Latest / Your Money, Your Rules | Financial Mastery, Wealth Mindset, Leadership Principles, Intuitive Decision-Making, Human Design / Ep. 63 What is a Spendthrift 643B trust (with special guest Sally Gimon)

Transcript

Ep. 63 What is a Spendthrift 643B trust (with special guest Sally Gimon) · Your Money, Your Rules | Financial Mastery, Wealth Mindset, Leadership Principles, Intuitive Decision-Making, Human Design

0:00
Erin Gray: When does the IRS get their money?
0:02
Erin Gray: They don't, Unless as long as you are a beneficiary or a trustee of the trust, right, that's basically then they don't.
0:11
Erin Gray: But if you do give it to someone who is not a beneficiary of the trust, that's when it becomes taxable.
0:17
Sally Gimon: That becomes taxable to whoever that person is.
0:20
Erin Gray: The receiver.
0:22
Sally Gimon: The receiver, not the giver, correct.
0:23
Erin Gray: Okay, you're listening to generate a life Well-lived podcast.
0:27
Erin Gray: I'm your friend and confidant, aaron gray.
0:29
Erin Gray: I'm a former certified financial planner, turned human design financial mentor and guide to entrepreneurs.
0:34
Erin Gray: I believe our money in our business can only thrive at the level of our emotional wellbeing.
0:40
Erin Gray: I empower entrepreneurs to feel confident with their money and in their business so that they can have fun now and in the future.
0:46
Erin Gray: On this podcast, we will explore all things money, business and self-development, including human design.
0:52
Erin Gray: I hope you enjoy the journey where I share everything that I know and am continuing to learn along the way, as I honor my heart's desires while inspiring and encouraging you to do the same.
1:02
Erin Gray: Hey, hey, how are you?
1:04
Erin Gray: While inspiring and encouraging you to do the same.
1:07
Erin Gray: Hey, hey, how are you?
1:07
Erin Gray: So I have something fun that I've been working on with a friend and colleague of mine, carmen Toledo.
1:10
Erin Gray: She's actually been on the podcast several times, I think episode if you go look, it's episode 46 through 50.
1:15
Erin Gray: And I think it's also 60.
1:17
Erin Gray: And we dove in just briefly into human design type and also like, if you are defining your um solar plexus, how to ride that wave and what that looks like.
1:28
Erin Gray: But what she and I decided to do was create a prerecorded.
1:32
Erin Gray: Basically, it's four modules for you and we dive into.
1:36
Erin Gray: The first module is going to be all about just type, really diving into what does that look like so, if you're a generator?
1:41
Erin Gray: What does that look like for you If you're a manifor?
1:43
Erin Gray: So we dive into those five types.
1:44
Erin Gray: Then we talk about in the next module about your authority, which is basically your way you make decisions.
1:52
Erin Gray: And then, module three, we talk about money and how to actually use decision-making, your intuition, to be with your money, have your money, use your money, spend your money, invest your money.
2:02
Erin Gray: And then we bring use your money, spend your money, invest your money, and then we bring it all together in module four.
2:07
Erin Gray: We're super excited about that.
2:08
Erin Gray: That's going to be up on both of our websites within the next month, and we really, you know, feel passionate about teaching human design from an embodiment and application.
2:19
Erin Gray: We feel like that there's a lot of teachers out there that know human design and they teach you human design but it's not necessarily imparted into you and you embody that right Like how do you actually use this in the real world?
2:31
Erin Gray: That's something that Carmen and I are super passionate about and want to help you, so be on the lookout for that that we're going to.
2:38
Erin Gray: That's going to be coming up on both of our websites and I'll keep you posted.
2:42
Erin Gray: So let's dive into the podcast.
2:45
Erin Gray: Today I invited Sally on the podcast to discuss the spin thrift 643 B trust.
2:51
Erin Gray: It was a trust that I I don't think I was aware of and we dive into.
2:56
Erin Gray: You know who it's for, who can use it, what are the benefits?
3:01
Erin Gray: Obviously, you know she and I are not attorneys, so go do your research.
3:05
Erin Gray: I am just giving you information so that you are aware of options that you have and to empower you.
