From the archive: This episode was originally recorded and published in 2019. Our interviews on Entrepreneurs On Fire are meant to be evergreen, and we do our best to confirm that all offers and URL’s in these archive episodes are still relevant.
Jim Dew is the CEO of Dew Wealth Management. He has 24 years of experience building high-functioning wealth management teams and virtual family offices for entrepreneurs.
Wealth Mastery Matrix – Find out where you fit on the Wealth Mastery Matrix!
3 Value Bombs
1) Have the right structure. It may seem overwhelming depending on where you are as an entrepreneur, but you can put that out as a goal you can start working toward
2) Go DEAPR on your tax planning. D is for defer; E is for eliminate; A is for arbitrage; P is for pay now, not later; R is for reduce.
3) The tax code is very complicated, and there are many opportunities to do things legally to dramatically reduce taxes.
**Click the time stamp to jump directly to that point in the episode.
Today’s Audio MASTERCLASS: The Entrepreneur’s Playbook for Expanding Wealth, Freedom and Time with Jim Dew
[01:07] – Jim shares something interesting about himself that most people don’t know.
- His first job was a math teacher. Before he went into wealth management, he did door-to-door sales for about 18 months.
[03:57] – What’s the structure that billionaires use that we can adapt to better manage our wealth?
- How billionaires structure their wealth management is called “family office”, where a very wealthy family will hire all the needed professionals to manage their wealth.
- What Jim helps with is building a virtual “family office” for a fraction of the cost.
[05:47] – What’s one thing we can do to better manage our wealth using this type of structure?
- The first thing you need to know is where you’re at today on the Wealth Mastery Matrix.
- The four quadrants are:
- Ostrich – lives by “avoid and ignore”.
- Juggler – tries to manage all of the stuff by yourself.
- Air traffic controller – when you have excellent advisors around you, but you’re managing the advisors yourself.
- Virtual family office – you have A-player advisors around you collaborating on your behalf and managing your wealth in a way that’s not so difficult.
- Wealth management doesn’t have to be difficult. If you start moving towards better structures, all things start to clear up.
- The structure is the most fundamental thing for good wealth management moving forward.
[10:54] – Basic building blocks to protecting your assets.
- Asset protection is protecting yourself from all sorts of outcomes, like unexpected lawsuits.
- I.L.A.T.E. – different asset protection strategies.
- I is for insurance – have umbrella liability insurance for your personal situation and liability protection for your company.
- L is for laws – utilize homestead protection laws.
- A is for annuities and life insurance – some entrepreneurs put money in annuities and life insurance if the state they live in has really good protection under the law.
- T is for trusts – a Domestic Asset Protection Trust would create ‘rainy day money’. If you ever get sued, it will be very hard to get to that money.
- E is for entities – separating different entities in your business can create asset protection.
[18:32] – Even if you’re doing the I.L.A.T.E., you probably aren’t as protected as you think you are.
- Even if you have the umbrella and other coverage, if you don’t have the right exclusions, then you may not be protected.
- It’s critical to read your exemptions and inclusions.
[21:26] – A timeout to thank our sponsors!
- Podopolo: The best podcast listening app in the world is here! Visit Podopolo.com, download the app for free, mention JLD or EOFire when you sign up, and start listening now!
- HubSpot: Learn how HubSpot can help your business grow better at HubSpot.com.
[21:30] – Are those who move to Puerto Rico paying too much in taxes?
- You have to think of warning signs and pay attention to them.
- The tax code is very complicated, and there are many opportunities to do things legally to dramatically reduce taxes.
- As an entrepreneur, your number 1 expense in your life is taxes.
- If you think you’re paying too much in taxes, you want to have the right CPA and a tax attorney as part of your team
- Go DEAPR on your tax planning. D is for defer; E is for eliminate; A is for arbitrage; P is for pay now, not later; R is for reduce.
[24:18] – Jim talks about an area of estate planning that almost every entrepreneur gets wrong.
- First, you need basic documents.
- Jim asks, “what do you want to pass on to the future generation other than estate planning?” If you can only pass on one thing, it should be wisdom.
- The part that most entrepreneurs miss is passing on the wisdom of a lifetime.
[28:23] – When selling your business, how could exclusively using an investment banker cause you to miss out on millions of dollars?
