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Unbound is a weekly podcast, created to help you achieve more as a leader. Join Chris DuBois as he shares his growth journey and interviews others on their path to becoming unbound. Delivered weekly on Thursdays.
Chris DuBois 0:00
Today learn how you can save 10s of 1000s of dollars with one simple legal piece of advice. Are you a leader trying to get more from your business and life? Me too. So join me as I document the conversations, stories and advice to help you achieve what matters in your life. Welcome to unbound with me, Chris DuBois. Sally Giman is a real estate investor and insurance agent in 2020, she purchased a bank owned property which sold a few years later for more than twice its value. After learning the tax costs on our capital gains, Sally started researching this deep dive into the tax code and other resources let her define the business and beneficial spendthrift trust. Today, Sally helps entrepreneurs establish trust to create a vehicle for wealth building, enabling them to reallocate funds that previously would have been lost in taxes. Sally, welcome, Ron. Ben.
Unknown Speaker 0:57
Thank you, Chris. I appreciate it.
Chris DuBois 0:59
Yeah, this is gonna be a lot of fun because like we were just talking, I know nothing about trusts. And I know very little on just the tax savings, the financial side. And so I'm sure there are other company founders who are in the same situation. And this episode is going to pack quite a punch.
Speaker 2 1:15
So many exactly. I just talked to not the county I live in two counties over I was at their What do you call it their mixers at this morning, and a gentleman who came up to me, he has three subway. He's a franchisor, franchisee owner, and he's like, I need to talk to you. Literally, he's calling his wife to go into the file drawer to get his taxes from 2021. Just so we can figure out figure something. I don't have my calculator in front of me. But we'll use what's on the computer. So you'll just the rich know this, the US presidents the Rockefeller set this up. So few people like if CPAs financial advisors, lawyers don't know about this, and they don't know what to tell their clients. So you having me on your podcast just helps so many more people.
Chris DuBois 2:05
Right. And so let's uh, let's get into it. What about can you give us your backstory, just so we have some basis
Speaker 2 2:11
my backstory back in October of 2018. My parents Joe from Goodyear, Arizona, that's 20 miles west of Phoenix to the Charlotte area for my oldest nephew's wedding. My mom along the way she got subjected to the blood. She was on a ventilator for 13 months, she was in a hospital for 15 months. Nine of those months were in the Charlotte area. My dad stayed with her. So going I was going from my house in Phoenix to their house three days a week to just check the mail. first week of December, huge fat letter got 27 pages thick was there for her Medicare statement, not the bill, just a statement. And for one month in the hospital on a ventilator in big bold black letters is at $172,000. I don't know if you can remember like certain times in your life where you everything's crystal clear. I remember the guy who went around the corner in a golf cart with an ugly plaid sweater on and so my dad, retired military, my mom's completely taken care of. I'm standing there kitchen. I'm working as with Medicare broker, commission and money. I have student loans. I have credit card debt, I have a mortgage. I have two car payments by a Nissan 280, ZX I had for three weeks. I went through in a green light on Indian School road. Somebody who was high ran a red light T boned me on the passenger side. So I had to get another car ASAP because I had to get to work. And I was broke. In my parents kitchen I called my friend Glenn. And he said, Hey, next week, we're gonna have a Christmas party, come to the party and meet some people. They're all real estate investors got involved with real estate investing. I've done very well with real estate investing. So the house you're talking about, I bought it in July of 2020. It was a contract. It was a bank owned reverse mortgage for $20,000. And it was gonna go to auction for $50,000. But all the courts were closed because of COVID. So it was 13 months. And I'm like, Whoa, I know my tax rates 24% I know how much capital gains are going to be. I need to do something. The National Real Estate Group a gentleman named Garrett Gunderson wrote a book called What the Rockefellers do. The Rockefellers have this trust, they call it their office, and they have almost seven generations old. So you know, let's say a 200 years old, and that they also have 400 people in it. US presidents have this chess, I started Googling, researching things because my background compared intelligence. I found the law firm in Texas as a private firm. And you know, I became a client and then I started teaching in my mastermind group because real estate investors pay a lot of money in taxes. So that little house it was a four bedroom One bathhouse the woman had passed away unfortunately, I had to do it was in my LLC. So I did tubular sales. I googled it one bill of sale for my LLC to me. This for consideration of $10 when I was getting it notarized, I can't get $10 to the person at the bank, when she handed it back to me, the second bill of sale from me to the trust, I sent it to the attorney in Raleigh, the wallet the attorney asked me for the first page of the trust. And on August 28, of 2020 21, when it went to auction, it started 50,000 went all the way up to 60 over 64,000, I need $44,000 without lifting a hammer. But more importantly, I saved $10,550 in capital gains that would have been due April 15 2022. I've done more real estate in the trust. And then I also run three businesses in the business trust because I it's an amazing thing. So few people have heard about this trust, I want to teach as many people as possible.