3:13
Erin Gray: So let's dive in.
3:14
Erin Gray: Hey, my friends, how are we today?
3:16
Erin Gray: So, on today's podcast, I have Sally on the podcast.
3:19
Erin Gray: She is a real estate investor and also an associate of Rosen and Rosen law firm.
3:22
Erin Gray: Real estate investor and also an associate of Rosen and Rosen Law Firm.
3:24
Erin Gray: She's not an attorney, and we are going to talk about all things spin thrift trust.
3:29
Erin Gray: What is it?
3:30
Erin Gray: How did it get started?
3:31
Erin Gray: We're going to talk a little bit about Sally's journey and I'm going to dive in.
3:38
Erin Gray: I'm going to ask some questions, because I always want to educate you, inform you of things.
3:41
Erin Gray: I always feel like the financial industry complicates things, which there's probably real truth to that, and also, how can we break it down to make it simple for you to, to empower you to understand more so about your finances and things of that sort.
3:54
Erin Gray: So thank you, sally, for coming on the podcast and sharing.
3:57
Sally Gimon: Thank you for having me on, I appreciate it, yeah.
3:59
Erin Gray: So you want to dive in just a little bit about your backstory, Just share with the listeners like who are you?
4:05
Erin Gray: How did you get started?
4:06
Erin Gray: How did you even end up doing helping people do spend thrift.
4:10
Erin Gray: That's a tongue twister.
4:12
Sally Gimon: It is a tongue twister and people are like are you sure I'm like?
4:15
Sally Gimon: Yes, I'm a real estate investor.
4:17
Sally Gimon: In 2019, I was working full time as a Medicare broker and I wholesaled seven bank loan properties nationwide, paid off $184,000 in debt.
4:27
Sally Gimon: I was a rock star.
4:28
Sally Gimon: I knew about capital gains and I had $50,000 sitting aside my bank account.
4:32
Sally Gimon: Where I got messed up was my personal taxes went from 22% up to 24% and all of a sudden, I owed $79,000 in capital gains.
4:41
Sally Gimon: When your CPA calls you, you have to come into the office and sign paperwork.
4:45
Sally Gimon: You know you're in trouble, so he had set up for me to pay monthly.
4:49
Sally Gimon: There was going to be some interest rates.
4:52
Sally Gimon: Things like that Kept it together.
4:55
Erin Gray: Because you had underpaid in your taxes, right?
4:57
Erin Gray: So the estimated taxes, what Sally's talking about.
5:00
Erin Gray: I didn't have to pay $9,000.
5:02
Sally Gimon: I mean, that was a shock to me, yeah.
5:04
Sally Gimon: So, uh, kept it together, went down to the I got my parking validate go down to the parking garage, literally cried for 20 minutes, drove home.
5:12
Sally Gimon: And I don't know if you know this book but, um, the power of your subconscious mind.
5:17
Sally Gimon: It's by Joseph Murphy.
5:18
Sally Gimon: It's an old book from 1930s, but it's one of my favorite books.
5:21
Sally Gimon: I woke up the next morning five o'clock in the morning, got online because I had read an article about the Rockefeller's Spendthrift Trust.
5:28
Sally Gimon: It's called the Office.
5:29
Sally Gimon: It's seven generations old.
5:30
Sally Gimon: It has almost 400 people under the same EIN number.
5:34
Sally Gimon: I'm like well, if the Rockefellers can save taxes, why can't I save taxes?
5:37
Sally Gimon: I spent five months researching the Spendthrift Trust this middle of COVID.
5:41
Sally Gimon: In September of 2020, I started both my business trust that saves me in 2022 and 2023, I saved 92% on my federal income taxes and did not pay North Carolina state taxes.
5:54
Sally Gimon: And then my beneficial trust saves me capital gains, interest income, dividend income, rental income and royalty income taxes and in three and a half years I've saved six figures and I'll never have to pay that back to the federal government.
6:08
Sally Gimon: It's legal, it's in the IRS tax code and it's been in front of the US Supreme Court.
6:12
Sally Gimon: Okay.
6:14
Erin Gray: So let's talk about what is the Spend Thrift Trust.
6:21
Sally Gimon: It comes from England.
