Are you holding off selling an asset because of that tax liability? If so, then you’ll appreciate today’s episode where the owner and founder of Infinite Wealth Management, LLC, Jeremy Stevens, guests to help us keep control of our money by taking us in an in-depth discussion of Deferred Sales Trust. He talks about sheltering cash from tax through opportunity zones, building generational wealth, and having that flexibility to diversify your equity. A former engineer turned financial advisor, Jeremy is on a mission to find the best solutions for their clients through efficient and effective system designs that help them preserve wealth for the long-term. He shares some of those with us, along with great strategies and techniques that not only add value but provide solutions as well.
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Deferred Sales Trust: Keeping Control Of Your Money With Jeremy Stevens
I’m excited about our next guest. His name is Jeremy Stevens and he’s out of Arkansas. He’s a financial expert who helps people create and preserve more wealth through different financial instruments. His story is one of helping people who are having challenges with different capital gains tax. He found out about the Deferred Sales Trust and he joined as a strategic partner. He’s now offering it to his clients as a way to grow his business and help his clients out. He’s going to talk about his journey and his revelation of what it can provide for their clients, as well as some of the best tools that he’s learned over the years to accumulate and grow wealth. You’re going to enjoy this a lot. I look forward to your thoughts and comments after the show.
We’d like to bring on specialists who are focused on the financial industry to help people create and preserve more wealth. That’s exactly who our next guest is. He’s located in Arkansas and he is the Owner and Founder of Infinite Wealth Management. He is going to share some of his insights and inspiration for how he’s helped his clients in the past create and preserve more wealth through different financial strategies and techniques. You could email him at Jeremy@InfiniteWealthMgnt.com. Jeremy, welcome to the show.
Thanks for having me. I appreciate it.
Tell us a little bit about your background and how you got started in the industry.
I like to say I’m a recovering engineer. I went to engineering school in Mississippi and graduated around 2003. Shortly thereafter, I got involved in some of the financial markets and analysis with some of the expertise I developed as an engineer. I transitioned out of that because I came to determine that it was a little bit too risky. It was the foreign exchange markets. I don’t know if many of the people are familiar with foreign exchange and currency exchange. I moved away from that because I thought it was a touch too risky. I’ve since gotten into more of sound money design. That’s something else I like to say about the way that I manage money and clients’ funds. Since I’m an engineer, I go back to efficient and effective system design. I like to go to sound money design insurance products and helping people preserve their wealth for the long-term, not just to get rich quick schemes but good investment decisions. Part of that has led me to the conversation about the DST.
Tell me a little bit about who Jeremy was growing up. In other words, we’re all given certain gifts and talents in this world. Is there one particular gift that you are given that you recognize as a child or growing up? What was that gift and how it helped you help people today?
I grew up in South Mississippi. If anybody knows anything about South Mississippi, it’s rural. It’s a lot of farmland. I worked on plenty of farms growing up. When you’re on a farm, you find a way to make things work. You find a way to make that situation go away, whatever that problem is. You don’t necessarily have the option of running down to the local store to buy whatever it is you need to make it happen. Because of some of that, that led to my following the path of engineering and system design, how it all works together and what are the best paths to go to get to the desired outcome. If I had to say any one thing that helped with that, it would be that exposure to being in a pinch and trying to find that shortest path to success.
Work smarter, not harder. Figure out a way to persevere through different challenges. You found ways to help clients create and preserve more wealth. You also joined the estate planning team and to be offered the Deferred Sales Trust and partnering with Capital Gains Tax Solutions. Walk us through that journey for yourself and what is it that your clients are facing that you feel that this might be a good solution for them?
Like many folks out there that are financial advisors in this world, they are always looking for the solution for their client. Whether it be an investment solution or a vehicle to keep their money in their control as opposed to having it in the control of Uncle Sam who wants to give your cash to the taxman. I stumbled upon DST. I read about it. I watched as many videos as I possibly could. I got on the podcast and listened to those and started piecing it all together. It made sense to me, understanding a little bit of the legal aspects of how entities are treated in our tax system and reading up on the IRS code. As I said, I was an engineer. I like all the details.If you're not tax planning, then you are not your advisor. Click To Tweet
I read the IRC. I had the 453 code off of which the DST is based. It all clicked with me. I said, “This is a way that I can help some of my clients with the higher appreciated assets, keep their money in their control, working for them, and not be fearful of that tax liability that’s coming down the pipe.” As financial advisors, we’re always trying to find the best way to keep that money in their control. That’s what led me to the DST. I signed up with the estate planning team and I’ve been training with Michael on how that works and here we are.