Chris DuBois 6:04
And I am very excited to learn as I'm sure many of our listeners are. So why don't we start with just defining a trust, just kind of how it differentiates from having a business.
Speaker 2 6:16
Exactly. Now in the United States, 97% of the trusts that are sold. My mom and dad had this are called a family trust. You know, this is what CPAs and financial advisors sell for about $1,000 Suze Orman talks about on TV, only thing is designed is avoid going through probate. If you have a Will you have to go in front of a judge and pay pay court costs and everything else. Then it dissolves. You know, when I finished my dad's 2022 taxes, all the money gets divided between my brothers and I the spendthrift trust. The history comes back if a way back in England when King Henry the Eighth got in trouble for chopping off his wife's heads. He started the Church of England, you know, let's make my own church, why not? So he went to go tax lords and ladies. And they went further back into history to the Magna Carta. You can Google this if you want to. And they said you can't do this. So it's a contract from England came over to the United States, when we're still a colony, the law firm I work on behalf they have a trust that's turning 350 years old. If they're going I'm 50 years old, and 2023 and has about 100 people under the same The trust has its own ein employer identification number, so they can do things. The trust will not hold any LLC s s corpse or C corpse because that statutory law, that state law, and it's all different. So I personally shut down six LLC s. And I don't have the right, do k one filings on March 15. anymore, that was costing me $300 per k one that saved me a lot of money. And you know, I have notes where I'm the mortgage by where I have the mortgage on the house people pay me that's interest income that's taken care of. A friend of mine does options trading. For me that's considered people don't realize when you do options, a year or less on the options, you get charged 40% on your profit a year or more. It's 60%. So that's covered by the trust. It's an amazing thing. I want to teach people as much as possible. And I have examples of people who make 1099 income more than I do. My business Trust has not paid for itself just yet. My beneficial Trust has paid for itself seven times over already, you know all the money I'm saving from the real estate I'm doing and everything.
Chris DuBois 8:40
Right. Wow, that's amazing. What so I mean, you can essentially run whatever you need, through the the trust what limitations I guess are there for besides S corp, C corpse, things like that. What What can you use the Trust for in order to assist on this the tax side,
Speaker 2 9:02
the trust is just like an LLC. Unfortunately, if you have w two income or pension or 401k income that cannot be in the trust until you convert it to you know to money, but the trust, the trust will pay for your mortgage, the trust will pay for your electricity, the trust will pay for your water bill. The trust will if you put your vehicles into the trust, they'll pay for the registration insurance, homeowners and car insurance. They'll pay for the maintenance they'll pay for the gas. I do have a blue debit card and a red the debit card with the beneficial trust that's for investors. The three things the beneficial trust does not cover is food, fun, personal food, fun and fashion. So you can do a demand letter. So my car right now is when I bought in 2015 vehicle paid 27,500 If I did not have the business trust, I can do a demand letter up to 20 $27,500 to cover my food, fun and fashion. Back in March, when I went on a cruise, it was a business business cruise, the trust paid for all of that paid for my airfare pay for my hotel stay in Los Angeles paid for me on the cruise, the cruise, all the food was there. I don't know if you've ever been out west, but I love See's Candy. And so when I was at the airport that I bought the skinny how to use your blue debit card for the business trust, I just keep track that way. It's not hard to work with, you have a debit card, when you open up the bank account, you'll have a debit card, to do your transactions, the only difference with your personal home is you're not going to put it 100% into the trust until you plan to sell it. So let's say you're gonna stay in the house for the next 10 years and then put it on the market. So April of 2000 2033, you'll go and change the deed from your maybe you and your wife's name, or maybe just your name, change that to the trust's name. And then you won't have to worry about capital gains, you can sit at your personal house, when you're married, you can say $500,000 in capital gains. And when you're single divorced or widow, you would only be able to save $250,000. But you know why even have to file all this special paperwork with your 10 410 40 tax return the trust files a 1041. So there's special considerations with this. And it's, I'm sorry, I'm biased, it's a beautiful thing to work with.