- When you have the right wealth manager involved, there’ll be some planning techniques that come forward an investment banker may not be aware of.
[31:11] – Jim’s parting piece of guidance
- Have the right structure. It may seem overwhelming depending on where you are as an entrepreneur, but you can put that out as a goal you can start working towards.
- If you get the structure right, then you’ll have a greater chance of not making mistakes in the future.
- Wealth Mastery Matrix – Find out where you fit on the Wealth Mastery Matrix!
[35:20] – Thank you to our Sponsors!
- Podopolo: The best podcast listening app in the world is here! Visit Podopolo.com, download the app for free, mention JLD or EOFire when you sign up, and start listening now!
- HubSpot: Learn how HubSpot can help your business grow better at HubSpot.com.
Boom, shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire brought to you by the HubSpot Podcast Network with great shows like Success Story Podcast. Today, we're pulling a timeless EOFire episode from the archives, so the giveaway may not be active and we'll be breaking down the Entrepreneur's playbook for expanding wealth, freedom and time to drop these value bombs. I had brought Jim Dew into EOFire Studios. Jim is the CEO of Dew Wealth Management. He has 24 years of experience building high functioning wealth management teams and virtual family offices for entrepreneurs. And today Fire Nation, we'll talk about having the right structure. We'll talk about tax planning, we'll talk about the tax code and so much more.
And a big thank you for sponsoring today's episode goes to Jim and our sponsors. The best podcast listening app in the world is here and it's called Podopolo. Visit Podopolo.com. Download the app, mention JLD or EOFire when you sign up for a free account and start listening now. That's P O D O P O L O.com. Success story hosted by Scott D. Clarey is brought to you by the HubSpot Podcast Network, the audio destination for business professionals success story features Q and A, keynote presentations and convos on sales marketing in more A recent episode on how to protect your business in times of crisis is a must.
0 (1m 28s):
Listen, listen to success story wherever you get your podcasts. Jim, say What's up to Fire Nation? And sure, something interesting about yourself that most people don't know
1 (1m 40s):
What's up Fire Nation, I'm excited to be on here. What a great podcast and a great group and I appreciate being on here with you, JLD. Thanks. So something that hardly anyone knows about me is when I transitioned my first job, I was a math teacher, which a lot of people know that. But in my transition before I went into wealth management, I did door to door sales for about 18 months.
0 (2m 2s):
Man, I'll tell you, so many people who have made it in this world started off with door to door sales. And I have my theories and I'm kind of curious what you think Jim, but sure you learn how to bounce back from no. And in fact you learn just how to react well to a no because you're gonna get a lot of those doors slammed in your face, a lot of nos, a lot of no answers, and you can come back stronger than ever. That's a true sign of a future successful entrepreneur. What are your thoughts on
1 (2m 30s):
That? I agree completely. I put a little spin on it and that is that I think I learned courage from doing door to door sales for 18 months. So I know the fear of rejection is a big thing, but for me it just came down to courage because many times in my career, the 24 or 25 years after that, I have felt like that gave me the courage. Cause I think to myself, okay, this is gonna take some courage, but it's not as hard as walking down a stranger's street and knocking on some stranger's door and hoping they're not gonna yell at me or slam the door in my face face.
0 (2m 59s):
I love that spin because I can honestly say that I look back at that as well, when I was 23, 24 years old, you know, I wasn't knocking on doors, I was knocking down doors in Iraq as a platoon leader in charge of four tanks, 16 men in a war for 13 months. And so when I look back, I'm just like, okay, that took courage that showed me what courage was. And so now when I'm going to, you know, ask Jim to be on my podcast, like that's not nearly as scary as some of those things and I have the courage to do some of that stuff. So love that analogy.
1 (3m 31s):
Can I just say to that that you know, thank you for your service. I really appreciate that my, my dad's a World War II bet he's gonna be 94 years old this year. He was in a combat area in the Philippines. And I just wanted to tell you that because when I saw your history, I really respect that type of risk and courage and you know, people like you, young people around the world doing that for our country.
0 (3m 52s):
Well I appreciate that appreciation and next time you see your father give him a salute and say that's from Captain JLD saluting you, the veterans that came before him. So appreciate that as well. We'd love that. Yes, thank you. So listen, Fire Nation, as I told you in the introduction, we have a killer, killer masterclass today, beyond a million, the Entrepreneurs playbook for expanding wealth, freedom and time. Such a great topic. So let's just dive right in, Jim, to talking about the structure that billionaires use, that we as human beings, as entrepreneurs, as Fire Nation can adopt to better manage our wealth.