6:22
Sally Gimon: Way back when King Henry VIII, that famous king who chopped off his wife's heads, started the church of england, he went to go tax the lords and ladies of england and they went further back to the magna carta um it's contract law that came to the colony.
6:36
Sally Gimon: So we're still part of england.
6:37
Sally Gimon: It's on the federal level.
6:39
Sally Gimon: So even if you're in louisiana, which has the political law for states, this is on the federal level and this is why it can take care of US federal taxes and state income taxes at the same time.
6:53
Erin Gray: OK, so what exactly like does it do?
6:56
Erin Gray: You did mention like what it saves you.
6:58
Erin Gray: So let's dive into like the five different.
7:01
Erin Gray: Let's just let's go back.
7:03
Erin Gray: Actually, how do you?
7:04
Erin Gray: Who is it for Let, actually?
7:05
Erin Gray: How do you?
7:06
Erin Gray: Who is it for let's?
7:07
Erin Gray: Let's start there.
7:08
Erin Gray: Who is it for?
7:09
Erin Gray: Who does it benefit?
7:10
Erin Gray: I should say the business trust.
7:12
Sally Gimon: I suggest people should be making at least $80,000 gross.
7:16
Sally Gimon: Okay, um, when uh people make $80,000 gross, they're going to save at least, uh, five figures in all states.
7:25
Sally Gimon: Some states don't have state income taxes but you know, it's year after year, generation after generation.
7:31
Sally Gimon: The beneficial trust is for investors.
7:34
Sally Gimon: So if, um a forex investor gets taxed twice interest income and dividend income taxes um, my first property that I um it was a bank owned property that I put up for auction.
7:46
Sally Gimon: I paid $20,000 for it went up to over $64,000.
7:50
Sally Gimon: So I made $44,000 spread.
7:52
Sally Gimon: I saved $10,353 on that first property in the trust and I never looked back.
7:59
Sally Gimon: I wholesale.
8:00
Sally Gimon: I have notes which are I have the paper on the house.
8:03
Sally Gimon: People pay me their mortgage.
8:04
Sally Gimon: That's interest income taxes.
8:05
Sally Gimon: I have three um seller financing houses where they couldn't get a mortgage.
8:11
Sally Gimon: That's also interest income taxes.
8:13
Sally Gimon: I have four rentals.
8:15
Sally Gimon: Yes, you can take depreciation.
8:17
Sally Gimon: Yes, you can do cost averaging, but there's four ways the trust is going to save you.
8:20
Sally Gimon: That you know.
8:21
Sally Gimon: I don't have to worry about someone trying to sue.
8:24
Sally Gimon: I don't have to worry about someone trying to sue me.
8:26
Sally Gimon: I don't have to worry about someone researching all my property in LLCs the sole private.
8:30
Sally Gimon: So it's amazing thing, okay.
8:33
Erin Gray: So what it does is it allows you to have your income pass through the trust, right?
8:41
Erin Gray: Okay.
8:42
Erin Gray: And then, in terms of your royalty, dividend income, long-term or short-term capital gains, as well, um, interest income and rental income, it has a more favorable taxing structure, right?
8:57
Erin Gray: Is that a good way to say it?
8:58
Erin Gray: Taxing structure for those types of income Is that?
9:02
Erin Gray: Is that fair way to?
9:03
Sally Gimon: say it Right.
9:04
Sally Gimon: Okay, and Paul Benson, who was a Harvard law professor.
9:07
Sally Gimon: He wrote the trust 76 years ago.
9:10
Sally Gimon: The law firm is now run by his grandson and great grandson, so the names change, but in 76 years not a single trust has ever been audited.
9:19
Sally Gimon: They're so sure about this trust.
9:21
Sally Gimon: When you start a trust, you get a certification saying if the IRS questions you, they will defend you free of charge.
9:27
Sally Gimon: They've only had to do it one time where a senior IRS agent examined the business trust for five hours and then he signed off on it saying it was legal.
9:35
Sally Gimon: And I mean, that's a track record you can't ignore.