Chris DuBois 11:36
Right. So in order to use your home or to be able to put your home in the trust, you need to fully own the property. If you have a loan with a bank,
Speaker 2 11:46
even if you have a mortgage on it, you can put the house into the trust, there is a thing called to do on cause that you know, the bank is a I'm going to call call the mortgage. As long as you're paying the mortgage every month, they're never going to issue that do ON clause. If if it comes from a different bank account, they're like, Okay, I'll take that money. You know, you're going to save, I can't you're not going to be tax free. But you're going to with the business trust for 1099 income earners, I can legally say you'll save 70% on your federal taxes. I many of my clients are up to 90 or 92%. For the beneficial interest for investors, any investor you won't pay capital gains, interest income, dividend income, rental income or royalties, ever again. So you do away with a 1031 exchange, you do away with the timeline. It's a great thing. Right? So
Chris DuBois 12:40
one of the one of the kind of exercises or thought process, I put my coaches through shares, it's called the leaders levers. And it's just four different ways that you can think that leaders have where they can use them as leverage in order to make stuff happen, just because they're in that position as a leader, one of those methods is capital, because generally speaking leaders have access to a budget or are different things. And I think that this trust is the perfect way to be able to reallocate funds just by moving some over and having this entity, you're now opening yourself up to be able to reallocate capital in a way that can actually benefit you and for your business for whatever you're trying to lead. At what point does it make sense to actually open a trust? Like how much capital do you need before that becomes a sound?
Speaker 2 13:27
Good question. It's going to be 10 depend on what you're doing. One of my examples I'm going to give to you right now is a real estate agent here in the Charlotte area. She's divorced, so she's filing single. She says she makes $70,000 a year. So she's at the 22 federal tax rate. There's figures here to do everything else. And at 70%. She's going to be she's going to be saving $7,495.25 She thinks because we haven't done a foreclosure since March of 2020. When COVID shut down. There's a whole bunch of foreclosures coming. She expects her business to go much, much faster. Do more business do more pre foreclosures. So that's why she got the trust because her it saved her more than $5,000 she was paying so much more in taxes than before. Another example if you don't mind my showing, talking about please. It's a married couple. i The wife is 1099. I don't know much about what she does. But we were the husband and I were on a zoom together. He they he said they make 20 $200,000 a year. There are 24% of the filing jointly doing all the doing all the information at 70%. Comparing what the trust would say would be $24,360 at least at 70%. He's just like I need this trust now. We paid so much more because he doesn't have this These were his 2021 paperwork that we were looking at, because his 2022 taxes weren't done. He's an affiliate marketer, his, everything is grown in 2022 and 2023. So he's making more money now than ever before. And he's just like, this is gonna save me 1000s of dollars. So the same money that you're, you'll make the money you make, like you're gonna save the taxes that you normally would have to pay.
Chris DuBois 15:26
Right? So just in tax savings, it sounds like 10% is like a, a minimum savings amount, is that?
Speaker 2 15:35
Correct? So, you know, with the real estate agent, you know, we let the numbers we ran, you know, she, I'll be honest, one trust most of my, the majority of my clients have either the business trust, or have the beneficial trust, I do have both. But you know, one trust is $20,500 upfront, it has to be wired or cashier's check for the real estate agent sheet. You know, so far this year, she's made $70,000. She's got four more properties under contract right now. So I can't help her with the $70,000 She's already made, but it's gonna go from she started June 30, is going to go forward with what she's dealing with. So the four properties that you know, I don't know how much she's she'll make on each of those properties. But she's running them through the trust. So instead of signing her name on the paperwork, she's going to sign her name and just put TT after it. She's the trust, trust a person. And then she's got a new bank account that she's got to make sure her commissions go into.