1 (4m 32s):
Yeah, so it's, it was a secret for about 150 years how billionaires would structure their wealth management. Lately when I speak to groups of entrepreneurs, more and more have heard of it, but the term is family office, so I'm sure you've probably heard of it. Family office before. Yeah. Let me give a quick definition for those in your audience who haven't heard of it. A family office is where a very wealthy family will hire all the needed professionals to manage their wealth. So to hire the attorneys, the accountants, the insurance professionals, the investment advisors, all as employees serving that one family. In my opinion, with everything I've seen in my career, it's the structure that gives you the best advantage and the best chance to make good choices with your wealth.
1 (5m 13s):
There is one caveat though, and you need about 200 to $300 million before that starts to pencil out financially. Because of that, what I've done and what I think other advisors could do for you is help entrepreneurs build what I call a virtual family office for a fraction of the cost. We can use the concepts that billionaires have used for 150 years, but today with technology and what the advances in knowledge and advice and information, you can build it for yourself at a fraction of
0 (5m 44s):
The cost. I mean Fire Nation, you hear the phrase the rich gets richer, that's because they do, it's because they use tactics and structures like this to protect their wealth, to grow their wealth, to make sure they're doing the right things. So let's just maybe give one example, Jim, I know we can't go into all these different things right now because of time constraints, but like what's one thing that we can do to better manage our wealth in these type of structures?
1 (6m 12s):
Yeah, so the first thing you need to know is where are you today? And so I created this thing called a wealth mastery matrix with four quadrants where entrepreneurs, I found in my experience, they fall into one or more of these quadrants. And let me just tell you that the characters real quickly and this will also identify whether wealth management is most likely easy for you or hard and will also probably indicate whether your results are gonna be poor or excellent. So the four quadrants are the ostrich, the juggler, the air traffic controller, and then the family office or virtual family office. So the first thing is where are you in those different quadrants? And I can again give you a quick description of each if you want
0 (6m 49s):
Me. Yeah, let's go through each one.
1 (6m 51s):
So the ostrich lives by avoid and ignore. So for the ostrich wealth management is pretty easy cuz that entrepreneur just says, Hey, I'm just not gonna worry about it. I'm gonna focus on building my business and making more money and that stuff is just gonna work out in the long run. That's the ostrich, the juggler is the entrepreneur who's trying to manage all this stuff himself or herself. And the ju juggler will often say to me things like, gosh Jim, I have all these things going on. I'm sure stuff is falling through the cracks. And if you look deep into my situation, I'm sure you would find out that I have a financial junk drawer of stuff just mishmash all over the place. The third is the air traffic controller.
1 (7m 31s):
And that's where you have excellent advisors around you, but you're managing the advisors yourself. That's hard. Even though you can have excellent results, that's very hard and you have to pay attention all the time. So the key is for each of these, you want to kind of transition toward a family office structure. So the ostrich where it's easy, but the results are often poor. One thing you can do if you're an ostrich is just p, pick one area to go in great depth, look at your tax return in great depth, look at your insurance policies, look at your liability coverages, how do you have your partnership agreements if you have partners, all of those things. If you just picked one area and went deep in that area, that would make you better than where you are right now as an ostrich for a juggler where it's very hard to juggle everything and the results are often poor.
1 (8m 18s):
Find one good advisor, could be a wealth manager, could be an accountant, could be an attorney. Just get one good advisor into your life and that will step your game up as a juggler to make your life a little better. And then if you're the air traffic controller, you're in the middle of everything. So think about having a team leader that can talk the language to all the other advisors, coordinate their efforts, get them to communicate with each other and get them to understand your values and your goals and your beliefs. And of course, no matter where you are, stepping toward the virtual family office where you have a player advisors around you, they're all collaborating on your behalf. You have a virtual family office CEO in the middle who's speaking tax, insurance, legal investment languages with the different advisors so that you're getting seamless coordinated advice and that you're managing your wealth in a way that's not so difficult.