9:39
Erin Gray: So, because I am ever the investigator right, like so Sally and I talk before the podcast like this was several weeks ago and I think I was aware of this I don't know if I was aware that it was called or who it started and so I started researching and of course, what Sally's saying, like there is that stuff on the internet about like hey, don't be so sure about putting your money in a spin thrift trust because you can get audited.
10:08
Erin Gray: And so is that.
10:10
Erin Gray: I know you work for the law firm Rosen and Rosen, but are you you're an associate for them?
10:16
Erin Gray: But are is that typical for most law firms where they will go to bat defend for the trust, or is that just something that you know for the firm that you work for?
10:31
Sally Gimon: Quite honestly.
10:32
Sally Gimon: There are over a million attorneys in the United States right now.
10:34
Sally Gimon: Only 4% are trust attorneys.
10:37
Sally Gimon: A textbook trust attorney study in law school is called Scott and Asher on trusts.
10:42
Sally Gimon: Most lawyers don't even get two hours of trust information.
10:46
Sally Gimon: That's why everyone knows about the family trust or the living trust that my mom and dad had.
10:51
Sally Gimon: Susan Norman talks about Yep.
10:53
Sally Gimon: Only thing that the family trust does is avoid probate and then when the people who start the trust pass away, that trust dissolves.
11:01
Sally Gimon: All assets have to be divided up.
11:03
Sally Gimon: This is not your mom and dad's trust.
11:05
Sally Gimon: This is what the Rockefellers, the DuPonts, the Carnegie's have.
11:08
Sally Gimon: The story is keep the money in the family, and that's what the Rockefellers did, and if they can save taxes, I want to save taxes.
11:18
Sally Gimon: Erin, you should save taxes.
11:19
Sally Gimon: Everyone should know this.
11:21
Sally Gimon: So they have it in their tool belt.
11:24
Sally Gimon: Maybe they don't want the trust, but at least they have education.
11:26
Sally Gimon: That's not being taught in schools anywhere.
11:29
Erin Gray: Yeah, it's an option right To explore, you know so it is and let's dive into, like a revocable right, Because I have a revocable living trust, right, so assets of ours are in the trust and then our well, yes, it goes to our child ultimately, right, Like, but she's too young to be the beneficiary so we divvied up other people but so I can make changes that I want now within the trust, like as a revocable living trust.
11:58
Erin Gray: So this type of trust is an irrevocable living trust.
12:01
Erin Gray: Is that correct, okay?
12:03
Sally Gimon: and so the only difference, the only difference between revocable and irrevocable revocable is just your generation.
12:09
Sally Gimon: Irrevocable is generation after generation after generation.
12:13
Sally Gimon: Some people think, oh, you can't change things.
12:16
Sally Gimon: Um, I'm going to buy a car next month when I go to the dealership, I I'm not signing Sally Gimmon, I'm signing Sally Gimmon TT, a trustee of the trust, so I can sell my car, buy a new car within the trust easily.
12:29
Erin Gray: Yeah, so you can move and sell, buy assets and things of that sort within the trust and so you are the trustee of the trust, right, but you cannot be the beneficiary of the trust.
12:42
Erin Gray: Is that correct?
12:43
Sally Gimon: Correct.
12:43
Sally Gimon: I decide who are the beneficiaries and who are not the beneficiaries.
12:47
Sally Gimon: So, um, I have my brothers and sister-in-laws and my nieces and nephews in there, if I'm making this up.
12:55
Sally Gimon: But if one of my brothers gets divorced, I can then say my sister-in-law is no longer a beneficiary and I I you can make that change.
13:04
Erin Gray: Correct.
13:04
Erin Gray: I'm the one who makes that change Correct.
13:05
Erin Gray: Yep, okay.
13:06
Erin Gray: So obviously the beneficiary is at the time of death, right?
13:10
Erin Gray: So your, so your trust, is going to live on even though you physically are not here on planet earth, right?
13:16
Erin Gray: Um, and you have already decided who those beneficiaries are, and if you wanted to change your mind, then you could do that and move beneficiaries just like you did assets.
13:27
Erin Gray: Is that correct?
13:28
Erin Gray: Exactly, okay.
13:29
Erin Gray: So if you are a business owner, you recommend roughly 80,000 in gross income.
13:34
Erin Gray: What about also like a 1099?
