He’s a strategic alliance and he’s a certified financial planner, a three-time number one best-selling author, and the owner of Lake growth financial services, a financial firm in Chicago, Illinois. Over the years he has helped hundreds of his clients take back control of their financial future and build their business with proven tax-efficient financial solutions.

He specializes in building custom-tailored financial strategies that are unknown to the typical stock jock stock jockeys attorneys or other financial gurus. He’s also the host of Not Your Average Financial Podcast.

 

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On Creating a Strong Foundation for your Financial Health with Mark Willis

 

Brett:

I’m excited to chat with my next guest here. He’s a repeat guest and he’s becoming a friend and a strategic alliance, and he’s a certified financial planner, a three-time number one best-selling author, and the owner of Lake growth financial services, a financial firm in Chicago, Illinois. Over the years he has helped hundreds of his clients take back control of their financial future and build their business with proven tax-efficient financial solutions. He specializes in building custom-tailored financial strategies that are unknown to the typical stock jock stock jockeys attorneys or other financial gurus. He’s also the host of the Not Your Average financial Podcast. Please welcome to show with me, Mark Willis. Mark, how’re you doing, sir?

Mark:

Brett, great to see you. How are you?

Brett:

I’m doing fantastic. I’m excited to dive in and spend some time with you again, with my audience. We’re going to be talking about some actual deal stories from the last episode where Mark was talking all about the three secrets, the three secrets to the infinite banking system. Okay, using whole life insurance, you can go back and check that out on iTunes, as well as on Spotify as well as on YouTube. I always recommend YouTube because you can see our handsome faces here and really get to dive in on the video. Again, the three streaks are infinite, making sense that was aired about seven months ago. But now we’re going to be talking about banking on yourself again, but more also actual deal stories, client deal stories that folks who acted when they heard the episode, and so that being said, Mark, you want to give our listeners get to know you for the first time. Just maybe the two-minute version of your story?

Mark:

First of all, speak for yourself on the handsome face thing, you might have one, but I’m still just trying to keep up with you, that’s all. I’m happy to connect with you and your audience again. It’s been my pleasure to work over the last 11 years with clients all over the United States and Canada, and honestly, throughout the rest of the world, too. There are ways in which I’ve been able to partner with folks in many countries, but we work virtually and over the phone with folks to help them become their own source of financing. Become more convinced as a certified financial planner over these last few years, especially in the last year, in particular, that being your own source of financing matters more than the rate of return you got on your mutual funds last year. In fact, it matters more than almost any other part of your financial portfolio. I liken it to the headwind coming right at you, if you’re trying to fly an airplane that can, maybe its engine can push it 100 miles an hour. But that headwind is coming right at you at 300 miles an hour. There’s no way, no matter how hard you push that little plane, it’s going to be moving in the wrong direction, and that headwind for most of us is the amount of mortgage interest and debt that comes with our real estate deals. Because even though we might be cashflow positive on our deals, very often the bank is the one that makes off with the biggest winnings. They have very little if any skin in the game, and they’re welcome and happy to take your monthly mortgage payment every month, and you can land the plane and then get a tailwind which means becoming your own source of financing your own mortgage company to your deals or yourself, not just for your real estate but for every part of your financial life. It changes everything, and so that’s what we’ve been privileged to help our clients do.

Brett:

Fantastic. Let’s dive right into a couple of recent case studies with Capital Gains Tax Solutions listeners who took action. Let’s start the first one, mark, without giving any names,, tell the story and what the challenge was and what we were able to help them achieve.

Mark:

You’re sure, and for your listeners, I want to say, I think the world of the people who’ve been willing and ready to act, fine to hear in other podcasts, watch another YouTube, but those that took steps to improve my utmost respect to them. One person in particular very, very successful professional, white-collar professional, was very interested in doing some deals and saw the kind of the inevitable tax that would come with having some success in real estate, and so they reached out this person reached out to me And we had had a discussion, and I’ll just say this upfront, he already had a whole life insurance policy from an insurance agent that had said something up for him roughly 789 years ago, and it was even with a company that I had been aware of and understood, but it was not designed properly, and the policy was going to become taxable in just a few more years, and the amount of debt that was accumulating on that policy was so massive, that it was costing this person almost six grand a month, just to service the interest on the loan. I better back up for just a quick minute and explain what is a bank on yourself, and how can it go wrong? That’s wrong, it’s a whole life insurance contract.