0 (9m 13s):
Fire Nation, one more time, that's the ostrich, the juggler, the air traffic controller and the virtual family office, the ostrich, I love how you put that. They are just avoiding and ignoring, they're just putting their head in the sand Fire Nation. It's time for you to take some responsibility, but if you're the juggler, you're trying to manage everything yourself, which I know a lot of people listening are right now, I mean that's just a step in the process. We all are there at some point in our life. Get one good advisor, just take that step, get one good advisor that can get you moving up that ladder. Then the air traffic controller, like you're actually managing advisors at this point now you need to work on getting a team leader and then the virtual family office, you know, having those A player advisors around you.
0 (9m 57s):
So before we move on to the next topic, Jim, anything you wanna add? How is my summation? What do you wanna make sure we really get from that point?
1 (10m 4s):
No, I say that's a great summation and I think that the key is wealth management doesn't have to be difficult. And if you feel like it's all up to you and it's complicated and you're frustrated, if you start moving toward these better structures, all of those things will start to clear up because often people don't know where to go next and they're not sure because they have people on their team, they don't know if they have an A player or a C player. They don't know if they completely can completely trust the advisors around them. So there is light at the end of the tunnel, but you have to take some positive steps toward that and structure once you have the structure right, that's the most important fundamental thing for good wealth management going forward.
0 (10m 43s):
I love that Martin Luther King quotes is you don't have to see the whole staircase to take the first step. Fire Nation, you don't have to see yourself right now with a virtual family office, all these A player advisors around you to take the first step. If you're an ostrich, you know, which is just take some gosh responsibility cuz you're head outta the sand, stop avoiding and ignoring and start moving forward in a responsible direction. So Jim, let's talk about the basic building block to protecting your assets. What is that?
1 (11m 14s):
Yeah, so that falls into a category I call asset protection. And this is protecting yourself from all sorts of outcomes like an unexpected lawsuit. And I created this little acronym of i late I L A T E for different asset protection strategies. The I stands for insurance, the L stands for laws, the A stands for annuities and life insurance. You gotta be careful in that area cuz there's a lot of agents that sell products that have a incentive to exploit. Even if they don't exploit, they could have an incentive to exploit trusts and entities. So when you put together a good asset protection plan, you want to think about all those, those areas.
1 (11m 54s):
But one simple thing on the eye for insurance is having umbrella liability insurance for your personal situation and liability protection for your company situation. And I can talk a little bit more about those and how you go about getting those and things to look for. But that would be one simple thing. Make sure you pay attention to liability insurance in your personal life and for your company.
0 (12m 15s):
Let's talk about laws. What does that mean?
1 (12m 17s):
So laws might be, for example, every state has homestead protection laws. So if you live in Florida homestead or Texas for that matter, homestead protection is unlimited. So you could have a 20 million home in Florida and if you get sued, nobody can get to that 20 million. In California, for example, if you're a single person, you have a $75,000 homestead protection. So a 20 million home in California would be almost completely at risk for a lawsuit. So knowing how the laws work are is critical to your asset protection. In addition, certain types of structures, like if you have a defined benefit pension plan through your company or you have even a 401K through your company, those are protected under arisa laws and they have really strong asset protection qualities in case you ever get sued.
1 (13m 7s):
So understanding how the laws fit into your overall plan and how you can utilize those to your benefit is a critical piece to protecting your assets.
0 (13m 15s):
Annuities in life insurance, break that down.
1 (13m 18s):
So annuities in life insurance can have protections based on state law. So in some states they're very good protection, others not so much. So often you'll have people who are in high risk professions or if you're an entrepreneur that's out there and on the internet, you have higher risk for someone to try to do something or come after you. Sometimes people will put money, entrepreneurs will put money in annuities or life insurance if the state they live in has really good protections under the law. I'll give a caveat though, you don't wanna let the asset protection tail wag the dog. You don't wanna buy an annuity or life insurance just for the asset protection. You wanna make sure those products fit into your situation. And often people selling those have an informational advantage and an incentive to exploit, and you'll hear me say this throughout, is that whenever someone has an informational advantage and an incentive to exploit, you want to be very careful, cautious, take your time, get another opinion.
1 (14m 15s):
And when I say incentive to exploit, I don't mean that they're going to exploit you. I mean they could exploit you and they have an incentive cuz they do better if they exploit.
0 (14m 24s):
And let's give an example of that. You're talking about like fees that aren't necessary, things along those lines.