13:36
Erin Gray: I mean, you're still probably self-employed, right, but 1099 income?
13:41
Sally Gimon: earner as well Entrepreneur anyone making at least $80,000,.
13:45
Sally Gimon: Just give you an idea here in North Carolina making $80,000,.
13:51
Sally Gimon: There's four ways to file your taxes Single, head of household, married jointly, married separately.
13:55
Sally Gimon: Single is the most expensive way.
13:57
Sally Gimon: So here in North Carolina I'm making eighty thousand dollars a year in 1099 income.
14:03
Sally Gimon: I'll save fourteen thousand one hundred and ninety one dollars each year.
14:07
Sally Gimon: That's federal and state income taxes.
14:09
Sally Gimon: It's my money to pay off my mortgage, to buy a new car, to take my family on vacation, to give to charity, to save for retirement.
14:17
Sally Gimon: I I can do whatever I want with that $14,000.
14:19
Erin Gray: It's my money and so basically the rates inside, like when you, when you develop this, trust your royalty, your dividend income, long-term or short-term capital gains, interest income and rental income, does it then become because for those of you listening that may not that the IRS is completely complicated tax laws and right.
14:42
Erin Gray: So there's a marginal rate, right that what is what Sally is referring to, and then and then we pay an effective rate, right, so your marginal might be at 22%, but effectively you might be at 18 after deductions and things of that sort.
14:59
Erin Gray: But are the royalty, dividend, short-term, long-term capital gains, interest income and rental?
15:06
Erin Gray: Is that taxed at a different level?
15:10
Erin Gray: Or is that just not taxed at all?
15:12
Erin Gray: Or how does that work from a taxation standpoint?
15:15
Sally Gimon: You're going to save the taxes.
15:16
Sally Gimon: The two taxes are different from everything else.
15:18
Sally Gimon: Royalty income taxes are taxed between 10% to 35% seven different levels and then long-term capital gains are on any profits more than a year.
15:29
Sally Gimon: But if you held a business or investment, that's either at 15% or at 20%.
15:35
Sally Gimon: I'm not a CPA, so I give people how much it is.
15:40
Sally Gimon: So someone, a client of mine, who just sold a family restaurant 42 year old family restaurant.
15:44
Sally Gimon: He's 69, his wife's 68.
15:46
Sally Gimon: On April 15th of 2025 they will not have to pay either $460,000 or $600,000.
15:55
Sally Gimon: That's that money is their money, six figures for their retirement, their their business broker who brought them.
16:03
Sally Gimon: He referred them to me and I got paid a finder's fee.
16:09
Sally Gimon: Then he told the gentleman who was buying the restaurant this is seventh restaurant.
16:13
Sally Gimon: The business broker told the gentleman buying the restaurant about the business trust.
16:17
Sally Gimon: So the business broker got paid twice for an affiliate.
16:19
Sally Gimon: If that makes sense, that makes sense.
16:21
Erin Gray: So I want to.
16:21
Erin Gray: I want to go back cause I want to make sure I understand.
16:23
Erin Gray: So long-term and I haven't looked at the rates lately but the long-term, if you do not have a trust and I know you are not a CPA, but just for the people listening so that they understand if you have long-term or short-term capital gains rates for an outside of the trust, you're going to pay.
16:40
Erin Gray: I didn't research this, but like roughly, it has been like anywhere from zero to 15 or 10 to 20%, depending on the tax law, right, correct?
16:49
Erin Gray: What you're saying now is if you have short-term or long-term capital gains rates inside the trust, what are you saying?
16:55
Erin Gray: That the?
16:55
Erin Gray: Are you saying that the tax rates are different and or lower than what it would be outside?
17:02
Erin Gray: They aren't even there.
17:04
Erin Gray: Is what you're saying.
17:05
Erin Gray: They're not even there.
17:06
Erin Gray: Okay, so is it correct to say that the royalty income, the dividend income, the short-term and the long-term capital gains, interest income and rental income does have zero tax?
17:15
Erin Gray: Is that what you're saying?
17:16
Erin Gray: Okay, so if you have a business, you're 1099 and you don't have the spendthrift trust, what you're saying?