The cash value on whole life insurance typically is $0 on old-fashioned whole life insurance. But if we can design it correctly if we can minimize the Commission’s and minimize the insurance expense, then we can just massively overfund the policy and have tons more wealth in the policy on day one, in the first 30 days, you can typically see somewhere between eight and 40 times more cash than the old fashioned whole life that Dave Ramsey loves to hate on, if it’s designed correctly, it builds guaranteed on a guaranteed basis every year, you have liquid access to that money with no taxes due, you can usually borrow against the policy, and if it’s designed the bank on yourself way, it will continue to grow as if you had not touched the money, and right there, that’s, that’s the sweet spot for a lot of folks, a lot of the real estate investors, when I use any other asset savings, account brokerage account, CD money market account, self-directed IRA, whenever I use my assets, I liquidate that asset and I can no longer get compound growth, I can either choose compounding growth, or I can liquidate my money. I can’t have both at the same time. With most financial vehicles, this policy allows us to do both. It’s liquid access to money and continuous compound growth.

Brett:

Excellent. This gentleman had a poorly designed policy, and he was having to service 6000 of interest on the loan on this policy, and so talk us through what he was able to do. How are you able to design and transfer or move or start a new one there?

Mark:

It was six grand a month, and for him, that was a lot of money, that’d be a lot of money for anybody, six grand a month just to service the debt, and remember, these are policies that do have policy loans on them, and the loan interest is an interest rate that’s typically well below market rates, if it was designed correctly, typical annual percentage rates on these life insurance policies that good companies, let’s say over four years might be an APR annual percentage rate of maybe one 2%. But this loan had ballooned to such a degree and had had such poor financial planning and coaching around it that it was really just becoming onerous for this client. He reached out to me and said, Mark, I’m familiar with infinite banking. But what is a bank on yourself? Well, what makes it different? And so we talked about how it comes with, there are only 200 banks on yourself professionals that have gone through the credentialing process, to become bank-on-yourself professionals in the United States and Canada. We talked about how the management of the policy and the design of the policy was. Unfortunately for him, poorly designed, it’s not unlike any law contract. If you poorly design a contract, it can really mess you up. My thought was, what can we do? We’ve got about we still got several $100,000 in this policy that has not been loaned out.

What we were able to do, after having a more in-depth financial consultation, was not just selling an insurance policy, but having a true financial plan, a discussion, a financial consultation with this client. We said, all right, we were able to move over the money through a 1035 Exchange. Does that sound familiar, Brett? A 1035 Exchange, sort of like a 1031 Exchange for real estate. But there’s a part of the tax code called the 1035 Exchange, which gives the policyholder the ability to for in a tax-free manner, transferring the cash value of life insurance from an old policy to a new one, usually with very little, if any, expenses to do that. That’s exactly what he did. He transferred over all of the tax, all of the tax-free money out of the old policy. The loan was wiped clean. He takes what he hadn’t borrowed out, and brings it to the brand new policy that we were able to set up correctly for him, and now he’s off to the races. He’s got a massive amount of money that he can be borrowing and using right away, and that’s just part one of the stories. There’s a part two, but I better hush for a minute Brett, any questions or comments on any of that? Forgive me if you’re saying things. I’m not hearing you. You might be on mute just for me. Can you hear me back now?

Brett:

Thank you. Thank you so much. Sorry about that. He asked, he did send 1031 exchange from cash value to a new policy, which can restructure the debt or pay off the debt. Eliminate the $6,000. The first thing?

Mark:

There’s about a million-dollar $1.2 million loan that’s just gone from his balance sheet.

Brett:

That’s pretty sweet, and then obviously, probably lowered some of the value of the insurance or got to come from somewhere.

Mark:

The death benefit for him was an afterthought in the first place. He had other assets and other things. But for him, we’re able to minimize the death benefit as much as he wanted. Give him what he needs, of course, for life insurance purposes. But the goal was to massively overfund the policy through a little-known writer called a paid-up additions writer, and have as little expense on that policy as possible. We did, we dropped down the death benefit from like 3 million, don’t say 1.5 or whatever million bucks, and for him, that was sufficient.

Brett:

That’s great. Basically, give him what he needed at this point in his life, as well as get rid of what was the pain of the 6000 in debt service every month. We’re in the business of solving problems on the business of even selling life insurance or tax deferral strategies or real estate. He’s solving his problem, and the tool was the bank-on yourself strategies, that fair summary?