That’s like my journey too. I was in commercial real estate at Marcus & Millichap. I was helping people buy and sell commercial real estate, mainly multifamily properties in Northern California, and 1031 exchanges. I like to help people solve problems and add value to them in some way. We found that certain strategies work well in certain situations. As this new Baby Boomer population is aging and looking to retire from the toilings to trash to liability, looking to downsize their time and energy from so much work to more so freedom and flexibility. They’re looking for ways to sell and liquidate without getting hammered by the 30% to 50% capital gains tax.
In fact, the American Bankers’ Association did a survey. They found that there are about 77 million Baby Boomers in the US alone and every day, about 10,000 are turning 65. There’s about $17 trillion they’ll pass from one generation to the next in the next twenty years. This is a massive problem and. This huge tax liability with some of the most highly appreciated assets in the history of the world that we know of are facing 30% to 50% that’s going to be wiped out. You can pay the government the tax and they can waste it away pretty quickly or you can keep it in your family, estate or community and hopefully give more, not just so that you can build your own wealth, which is important for you in your family. Beyond that, be able to fund charity organizations or fund different projects with money that you can touch, hold and feel versus giving it to a government that too often does not spend it wisely and waste it away.
The Deferred Sales Trust is a great tool for that and is a great way to be able to grow your influence in your business. Let’s be honest, if we’re in a service business for high net worth individuals, it’s to add value. We’re in the business of adding value and solving problems. Those go hand-in-hand. When you have a tool that can do that, it can help them which can, in turn, grow your business. Jeremy, walk through what you’ve tried in the past and what about the Deferred Sales Trust that you think is going to add the most value to your clients?
Something that we’ve discussed in the office before is the opportunity zones. Have you heard of the opportunity zones?
Opportunity zones are the way that people are trying to shelter their cash from tax liability. That seems to be the hot topic of when I talked with several of my other advisor buddies that have been doing this for a number of years. They’re trying to get into that. I brought them into the DST or at least I’ve introduced them to it. I said, “There’s an opportunity here where the opportunity zones become riskier. It locks up your capital.” It’s less versatile than anything I’ve seen. I haven’t been sold on that particular way of assisting clients to get their cash out of their assets and into something that’s a little bit more sheltered. It’s a touch too risky, a little bit too dangerous. In the search for good and better options that come along the line there, I stumbled upon the DST.
With the versatility of the DST, you can diversify your investments. You’re not time-limited like 1031s. With the opportunity zones, you have other times that you have to abide by to avoid capital gains. You can use the DST for a number of other things like estate planning and leveraging it depending on what’s in the DST to free up your estate taxes and capital gains taxes upon your death. The versatility and the lack of risk that is inherent with the process doesn’t mean that the investment selection isn’t risky. If the note holder is risk-tolerant, then they can go that way. The versatility and being able to use it as the customer sees as appropriate, I couldn’t find anything that would compete.
That’s what we found too. The flexibility, ability to diversify and to have what’s called optimal timing where you can put money into real estate tomorrow or day 181 or five years from now. You could put some money into an opportunity zone deal if you wanted to. You may not want to put all of your money or all of your gain. You might want it to be all restricted into one single asset or one single opportunity zone fund. In the Deferred Sales Trust, a lot of the clients that we work with are looking for the ability to have liquidity, diversification, insurance products, financial products and real estate products. It’s a mixture of multiple things versus just one operator or deal. That is truly a nice part of the Deferred Sales Trust to have. What’s the most rewarding part of what you do? What attracted you to be fascinated and/or obsessed with helping people create and preserve more wealth through financial strategies that you help people with?
My dad says all the time, “The financial world, to someone who isn’t in it every single day, seems dangerous.” It’s stressful for someone who doesn’t necessarily have the time or desire to dig into the details and understand what’s going on. What are you leveraging? What are you giving up? What are you risking? You see the relief on a client’s face from the worry of what’s going to happen, “I’m about to give 30%-plus off the top. What if I sell and I’ve got a broker? I’ve got another 10% thrown on top of that.” You see it melt off their face, their shoulders relax more. That right there is a perfect driver for what I do.