17:20
Erin Gray: Okay, so if you are have a business, you're 1099 and you don't have the spendthrift trust, you're going to pay the regular rates that, whatever the tax law states for those types of income, if you have those assets inside the spendthrift trust, then it is 0% income taxable on those types of five types of income.
17:42
Sally Gimon: Is that exactly?
17:43
Sally Gimon: And just give you an idea, Aaron, some people say, oh, I'll do a 1031 exchange.
17:48
Erin Gray: Hang on for those, for those people that don't know what a 1031 exchange is.
17:52
Erin Gray: Do you want to explain that to them?
17:54
Sally Gimon: Just real quick.
17:54
Sally Gimon: Take a like property for like property, so let's say it's a single family home and then you get a larger single family home.
18:00
Sally Gimon: That's just kicking the can down the street.
18:03
Sally Gimon: Unfortunately, I have spoken to at least a dozen 15 adult children whose parents are incapacitated.
18:11
Sally Gimon: They either have stroke or heart attack.
18:13
Sally Gimon: The children are selling off assets to pay for them to be in yep long-term.
18:18
Sally Gimon: Take care for them and they get this humongous tax bill from the government going.
18:22
Sally Gimon: What the heck, what, what, what did we just do?
18:24
Sally Gimon: And like they kicked the can, maybe for 20 years they just kept using it with the spendthrift trust.
18:32
Sally Gimon: That will never happen.
18:33
Sally Gimon: If my great, great, great nephew decides to cancel the ein number and dissolve the spendthrift trust, those taxes will not come back to for him to pay them that once they're.
18:44
Sally Gimon: It's not a look back, but it's avoided.
18:47
Sally Gimon: It's avoided.
18:48
Erin Gray: Okay, yeah, because that's what a lot of people in the real estate business typically do.
18:55
Erin Gray: Right, like you've.
18:56
Erin Gray: You've generated some appreciation right in the home and so you're able to buy another home, and then you have to roll that within a certain I don't remember if it's 90 days or something like that.
19:08
Sally Gimon: It's a crazy 160 days.
19:09
Sally Gimon: Everyone I know who's done a 1031 exchange regrets doing it.
19:13
Sally Gimon: They always get rushed doing it if that makes sense?
19:16
Erin Gray: Yeah, so for that money to not be taxable?
19:19
Erin Gray: Okay, here Does that make sense?
19:22
Erin Gray: Yeah, so for that, for that money to not be taxable?
19:23
Erin Gray: Um, okay.
19:24
Erin Gray: So then, in terms we talked about irrevocable and revocable, um, so, if what?
19:28
Erin Gray: Let's talk about if you, once you set it up, if I want to receive the money out of there, so let's just, let's just use general numbers.
19:35
Erin Gray: So you, you generate a hundred thousand of gross income in your business.
19:40
Erin Gray: Let's just say you have a profit margin of 70%.
19:43
Erin Gray: So $70,000 is what you're, and I'm just using this for easy math.
19:46
Erin Gray: So you have $70,000.
19:49
Erin Gray: So do you get to have that flow through to you and your family, if that's what you wanted to take for distributions?
19:56
Erin Gray: And then how does that work from a taxable perspective?
20:00
Sally Gimon: As long as you're either the trustee or the beneficiary, there's no distribution.
20:04
Sally Gimon: Okay, If I'm using my niece, she's dating a guy.
20:09
Sally Gimon: They're going to get married next year.
20:11
Sally Gimon: If I go to pay him money, he's not a beneficiary yet.
20:14
Sally Gimon: I don't pay the taxes.
20:16
Sally Gimon: But because he's not a beneficiary, he'll pay the taxes on that money.
20:18
Sally Gimon: Okay, If I give it to my niece's not a beneficiary, he'll pay the taxes on that money.
20:20
Sally Gimon: Okay, If I give it to my niece who is a beneficiary, she doesn't have to pay the taxes because we're all under the umbrella of the Spendthrift.
20:28
Erin Gray: Trust.
20:28
Erin Gray: So when does the IRS get their money?
20:31
Erin Gray: They don't, unless if, as long as you are a beneficiary or a trustee of the trust, right, that's basically then they don't.