1 (14m 29s):
Yeah, so let's say someone's selling you a whole life insurance policy. So whole life insurance policies, just like any product, they have advantages, they have disadvantages, but that person has an informational advantage. If they've been selling whole life, whole life insurance for 10 or 20 years, they probably know way more about that product than you do. So first they have an informational advantage. Secondly, they have an an incentive to exploit because whole life policies often pay the agent a hidden commission. So you don't even know how much incentive this person has to sell you that product. So when you have those two ingredients, informational advantage and incentive to exploit, you just wanna step back and say, okay, does this sound too good to be true?
1 (15m 10s):
Is this person believe in their heart that they're doing the right thing? But maybe it's not the right thing? Cuz people tend to, when they have a big incentive, they can make themselves believe things. So it may not be that the person is a bad person, but they might be trying to sell you something that they know a lot more than you do, but they also gain a lot more than you do if you buy it.
0 (15m 30s):
Let's talk about trust.
1 (15m 31s):
So all kinds of trust can add asset protection advantages. And often these kinds of trust can have more than one advantage. So a simple asset protection trust might be the domestic asset protection trust or D, and that kind of a trust that can be done often in Alaska, Delaware, Nevada, Wyoming, those are some of the big states that have good asset protection laws that would create kind of rainy day money. So if you ever got sued, it would be really hard to get to that money. So that's how a trust could come into play. As I said, there may be more than one benefit. Like for example, there's this thing called a Ning, which is a Nevada incomplete gift non grand tour trust. And that not only gives you asset protection, but it can also reduce taxes.
1 (16m 15s):
So let's say you gifted you, you moved some of your company stock into a name and a few years later your company sold. And let's say there was 10 million worth of stock that sold in the Nevada incomplete gift non grantor trust, you'd pay no state taxes on that game because there are no state taxes in Nevada. So if your tax rate in your state is 10%, that would save you a million dollars in taxes. In addition, that money is now asset protected so that it would be very, very hard for anyone to get to that money if they sued you. So now you have rainy day money kind of protected and set off to the side.
0 (16m 51s):
And let's talk entities.
1 (16m 53s):
So really simple on entities. One thing might be if your business has two clearly functions, two clear functions you could split. So let's say for example, you have a building that you run your business out of and then you have operations, you might wanna split those so that if the operations gets in trouble and someone sues you in the operations side, they can't get the building. So just separating different entities can create asset protection. In addition, if you have ip, most people have intellectual property, sometimes that's the most valuable part of your business. Sometimes that's what you wanna license to other businesses. Putting your IP in a separate entity can be a very smart move for asset protection purposes.
0 (17m 33s):
So Fire Nation, let's go through this acronym again, I L A T E Insurance. You wanna have an umbrella liability for both personal and for your company. Let's talk about laws. The homestead protection laws a great example about knowing how your laws are or are not protecting you. Again, California, not so much for a 20 million home. Texas, yes, a lot more annuities and life insurance like get protected, but proceed with caution. You know, I can think back to my days in corporate finance where I'm not gonna lie, like the company that I was working with really pushing American funds 5% upfront load. Now why are they pushing that?
0 (18m 13s):
Because there's a huge incentive in commission for those agents that were selling those funds that were frankly just the exact same funds as some no load funds or some index funds that were having basically zero fees whatsoever. So definitely proceed with caution there. Trust, you wanna have those rainy day funds and then e for entities, split your company up if it makes sense for the reasons that Jim just talked about. And now Jim, in our pre-interview chat, like we talked about some things like even if you're doing all the above, you probably aren't as protected as you think you are. Now, what did you mean by that?
1 (18m 48s):
Yeah, so I'll just give you an example. A lot of entrepreneurs have umbrella liability protection, and that comes in million dollar increments. It comes over and above your auto and homeowners insurance to protect you in case you get sued. And by the way, it could protect against a lot of things other than a car accident or an accident in the home. For example, let's say you have a teenager that is posting stuff on Facebook or Instagram and makes fun of another kid that kid's parents decide to sue you for bullying that can be protected in your umbrella. So there's a lot of things other than accidents that are protected. That being said, most people think all umbrellas are created equally. And a lot of the insurance company that companies have actually done this through the advertising, you know, they advertise that, you know, we have cheaper rates, shop us and we'll get you a cheaper rate.