Mark:

That’s correct, that’s right. That’s part one. I can give you a sneak peek into part two, and you can let me know if you want to go there. Very briefly, he’s not done yet. He expects there’ll be more deals. His plan is to borrow from this new policy and to smartly pay it off. That’s the key. We’ve got strategies for doing that, and so forth, and software and tools and coaching and six-month reviews and true financial planning that comes with working with us, and again, I’d say you want to make sure the policy was designed by a bank on yourself professionally and with a company that’s approved by a bank on yourself. That’s the difference between an all-natural grocery store item, granola bar, whatever, and a USDA Organic. We only know the qualifications and certifications for USDA Food, USDA Organic mean something. But all-natural can mean anything at all. We went with the correct design. But here’s where it gets really interesting.

As of now, he’s got his policy, the new policy, and some deals, those deals are coming due, and he has some other syndications that are coming due, and his plan and goal, and rightfully so, is to start new policies inside his Deferred Sales Trust. The DST now will hold some life insurance, it’ll hold some policies that can then provide for him more and more liquid capital for even further deals, whatever he decides to do within the DST through your guidance and support, obviously, Brett, and now the policy inside the DST can be a part of capital acquisition and management of assets, and of course, receipt from windfalls inside the DST, and then as he wishes, he can take the money out of the DST through your support and guidance, of course, and among those assets is the life insurance. So among the real estate that comes out of the DST with the tax advantages that you offer, life insurance comes out with some tax advantages, and finally, if there’s any, and you’ll have to help me on this part, if there’s any estate tax due upon his passing, the life insurance can even liquidate that estate tax.

Let’s say that the Congress gets their way and the United States gets their way, and they burden us with some further estate tax, or they lower the threshold of the estate tax exemption, life insurance counts toward your estate, just like real estate, and other things would, and then it shields you from having to sell that real estate. So the life insurance for this client or anybody who would work in setting these policies up can act as a shield against any estate tax obligations. So it’s an incredible way to be able to avoid the sale of real estate, a fire sale, after you pass by being able to use the life insurance death benefit. To pay the estate tax, let’s say that this person owed, give him a number, a million dollars of estate taxes due to that could be possible, depending on the net worth that the person is passing, and then, in this case, the death benefit would be more than a million to be able to pay that death but to be able to pay that estate tax, and Brett that would allow him to keep all the real estate or any other asset he wishes to keep without having to sell it to cover Uncle Sam’s demands.

Brett:

Yeah, that’s really powerful. That’s really powerful, and then there’s also something called the separate what’s called a DST plus for ultra-high net worth individuals where we just take it out completely outside the taxable state upon closing But that is a really, really cool, and really fascinating way to design and build more wealth using life insurance in the Deferred Sales Trust, awesome. Now is there anything new Mark that you’re seeing out there that you might want to touch on, or some trends since we talked seven months ago.

Mark:

Trends-wise, we’ve seen quite a bit of spending in this country. I think I heard that 40% of all the United States dollars that have ever been printed or printed in the last year, 40% of every dollar ever printed in the last year. That to me is an incredible fact, and if you take out, well, if you take rent owners equivalent rent out of the CPI, we’ve had a 25% inflation in this last year, and you can dither over what is owner-equivalent rent is and does that even mean anything. But even if that’s half true, even if we have only had a 12% overall inflation in this country, that’s an incredible number that isn’t going away, it’s not like we’re gonna have negative 12% inflation next year to make up for it. We have some massive, massive increases in the cost of living, and so we have to discuss what that means and how we can guard against something like that. Now, that’s been a lot of what we’ve talked about with our clients, and I’ll mention quickly that life insurance specifically has an interesting component to it.

It’s not tied to the CPI in any kind of direct way that the inflation rate in any kind of direct way. However, when having gone through periods of high inflation before, let’s say, the early 1980s, there was some pretty big inflation factor, some of your listeners might remember mortgages at 14 16% 18%, which just so happens, I have some history of dividends of whole life insurance contracts from the early 80s, and wouldn’t an 82, 83, 84, some of these major, mutually owned life insurance companies were kicking off dividends 12, 14, 18%. In those years, it’s really wonderful to see the kind of protection that comes against massive inflation. I can’t say we’re going to avoid the fate of Zimbabwe or Weimer, Republic, Germany, or whatever. But as long as we have a predictable inflation rate, we’re gonna see dividends keep up with inflation. In fact, if we start to see inflation go up, or if we see mortgages back up at 678 10%, I’m telling you, the party is going to be at my house, and you’re invited, because that means all of our dividends are going up to.

