are you go to capital gains tax calm? By the way to learn more about what we do? Mark? Are you ready for the last question? And it goes like this? How do you stay centered in your values? After all, you’ve accomplished right, and everything you’re doing to help people? And how do you stay encouraged to reach for new massive goals?

Mark:

I think going back to helping people. And I think that as you help people out and you see the successes that you’ve had, and the transformational change of these families that you’re able to help and then the thanks that you get, you know from these people and helping them out. That’s what keeps me moving and what keeps me going because my industry is not an easy industry. And there is a lot of competition factor in my industry, like every industry, but you have to have to you have to find your purpose and my purpose is making sure that you know we can help people out. Get them through retirement. Make sure that their family doesn’t become a burden, you know, to the IRS that, you know, they don’t have to write a huge check that that’s our goal. We want to keep the money in the family, we want to make sure that they have their dreams and goals and desires and live through those.

Brett:

Amazing. And Mark, for those who want to get in touch with you, what’s the best place for them to find to get one more reminder?

Mark:

Yeah, so they can go to our website, it’s kennedywealthmgmt.com. But they can also call our office at 818-224-4177.

Brett:

Beautiful. Mark, I want to thank you for being on the show sharing a bit of your story. I want to thank you for being a strategic alliance of ours now, and being able to help the CO client at this point differ millions of tax and save a lot in the state tax, and have a transformational wealth plan. And I look forward to many more with you. And with that, I want to thank our listeners also for listening to another episode of the Capital gains tax solutions podcast. As always, we believe the highest net worth individuals and those who help them struggle with clarifying their capital gains tax deferral options, not having a clear plan is the enemy, and using a proven tax deferral strategy such as the deferred sales trust is the best way for you to exit your business or real estate high in the primary home or stock and so that you can create and preserve more wealth, please rate review, subscribe, go to capitalgainstaxsolutions.com if you want to learn more, we appreciate all of you out there and bye now.

 

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About Mark Kennedy

Customizing Your Retirement Blueprint with Mark KennedyMark Kennedy is the founder and president of Kennedy Wealth Management LLC, a Calabasas, California-based Registered Investment Advisor founded in 2008. For over two decades, Mark has been in the insurance and estate financial planning field and has personally focused on strategies surrounding tax planning, retirement income planning, and wealth transfer. He has shown numerous high net-worth families and business owners financial strategies that may potentially allow them to preserve their income and wealth, while also potentially leaving more money for them to spend during their lifetime and pass to the people they love and care about instead of the IRS.

Mark has also been a resource for the media… having been interviewed by the Fox Business Channel, ABC Television, CBS Radio, Smart Money Magazine, BankRate.com, and the Los Angeles Times, among others. In addition, Mark has written for various publications to include Life After 50 Magazine, and has hosted his own financial radio program on KRLA AM 870. As a public speaker, Mark has spoken to many groups of people, who are either in or nearing retirement, about the subject of retirement and he is also the author of the book, “Don’t Let The Stock Market or I.R.S. Control Your Retirement.” Mark attended college at the United States Air Force Academy in Colorado Springs, Colorado, and the University of California, Riverside. He is also a former member of the United States Air Force. Mark’s passions include various charities, running, downhill skiing, health and fitness, traveling, and spending time with friends and family.

 

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