Chris DuBois 16:37
Right. Okay. It's making sense to me. Okay. Hopefully, hopefully, everybody else was keeping up with us. What are some of the different things that people are that you've seen people doing with their trust? Once they've set it up? How are they actually benefiting from having a separate from just tax savings?
Speaker 2 16:56
Correct? What a gentleman who three years in a row, he's in Texas, he does the birth strategy by rehab re rebuilt, there's three Rs, I don't have them all. For three years in a row, he kept going to his CPA saying I'm paying too much in interest income. And his CPA three years in a row said stop buying so many houses, I mean, who tells you that he's got 85 houses. So his friend told me, he told me about this. You'll he has all these houses that he had to change the title over. So he took them to the title company, 10 a week asked him to do this. The maturity of the title company contacted me and he goes, we deal with a lot of real estate investors talk to me about this, with what Michaels doing. Compare what in 2021, he paid $135,000 in interest income, you got all 10 Oh 85 houses into the trust, August of 2022. So we saved them partial amount, the trust, I don't know if you know, the IRS rule that if your kids work for you, you can pay them up to $15,000. So he was letting his kids do that. So he could pay for their private school. Their private school was $24,000 per child. So the trust is paying for them to go to school, that trust is doing other things. And then this is Michael is came from the Khmer Rouge like he was an immigrant here. So he purposely has started a charity with the money he saving to help other people who came over penniless and things like that. My other gentleman up in the state of New York. He's near where I hate to talk about it. But you know, when buffalo had that, shooting at the grocery store a few a few months ago, he set up a charity to help all I don't know how many grandmothers and grandfathers were killed, but his charity is going to help the families that lost breadwinners there. He's just like, why won't I help the people in my community that you'll it's just a way to do things. For me personally, my mom grew up very food insecure, during World War Two in Ireland. So every time I sell a trust, I make a donation her name to St. Mary's Food Bank in Phoenix, because that's where she always donated to.
Chris DuBois 19:18
That's awesome. It's a great way just to be able to have the capital to give back
Speaker 2 19:22
exactly. Which no one's telling people to give back. But this is what I know. Some of my clients are doing some amazing things for people.
Chris DuBois 19:31
Right. And this I think we had we had talked, I want to say the gentleman's name was Robert, if that jogs your memory, I'm the pizza places. Okay. Could you could you share that sorry,
Speaker 2 19:43
um, he. I live in Charlotte. I'm not making Philly New Yorkers, but half of Long Island moves down here. So it's New York style pizza. It's very thin white pizza. It's, I love it. So my friend and I were sitting you'll, we met for pizza and we're just sitting there too. talking for about three hours. And I was telling her about a client. And Roberto is from Italy, he comes out he goes, can I talk? Okay, talk to you. He's got two different pizzerias in the area, he's making about $12,000 in 1099 income every month, he has two sons who've grown up working the pizza pizza, the piece that replaces his thing is he's going to be saving so much money. Every year in taxes, I want to say, I am not good with numbers, I'm dyslexic, but I want to say we're gonna save him about $43,000 every year. So, first year, it's going to be almost breakeven about $7,000, because he's got to pay for the trust. So that year two, and then year three, in year three, he's going to open up a third location, and then he plans to open up fourth location, and then he's going to retire and leave to to one son and to to the other son, and they are going to be all part of the trust, and then they won't have to pay 1099 income because, you know, it's gonna go from generation to generation.
Chris DuBois 20:58
Right? And that's one simple decision to start a trust just set up his family to set I mean, it's grandkids are gonna be hopefully good to go. So that's it. Exactly. Amazing, that just being able to, like having access to this knowledge, right, so are there any stipulations or restrictions for who can actually even apply for for a trust?