1 (19m 34s):
But umbrellas are not created equally. So for example, one umbrella might have exclusions that in your, your situation might really pose a problem in the future. So I'll give you a couple of examples. There was a couple, they have a daughter who was an equestrian, and I used to think that meant she was a swimmer, but I learned that that meant she rode
0 (19m 53s):
1 (19m 54s):
Sometimes I'm not the brightest in those areas. And their horse was kept at a stable. That stable had a lot of other kids milling around. Well if that horse kicked a kid when I looked through their umbrella, there was no coverage on the horse. So even though they had the umbrella and they had the right coverage, they didn't have the right exclusions or they had exclusions or exemptions that were really bad for them. I've seen that with watercraft. If you have special kinds of watercraft, you wanna make sure that those are covered. If you have a big dog, sometimes these companies will put a dog on a dangerous dog list without telling you. And if your dog bites a kid that you could get sued for a huge amount of money and your coverage could be very limited.
1 (20m 35s):
I've even seen recently firearms being excluded. So that would be if you had a firearm in the house or if some other kid or a person brought a gun into your house and there was an accident, it could be excluded from the coverage. Wow. So all those things, it's critical to read your exemptions and exclusions. Punitive damages is another one that that I see excluded a lot of times. And that's where if you get sued and the judge puts on punitive damages, then that part wouldn't be covered under the umbrella and this could be hundreds of thousands of dollars in a judgment against you. So those are some of the things that you look for on umbrella liability.
0 (21m 11s):
Fire Nation value bombs are being dropped, more are coming up after the break. Like are you paying too much in taxes? Or what if you're planning to sell your business? Let's talk about estate planning a critical topic when we get back from thanking our sponsor Ready to ditch your subpar podcast listening app and download an app that has every feature you want and need with more great features being added all the time. The app is Podopolo, and you can download it for free and start listening right now at Podopolo.com. Podopolo gives you access to every podcast at your fingertips with easy, discoverability audio and video podcast in every genre and language and instant recommendations.
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0 (22m 38s):
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0 (23m 21s):
Get a seven day trial of trends for only $1 At trends.co/m F m. That's trends.co/mfm. So Jim, we're back. And for those people who didn't move to Puerto Rico and get Act 20 and Act 22 like yours, truly, are they paying too much in taxes?
1 (23m 44s):
Well, I, I always talk about warning signs. You have to think about warning signs. You have to pay attention to them. And I would say think about your health. If you have a warning sign in your health, like your doctor says your blood pressure is too high or you feel that you're being sluggish or you feel your weight's too high, those are warning signs and you want to pay attention to those warning signs. Same thing's true in your financial situation. So if you're an entrepreneur and you feel like, gosh, I think I'm paying too much in taxes, you probably are. I'll give a disclaimer here to start out, which is don't do anything that's illegal or don't try to avoid taxes in a way that would get you in an orange jumpsuit. We never want you to do
0 (24m 20s):
1 (24m 21s):
We want you to do things that are legal, but the tax code is very complicated and there are many, many opportunities to do things legally to dramatically reduce your taxes. And by the way, as an entrepreneur, your number one expense in your life is gonna be taxes.
0 (24m 35s):
What do we do if we think we're paying too much money in taxes?
1 (24m 38s):
The first thing is you have to have the right structure. So you the virtual family office structure, you want to have the right team. So you need the right tax professionals. So often people have a CPA who is what I call a historian, a CPA who's a historian, takes all the information that you give him or her, they put it in the right boxes and they tell you how much you owe the government. What you really want is a CPA and maybe even a tax attorney as part of the team that's forward looking, that's proactive. It says, based on your situation, here are things that we can do this year, next year, the year after that will dramatically reduce your taxes. So again, the structure and the people is always, those are always the first two steps. Then when it comes to putting a plan together for your taxes, I created another acronym which is go deeper on your tax planning.
1 (25m 24s):
And I spell that D E A P R, DEAPR. So D is for defer, E is for eliminate. A is for arbitrage, P is for pay now, none later. And R is for reduce. So when we put together a tax plan with entrepreneurs, that's how we want to think of it. Categorizing those different areas. And you wanna have an overall plan, not just one strategy.