You know you’ve done your job once you can help them have that either epiphany moment or part of their brain that goes, “There’s another way.” That dissolves the stress of the burden of selling the property or the business, paying the tax or not having enough income to live off for retirement. You go, “We can save you hundreds of thousands to millions of dollars in the sale of your business, primary home, farm investment, real estate or whatever it might be by using this tool.” It’s a legal loophole.
For new readers, the Deferred Sales Trust goes back to the 1920s. It’s based on IRC 453, which is an installment sale. This trust is buying your position by giving you zero down payment and it’s going to turn around and sell it to a cash buyer all ready to go. They’re going to take the asset and the money is going to sit in the trust. Once it’s in the trust, it’s flexible with where and how it can be invested. The key is that you’re investing pre-tax dollars and it can go on for as long as you want to. It can pass on to your kids and they can live off this wealth. You have freedom from the capital gains tax, which is the key here. Relieving that burden and that pressure and helping to build generational wealth are two things that I found to be the most rewarding part of what I do too. Beyond the Deferred Sales Trust, walk us through some of the services that you help people with once the funds are in the Deferred Sales Trust. Where might they be able to invest to continue to create and preserve more wealth?
A number of methods can be used. A lot of the people that we’re dealing with are nearing retirement and they’re more concerned about a return of their money than a return necessarily on their money. They want a return on their money if they can as well. As a firm, we steer folks into sound investment practices, things with a 0% floor so they don’t lose their money. It might have a modest upside depending on the tracking function of the product. Insurance products are always a good way to go if you’re looking to develop income streams for the long-term. Most people in that retirement phase are in that income phase or distribution phase of their life as opposed to their accumulation phase. We could, if they wanted to get into market-based functions, put a percentage of that depending on their risk tolerance. They will fill out a risk questionnaire and we’ll discuss. We’ll understand a lot about their situation before we move forward with any investment advice. A little bit in the markets, a little bit of risk, a little bit of conservative and keep income flowing and working for them throughout.
Most people are living well into their 80s and 90s. One of our advisor’s grandmother passed away at 102. Most people don’t necessarily think that far out. We’re helping push that envelope to think that far, stretch that money and make it work for them all the way through, whether it’s through the insurance products or the market-based functions. We also look at holistic plans because you’ve got security that’s going to factor in for most of us. You’ve got medical care that you’re going to have. You’ve got long-term care. These are all things that we like to say are sleep insurance. Like I talked about, the melting away of the stress when you talk to a client and you tell them, “You don’t have to give that money to Uncle Sam.” That sleep insurance helps them sleep better at night knowing that their funds and future are taken care of. We’d like to get them into a mixture of assets.
It depends on what stage the client is in, what their needs are and what their risk tolerance is. A lot of Baby Boomers are looking more for income, safe investments and return of capital. It’s not just return on their capital. They’re more in the preservation stage versus the creation stage. We found that they want to create at optimal timing, meaning buying when the market makes sense, not overpaying for properties or staying in a business, property or personal residence to defer or not pay the capital gains tax. They want options and flexibility, which is exactly what the deferred sales trust provides. Jeremy, you are a wealth advisor and you’ve been in the business for a while. You helped countless individuals and families create and preserve more wealth. What are 1 or 2 practices you found to create and preserve more wealth that you would recommend to your clients or your family?
I go back to the insurance products because of the way that the insurance products are required to maintain certain levels of on-hand cash. They are not allowed to do some of these things that banks are allowed to do with their deposited capital. I would not leave a lot of money in a bank, that’s for sure. That’s for another discussion. Insurance products are a good base. That’s what I like to focus on with folks who have the capital to keep that income coming in and form that base for their financial plan in the future. Not many folks focus on a generational aspect of wealth. There are a lot of folks in my area who are conditioned currently. I like to lift their eyes up a little bit, look out a little further and see the road ahead. What about your grandkids? What would you like to do? Like you mentioned earlier, charitable organizations, charitable giving, and generational wealth. How are you going to pass it along so that Uncle Sam doesn’t come in and take their part when the death tax comes around when you and your spouse pass away? How are you going to deal with those things that are coming up?
It’s tax planning as opposed to tax preparation. Tax planning is an activity that happens prior to. If you’re just handing your papers to an accountant at the end of the year, then you are doing preparation. You’re not tax planning, which is what the DST falls into. You need to find another advisor, whether it’s me or not. You need to find somebody who’s tax planning on that. Insurance products were the foundation for my recommendations. It doesn’t necessarily mean a new insurance policy. It could be viatical investments. Those types of investments typically target double-digit returns. They tie up your cash a little bit longer, but they’re still required to stay. The insurance company’s Grade A. They’ve been around for a long time and they do well in the viatical investment world. I like to form a foundation with insurance products.