Speaker 2 21:24
So there's no, there's no, I'm gonna tell you a bad story. But I'll tell you anyways, someone who has this trust, if you remember OJ Simpson, you know, he was acquitted for both for killing his wife and Ron Goldman. Unfortunately, the Goldman sued OJ Simpson for wrongful death. OJ Simpson has his trust. So all his football memorabilia, all his real estate, everything else is in the trust. OJ Simpson is worth nothing on paper. The old adage from Nelson Rockefeller own nothing control everything, so the Goldman's against him. Yes, it's out there. But he's got no money to pay for that lawsuit. And he never has to pay for that lawsuit. Again. I've had several clients, one client, who has 100 doors up in Chicago, he cars, what he has a huge RV, and one of those that you need a bus license for last a last year, he couldn't slow down and accident, he hit the car in front of him, the car went into the car in front of that no one's injured, but two cars are damage. You know, the woman jumps out of the car that's squished in the middle, she goes, I'm gonna sue you for everything that you have, because she can see his RV or a quarter of a million dollars easily. So the insurance card and the registration are in the trust name. But the driver's license is in Patrick's name. So your everything gets fixed. For eight weeks after the accident. He gets a lawsuit from her for pain and suffering and you know, things like this 400 for $420,000. All he had to do was just send the first page of the trust back, you'll talk to the attorney and he's like, I've got no money, I'm worth nothing here. Here's my information on paper. And you know, she has no idea he has 100 rental properties up in the Chicago area making he's probably gonna make that up is probably worth an easy $10 million. With all his rentals. You know, he's a very well, well heeled investor.
Chris DuBois 23:27
Right. So this is an interesting way to have kind of protection of your assets. That's exactly. Yeah, that's a that's interesting.
Speaker 2 23:36
So in that what the good. The other thing that tres will do. If you're selling a business, any business, you know, an Amazon store, I just helped a gentleman in Jae Joon sell a H fax store, he's got bursitis at the knees, and he's gonna get on social security disability. Now, Social Security, this is a crazy roll. I know this because I was Medicare broker every October, November. So Security looks at things two years ago, two years back to see how much money you made. If you're making too much money, they look at the 1041. So he sold his business for $1.7 million. He put it in the trust, just to give you an idea, I'm doing my math, I'm talking to you. We're gonna save him at 15% $225,000 and then if he had to pay 20% You know, let me do this. Give me one second, one second. Two, or $340,000? You know, his wife is just like, Do you know what that's going to do for our retirement? That's That's six figures that they weren't aware of that they would have to pay come April 15 2024 Because he sold this business June 30. Well, his business broker contact me for that. You know, he didn't pay for the trust until July 3. You know what, from the selling of the bids says the business broker because he's an affiliate got when I got paid on the fifth, I sent him $600. And then the business broker told the gentleman who bought the H back company, you need this trust to keep to 99 income. So you made $1,200 off of the two people getting the trust, it is a win win win win win for everybody.
Chris DuBois 25:21
Right? That's people listening to the audio version of this can't see me shaking my head in disbelief. Like how much money people can be saving. I guess one last question, to kind of wrap up the topic. What What mistakes have you seen with people just trying to set up their trusts on their own or even just using their trusts?
Speaker 2 25:49
Correct? I several mistakes I've seen. So two different people who've contacted me have used paid a lot of money for the trust and have had no training on it. With with the law firm I work with because it's their name on it. You know, you've got an entire team working with you to get things in there. You have a retainer, to talk to a CPA, to help you figure things out. And then I somebody else I talked to it was a hodgepodge of four different trusts put together. And if someone tries to sue you, you'll if it goes to court, if you pierce the veil, the trust, you can lose everything. Just to give you a I'm not trying to be political, but somebody that I'm following. For former President Trump, Dad bought this trust way back in the 70s. If you're following what's happening with Donald Trump, right now, they're trying to pierce the veil of the trust. He's like, Teflon is just bouncing off of him. But all the people around him are going to jail. I don't know if all the different lawsuits can do this or not. But that's one of the things that work with another thing that I see a lot of mistakes with, do you know anything about 1031? Tax 1031 Exchange? I do know, it's a special tax code for real for real estate can't be for your personal home, that you can defer the capital gains, but you have to keep renewing it and renewing it. I have talked to 11 adult children who whose parents are incapacitated or have passed away. They all of a sudden got tax bill from the IRS saying you've got to pay these capital gains from way back in the 90s or 2004. Like, where does this come from? Like your parents did attend 31 and didn't continue it. Now. Now you're responsible and it can get ugly. I mean, we're talking the 20 $30,000 $40,000 easily and all of a sudden you got a tax bill you didn't know about that could be a little bit daunting for people.