 

On Creating a Strong Foundation for your Financial Health with Mark Willis

On Creating a Strong Foundation for your Financial Health: “Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.” – Peter Lynch

 

Brett:

Excellent. There’s a direct correlation. As interest rates go up, there’s the better payout for life insurance. I think it’s what I gathered there, and obviously, with inflation, 40% of all the US dollars printed over the last year that’s ever been   in the history of the US. That is staggering, to say the least, and scary, and curious about where we’re going to be in six or 12 months. 24 months at a certain point, the cotton candy, and all the seems like it would catch up to us. I don’t know. But that’s, uh, that’s for smarter people, maybe to figure that out. Anything else, any other thoughts on that, or anything to add?

Mark:

There’s another financial strategy. I thought I’d leave your best listeners who stay to the end. I might be able to give this little concept that’s been really incredibly powerful for a lot of folks. In fact, some of the clients that have reached out to me from our last interaction, Brett, would you want me to dive into that? This is going to take a little explaining. I’m going to try to do this as quickly as I can. But a lot of times clients will come to us and say, Mark, I have a million bucks, or I’ve got two million bucks, or 800,000 bucks, or whatever their number is, and I don’t want to just drip it into a policy. Most whole life policies, if you want the tax advantages need to be funded, at some sort of rate over some serious series of years, typically, 6 7 8 years is pretty common, and there are obviously variations there, and there are even ways you can put in a single lump sum, and that’s it into one policy, just drop it in, boom, and it’s done. It’s called a single premium policy. But that loses some of the tax advantages when you do that. I won’t get into all the details unless you want Brett. But there’s a way that we’ve been able to find that’s been incredibly powerful for helping people one fund policy that keeps the tax advantages stays on the right side of the tax law, and then to create for them a guaranteed income that they cannot outlive at the same time. It sort of solved several problems all at once.

Essentially, what we do is we take the lump sum that they would like to put toward the policy million bucks, and they put it into what’s called a fixed indexed annuity. A fixed indexed annuity. Typically it needs to have an income writer and it’d be great if we could get this fixed indexed annuity, to payout increases to keep up with inflation in the future. Now, again, without going too deep into the weeds, an annuity is essentially a stream of income that you will never outlive. It’s like a private pension with yourself. It’s like mailbox money. It’s like getting paid every single day for the rest of your life annuities are as old as Jesus. They’re 2000 plus years old, as old as the Roman Empire. But the more modern annuities these days stay liquid, the old-fashioned annuities, the insurance annuity company would keep all your money. You give them a million bucks. You die the next day, the worst investment you ever made if you died the next day. But with these new, more modern annuities, the money in the annuity is still available to you. What we were able to do with one client was we put a million bucks into a policy, and then we were able to withdraw 10-10% a year out of that annuity, so 100 grand a year to drip into a policy over a 10 year period.

Meanwhile, the annuity grows alongside the market. If the market went up 12% or 10%, then the indexed annuity would track that maybe it would do 7% 8%, whatever. But if the market should fall over this 10 year period, the annuity is protected. It won’t lose a penny. It stays put, and then it resets the next year. If the market rebounds, then you get to pick right up where you left off. As I say, zero is your hero. You can really expect that this money will be safe when the market crashes, and you get most of the upside when the market goes up. This is not a universal life policy and indexed universal life policy. Because there are some internal expenses of universal life that I would probably stay away from. But a fixed indexed annuity does not have all this, insurance expenses, and so forth. The kind of phase one of this strategy. We’re dripping money in from the indexed annuity, and it’s funding the life insurance, which stays liquid. We can use it for deals as we go. But the fixed index annuity by itself is continuing to track alongside the market. Any thoughts on that so far, Brett?

Brett:

My brain is, catching some of that math, rewind it, and catch it again. But it sounds pretty awesome. By the way, you can go to bit.ly/boyrealestate to learn more about this and schedule a time with Mark, he’d be happy and or his team to dive into your particular situation, that’s BIT dot LY Bitly, if you will, for slash-boy real estate. I’m very interested. Fascinating, and then love to see a case study, and maybe there’s something on your website there, we can  break that down, and show that on paper. I think that’d be very helpful. Do you have something like that, Mark, on your website?