Insurance products with high reserves versus some banks that aren’t as strong. Planning with generational wealth, helping people to see beyond their lifetime and what they want to do for their kids or grandkids. Tax planning versus tax prep, not just being passive and providing the documents. You’re actually active in the planning with your CPA, tax attorney and with a Deferred Sales Trust attorney to make sure you are maximizing what is probably going to be the biggest capital gains tax expense and sale of your lifetime. It’s making sure you have all that in place so that you don’t pay the tax and it’s gone forever when you can keep it all deferred and working it earning for you. Are you ready for the lightning round?Click To Tweet
Let’s go for it.
What’s a favorite book that comes to mind that you’ve read or it could have been an old-time favorite?
Let’s talk about a favorite podcast that you’re listening to.
Have you ever heard of Another Kingdom by Andrew Klavan? It’s an online book or whatever. He’s written a series of books before. He’s an author. Instead of releasing it as an audiobook or a regular book, he’s released it in podcast form.
Favorite athlete or sports team?
I don’t pay attention to sports very much. Can I say Kobe?
Absolutely. Kobe passed and it was sad. He’s such a legacy. That’s a wonderful athlete to be a favorite. Mississippi is where you’re originally from. Is it Mississippi State or is it the other folks over there?
No, it’s Mississippi State.
Last question, Jeremy. How do you stay centered in your values and encouraged to charge forward to reach new goals?
I’m active in my church and community. My wife and I are both active in that we participate and volunteer in that arena. I think that helps you establish and keep your principles about yourself. It’s easy to get distracted in this world. Without those underlying principles that are offered through faith, you can easily veer left and right and miss the mark entirely. It’s something that I continually pray about as guidance and blessing in whatever it is I’m doing. That’s pretty much how that happens. We stay grounded with our church.
Any last thoughts to leave with the readers?
I appreciate it. Thank you for your time. Thank you for interviewing me.
I want to thank our readers for following another episode of Capital Gains Tax Solutions Podcast. As always, we want to help you create and preserve more wealth by using legal tax deferral strategies such as Deferred Sales Trust. That is so you can retire, move from the toilings, trash and liability, and live the lifestyle you want to live today. You can also build generational wealth so you can give more tomorrow. We appreciate you being a part of the show and we look forward to connecting with all of you soon. Reach out to CapitalGainsTaxSolutions.com if we can be of any help. Reach out to Jeremy, especially if you’re anywhere in the Arkansas area. He can be a resource for you. Thank you so much. I look forward to the next show with you. Thank you.
That concludes our conversation with Jeremy Stevens, a wealth advisor in Arkansas. Some of the key takeaways that I gathered was that clients, in general, are looking for flexibility and versatility. Let’s face it, we’re in a dynamic world with lots of rapid changes and the marketplace has appreciated a great deal. Having flexibility, versatility and the ability to diversify your equity is as important as it’s ever been. The Deferred Sales Trust solves that. Jeremy has found that and now he’s offering it to his clients. Also, having proper planning for different wealth products, such as insurance products and creating generational wealth. It’s not just doing tax prep, but proactive doing tax planning so that you’re taking advantage of every legal loophole that the government provides. That’s it for this episode. Thanks for reading. Subscribe to the podcast, share this with someone who might benefit, who might be in the professional business world as a financial advisor, commercial real estate broker, etc. We look forward to connecting with you on the next show.
About Jeremy Stevens
I graduated from Mississippi State University (Go Dawgs; Hail State!) in 2003 as an Electrical Engineer and became a licensed Professional Engineer with the state of Arkansas in 2013. At the time of graduation from MSU, I had been enlisted in the US Air Force for 5 years and decided to get my commission and serve out the next 15 years of service as a Communications Officer, Civil Engineer, and Squadron Commander.
I’ve been working in the financial sectors in some capacity since the early 2000’s. Over the years I’ve developed and honed strategies that emphasize sound money solutions for growth, retirement planning, and generational wealth. I was introduced to IBC in 2013 through my own intrigue and research and opened my first IBC policy in 2014. Since then, I’ve opened 3 additional policies (as of 2020) for my household’s future and have aided many in establishing their own bank through properly structured WLI policies.