0 (25m 49s):
Defer, eliminates, arbitrage, pay now not later and reduce, Fire Nation. If you think you're paying too much in taxes, you probably are. If you think you've got some issues internally health-wise, that's probably your body telling you that. Yes, in fact you do go to the doctor. Your body's good with gut, with your instinct, with your intuition. Follow those red flags. So Jim, I'd love to talk about one area of estate planning that almost every entrepreneur gets wrong. Talk about that.
1 (26m 24s):
So first thing is you need basic documents, whether it's a will, probably a revocable living trust, powers of attorney for healthcare and finance, all those things are really important. Some of you probably haven't done that and hopefully this is a little nudge to get those things done to protect yourself and your family. But some of you have done those things. But the thing I see missing from most entrepreneurs that I come across is I ask them this simple question. I say, okay, when it comes to your estate planning, other than your money and stuff, what would you wanna pass on to future generations? And they tell me all this wonderful wisdom they've learned over their years as an entrepreneur. Things that have helped them grow failures.
1 (27m 4s):
They overcame certain beliefs and values that they hold dear. And when they finish, I ask them another simple question, which is the money and the stuff or what you just told me. If you could only pass on one, what would it be? And guess what they always tell me, the beliefs, the values, the wisdom. Because if they pass on the wisdom, their kids and grandkids will be able to make money. They'll be able to have a great life, a fulfilled life. They'll be able to grow and live a wonderful, incredible existence on this planet if they just have money and stuff and they don't have the wisdom they can squander. Now of course you want to be smart passing on both.
1 (27m 44s):
But the part that a lot of entrepreneurs miss is passing on the wisdom of a lifetime. I'll give you an example on my dad's side of the family. We come from a long list or a long multi-generational group of steel mill workers in Martin Ferry, Ohio. And you wouldn't picture me if you see me today in my white collar job that I came from steel mill workers. I mean a lot of people are shocked to hear that. But my grandpa was out of work for seven years during the Great Depression and dug ditches for the wpa, for the work progress administration. If I could have a video of my grandfather telling me about his life lessons, his struggles, his failures, he's his successes, what do you think I would give to get that video?
0 (28m 27s):
1 (28m 28s):
A lot of money right now my grandpa didn't write the stuff down, he didn't have the technology to create a video, but we do today. And one of the greatest gifts you can give future generations is memorializing stories about your life and your family that are meaningful, that teach lessons and values and beliefs and wisdom and memorialize that in a video. Cuz the best way to pass on knowledge is through stories. And the best way to memorialize stories is through video. Do this. And I don't care if your kids are two and three years old or 30 and 40 years old, the more you memorialize these important stories about you and your family, the greater that gift will be to them at some point in the future.
1 (29m 10s):
And you can redo 'em if you do one for your daughter who's two years old in 10 years, you might say, I wanna redo that video. But that would be such a great precious gift to give future generations.
0 (29m 20s):
And just think about right now, Jim, your great, great, great great granddaughter just might be listening to this interview right now.
1 (29m 28s):
That's really cool to think about
0 (29m 30s):
That. Isn't that cool? Oh man, that is cool.
1 (29m 32s):
Except we don't have kids, so that would
0 (29m 34s):
Be tough. That would
1 (29m 35s):
Be tough. I have nephews, so we could go that
0 (29m 37s):
Way. There it is your great, great, great great nephew.
1 (29m 40s):
Yes, and and and by the way, because my wife and I, we've been together for 30 years, I love Mimi to death. I know you have a great relationship as well. Yeah, I like to just give credence to her any chance I get. But we also believe in passing things on to the world. So yeah, my nephews and their kids and their kids, but also just anybody, an entrepreneur, someone who's struggling, someone who can grab my video or my audio or this, this interview sometime in 30, 40, or 50 years. That could be really valuable to someone at an important point. Totally.
0 (30m 10s):
So the final topic I wanna chat about today is, let's say we're planning on selling our business. How could using an investment banker exclusively cause us to miss out on potentially millions of dollars?
1 (30m 23s):
That's a great question. So of course you need a great investment banker. You probably need a great m and a attorney. But you also need someone who would be, again, your team leader or your virtual family office CEO, which is often a wealth manager in my experience. It's usually wealth manager, one that who specializes working with entrepreneurs, someone who's been building these high functioning teams for at least a decade. That's a critical piece to all of that. And what do you have the right wealth manager involved? There are gonna be some planning techniques that come forward the in the investment banker may not be aware of or may not talk about. So as an example, I was talking to an investment banker just a few weeks ago.