Mark:

Yeah, guys, a few ones, you can go to our, you can reach out to me, go to that website that Brett already mentioned, bit.ly/boyrealestate, and you can find out all about this. But if you want to see an example of this, and a case study of a real-life person, his name is Tom, we were able to help him, let’s just call him Tom. It’s not his real name. But we call him Tom on our podcast, and we do a full breakdown of Tom’s concerns, and the steps that we took. We transferred $750,000 from his IRA into one of these fixed indexed annuities. The annuity then funded the life insurance, and after 10 years, not only did he have a massive death benefit, a big pile of the cash value that he could take out tax-free for the rest of his life. But his income off his annuity was another. Let’s see $73,000 a year. Plus, you’d have social security on top of that with no taxes due. It’s a pretty cool strategy. If you find the time to listen to our podcast, it’s not your average financial podcast, scroll down to Episode 172. It’s back in December. But that’s where we really dive into this example and give everybody as much detail and as transparent as we can make it.

Brett:

Awesome. Are you ready for the lightning round?

Mark:

Let’s make it happen.

Brett:

All right, so knowing what you know now, if you go back to your 25-year-old self with one Golden Nugget, make sure to tell yourself to do it.

Mark:

Stop paying off your debt the old-fashioned way. Don’t do the snowball method. Whatever you do, don’t listen to Dave Ramsey. He doesn’t have a corner on truth.

Brett:

Number two, what’s the thing that you’re most curious about right now? 

Mark:

I’m really loving the there’s a book about a spy that I’m really reading right now, and I really am getting really deep into KGB spy novels, and it’s cool. I’ve never really done anything like that. I very rarely get into, like nonfiction spy history stuff, but it’s pretty cool, and so I’m really curious about where it’s headed. Twists, and turns, the best fiction is real-life history, as they say. 

 

On Creating a Strong Foundation for your Financial Health with Mark WillisBrett:

Love that. By the show the Americans are pretty cool and if you’re into that thing, cool type of a KGB-slash, Cold War stuff. Question number three what’s the number one book you’ve recommended, give it the most in the past year?

 

On Creating a Strong Foundation for your Financial Health with Mark Willis

 

Mark:

There’s a book. Well, guys, if you have never heard of the bank yourself, gotta check out The Bank on Yourself Revolution by Pamela Yellen. Great book. Outside that, as far as what I’ve recommended, check out The Road Less Stupid by Keith Cunningham. Super awesome. Like the book of Proverbs for business basically, in the 21st century. Great, great book.

 

Brett:

Awesome. Last question for those who want to get in touch with you. Would you mind one last time where to meet him? 

Mark:

I’ve got a bit.ly/boyrealestate, and that’s the best way to reach out you can get a download of kind of our concepts philosophy, you can find my podcast you can reach out and have a 15-minute call with me and make sure to mention Brett’s name, and I’ll let I’ll know where you came from, and we’ll have a good conversation.

Brett:

Thanks, Mark, for being on the show. We’ll have you again here not in the too distant future and I want to thank you all so our listeners for listening or watching another episode of the Capital Gains Tax which is Podcast also streaming Expert CRE Secrets, or we believe most high net worth individuals those who helped they struggled clarifying their capital gains tax for 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 to exit your highly appreciated business real estate cryptocurrency sales and 1031 Exchange also you can defer tax and create more wealth you have more wealth to be able to buy some life insurance that you might very well need we want you to go to capitalgainstaxsolutions.com, we can help you clarify the Deferred Sales Trust, get with Mark Willis. We can help you with life insurance, and we want you to please share rate, review, and subscribe. We appreciate everyone out there in the iTunes world. Spotify, YouTube. Thanks so much, everybody.

 

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About Mark Willis

On Creating a Strong Foundation for your Financial Health with Mark Willis

He’s a strategic alliance and he’s a certified financial planner, a three-time number one best-selling author, and the owner of Lake growth financial services, a financial firm in Chicago, Illinois. Over the years he has helped hundreds of his clients take back control of their financial future and build their business with proven tax-efficient financial solutions.

He specializes in building custom-tailored financial strategies that are unknown to the typical stock jock stock jockeys attorneys or other financial gurus. He’s also the host of Not Your Average Financial Podcast.

 

 

 

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