Chris DuBois 27:47
Right? Now I have to go talk to my parents to make sure I'm safe. Exactly.
Speaker 2 27:53
You're with my you're my parents house. They bought their house and good year, I want to say they paid 120,004 I had to get permission with my brothers. They they're like, why would we put in the trust? And I'm like, because we're not on the title. We sold the house for 390 as is so we would pay the capital gains against it because we weren't on the title. And my brother's like we'll save this in the trust Summit. Yes. So saving the trust. One brother signed off ASAP the other brother I had to send a notary after him to three different places like Neil just sign the paperwork before we sell the house tomorrow. That's all I need to do so, but you know, we save quite a bit of money between the three of us because we put it in we did. I did a quick claim deed my father unfortunately passed away during COVID In the hospital, so I couldn't get him to sign anything. So I did a quick claim deed and then put it into the into the spendthrift trust. My My brothers are beneficiaries of the trust. So we could split the money equally between the three of us. Right?
Chris DuBois 28:59
That's a another thing to just consider being like opening up your trust to to your family to make sure that they're putting their assets in is going to protect everybody as well.
Speaker 2 29:12
Exactly like you'll all my nieces and nephews are W two employees. So I purposely buy them silver coins for Christmas and birthday, say hey, now you've got an asset for the trust. But it just, I just spoke to somebody that I was telling me about the gentleman who has three subway plazas as somebody shops today. And he's just like, I need to talk to you if he's on the phone with his wife to get out his tax paperwork from 2021 to start running numbers, and he's just like, wink. Can you send me the application? I'm like, Sure, let me get home and email it to you. So it was a good thing.
Chris DuBois 29:48
It's awesome. Well, Sally, this has been a very informative conversation. I want to go into our kind of semi rapid fire. We're not going to go okay. Uh, what uh, what book do you recommend everybody read?
Speaker 2 30:04
My favorite book? It sounds crazy. It's an older book by Joseph Murphy, the power of your subconscious mind. Literally, you put a thought before you go to bed. And next morning, you have the entire plan set up for it. So I love the book. And then you just gave me a Richard rosary book for chat, chat GPT that I have to read.
Chris DuBois 30:27
Yeah, that's like episode 10 of the podcast where he talks about a mess. So you can go back and watch that one. What is next for you professionally?
Speaker 2 30:40
Um, I am just signed up for a speaking tour I do to talk on stages, because I want to talk to as many people as I can and start doing this. So you're gonna start maybe seeing the Forex conventions, just someone who does Forex investing, they get taxed twice, interest income, and capital gains. But you know, I'm trying to trying to get the word out to as many different conventions as possible because people don't know about this.
Chris DuBois 31:13
Yeah, no, I think that's very true mortar than probably what most people don't realize. Finally, where can people find you?
Speaker 2 31:22
at my website, the trust is you.com, I have free 80 minute education that I'll email you to email to you. I'm going over the slide deck, I talk you through it, because most people need to learn about this, and then they can schedule an appointment. And then every Monday night 8pm East Coast time I do a live q&a. It's on Zoom. So people can come there if they want or set up an individual Zoom meeting if they prefer.
Chris DuBois 31:50
Awesome. And I would strongly encourage anyone to go ask their questions during one of those sessions. Exactly. Exactly. Because we probably only touched the surface on this episode. So Sally, thank you for joining me. This has been a it's been a great episode.
Speaker 2 32:06
I appreciate you having me Chris, I wish you the best. Your we talked a little bit about your situation. Well, one of the things I do want listeners to know the most expensive way if they're being an independent you're working for themselves is to be taxed as a W two employee, at least try to get everything's put into a 1099 because you can start taking deductibles more and things like that. So I appreciate you having me on the show. When this does get dropped, let me know and I will put it out to all on my social media too.
Chris DuBois 32:37
Awesome. Sounds great. If you enjoyed today's episode, I would love a rating and review on your favorite podcast player. And for more information on how to build effective and efficient teams through your leadership visit leading for effect.com As always deserve it
Transcribed by https://otter.ai