1 (31m 4s):
He's very good. He's one of the best investment bankers that I have gotten to know. And he asked me a question very direct, which was honest. He said, Jim, why do I need to involve my client with you? Or why would an client hire you or any wealth manager at this point? They have no money yet. Shouldn't they wait until they sell their company and then they have money? And I asked him a simple question, I said, have you heard of section 1202 stock? And he said, no, what's that? And I said, section 1202 stock, if you qualify, you get either a $10 million exclusion on the sale of your business or 10 times basis on the sale of your business. So a 10 million exclusion at a 20% capital gains rate is a 2 million savings.
1 (31m 49s):
Wow. And if the basis in your company was, let's say 40 million in growing really fast, if you qualified for section 1202 stock, you'd have a 400 million exclusion at the sale of your business. Think about that, at a 20% capital gain rate, that's about a 64 million tax savings. So I said that's just one of many examples of planning techniques that a quality wealth advisor who works with high level entrepreneurs is gonna know about that an investment banker isn't gonna see on the radar. So I always say the investment banker, if he or she is good, is gonna try to get you the highest multiple on your business, the highest price on your business. That's how they gauge how well they're doing.
1 (32m 30s):
A good wealth manager isn't gonna care about that. A good wealth manager is gonna say, okay, whatever the price is, I care about how much is in your pocket after taxes, after expenses. That's the number that matters to a good wealth manager who's leading a team of advisors for you.
0 (32m 45s):
Value bombs were dropped today. Fire Nation, I hope you go back and listen to this to set your financial situation up in the most successful way possible. Jim, you shared a lot. Give the one thing you wanna make sure Fire Nation really gets, from everything that we talked about. We shared the acronyms, we shared the value bonds, we talked about a lot of critical things that Fire Nation can do both today and in the near term future to protect themselves, to set themselves up for success. What's the one takeaway you wanna make sure that we get? And
1 (33m 18s):
So the one thing I would say is structure. So you wanna have the right structure, and that's where I gave you the, the juggler, the ostrich, the air traffic controller and the virtual family office. And it may seem overwhelming depending on where you are in your life as an entrepreneur, but you just wanna put that out as a goal that you wanna start working toward that ideal structure. Cause if you get the structure right and then you get the people right, then you have a much greater chance of not making mistakes and having problems in the future.
0 (33m 44s):
And I know you have a gift for Fire Nations, so sure. That URL.
1 (33m 47s):
Yeah. So if you go to www.wealthmasterymatrix.com, that's wealthmasterymatrix.com. I created a PDF that has a lot of information so you can decide whether you're the ostrich, the juggler, or the air traffic controller. And also very specific steps that you can take to start building a virtual family office.
0 (34m 8s):
Fire Nation, you're the average of the five people you spend the most time with and you've been hanging out with JD and JLD today. So keep up the heat and head over to EOFire.com. Type Jim in the search bar, his show page will pop up with everything that we've been talking about today. Best show notes in the biz linked to everything we've been talking about in a straight call to action Fire Nation, wealthmasterymatrix.com. Get over there, get your stuff figured out, start moving in the right direction. And Jim, thank you for sharing your truth with Fire Nation today. For that we salute you and we'll catch you on the flip side.
1 (34m 49s):
Thanks, JLD. It's been great being on the show.
0 (34m 52s):
Hey, Fire Nation, today's value bomb content was brought to you by Jim Dew. And if you're ready to discover your big idea in less than an hour, well I've created a completely free training. It's step by step that will take you from no idea to your big idea in less than 60 minutes. Visit yourbigidea.io today. I'll catch you there, Fire Nation, or I'll catch you on the flip side. The best podcast listening app in the world is here and it's called Podopolo. Visit Podopolo.com. Download the app, mention JLD or EOFire when you sign up for a free account and start listening now.
0 (35m 36s):
That's P O D O P O L O.com. Success story hosted by Scott D. Clarey is brought to you by the HubSpot Podcast Network, the audio destination for business professionals success story features Q and A, keynote presentations and convos on sales marketing in more. A recent episode on how to protect your business in times of crisis is a must. Listen, listen to success story wherever you get your podcasts.
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