20:41
Erin Gray: But if you do give it to someone who is not a beneficiary of the trust, that's when it becomes taxable.
20:47
Sally Gimon: That becomes taxable to whoever that person is.
20:50
Erin Gray: The receiver.
20:51
Sally Gimon: The receiver, not the giver.
20:53
Sally Gimon: Correct, Okay.
20:54
Erin Gray: Is there a limit on how many beneficiaries you can have?
20:58
Sally Gimon: The Rockefeller's trust is seven generations old.
21:06
Erin Gray: They have almost 400 people under the same EIN.
21:07
Erin Gray: You did say that earlier, but I don't think I actually understood what you meant by that.
21:09
Erin Gray: So basically, what you're saying is they have 400 beneficiaries under this one EIN.
21:13
Erin Gray: So if they want to give money to whoever those 400 people are, it's a non-taxable event correct, Correct, and they might have separate business.
21:21
Sally Gimon: They all have their own different bank accounts, so they're not sharing bank accounts.
21:25
Sally Gimon: But the Rockefellers actually have an entire system set up.
21:30
Sally Gimon: If I'm a Rockefeller and I want to start a McDonald's, I have to take out an infinite banking policy on myself and make the trust the beneficiary.
21:39
Sally Gimon: Uh, infinite banking policy on myself and make the trust the beneficiary, so they get money from the uh, the the trust.
21:45
Sally Gimon: Then, when I pass away, that money goes back into the trust.
21:48
Sally Gimon: So they're.
21:48
Sally Gimon: The Rockefellers are just growing it and growing it and growing it, growing it.
21:51
Sally Gimon: My personal family trust is only three generations old.
21:55
Sally Gimon: I would love to get it bigger than the Rockefellers, but I don't think that's going to happen.
22:02
Erin Gray: Yeah, so let's talk about the benefits of the trust, let's talk about, you know, things that we may not like about it or things that we need to think about before doing it.
22:09
Erin Gray: Okay, so what would you say are you?
22:13
Sally Gimon: you had mentioned before there were like a couple of things, um, like taxes, obviously the trust the trust is going to save you in four very important ways taxes, year after year, generation after generation.
22:25
Sally Gimon: It's going to keep your information private.
22:27
Sally Gimon: Unfortunately, there's a false rumor out there that your llc s corp or c corp does that every, not true?
22:34
Erin Gray: go look at secretary of the state.
22:35
Sally Gimon: Wherever you are, you could go find me for the corporation commission, correct, yep, anybody can research it online.
22:42
Erin Gray: Now it is false, because that is one of the things that that was actually.
22:46
Erin Gray: Now I know we're talking are we have a revocable living trust, but when I set it up with the um, um, oh gosh, real estate, what is it?
22:58
Erin Gray: Yeah, like when I, when I put our houses underneath there, it isn't.
23:03
Erin Gray: It says trustees of you.
23:05
Erin Gray: Know, you think that that's what we're taught about.
23:08
Erin Gray: The trust is that, oh, it'll keep it private and you can't, but you actually it's.
23:12
Erin Gray: It's.
23:12
Erin Gray: There's another type of trust that actually does that.
23:15
Erin Gray: That yeah, and you can't.
23:18
Erin Gray: It is.
23:19
Sally Gimon: Yeah, and you can't.
23:19
Sally Gimon: It is, it's public True story.
23:20
Sally Gimon: When I lived in Lemonster, massachusetts, in my library it had this humongous book of all the real estate and I got in trouble because I took a black marker and blacked out my name and I got someone to the court saying I can't do that.
23:32
Sally Gimon: I'm like I don't want people to know my name, my social security number, the date I bought my condo.
23:37
Sally Gimon: I was appalled.
23:39
Sally Gimon: Anybody could look at this at the library at any time.
23:41
Sally Gimon: You know that just scared the heck out of me.
23:44
Sally Gimon: So again, nobody knows what you own, how much you own, where you own it or what you do with it.
23:53
Sally Gimon: That's all private because it's in the trust.
23:54
Sally Gimon: Third way it's going to save you lawsuits.
23:55
Sally Gimon: All your assets are in the trust and if they try to sue me, the individual, I'm worth nothing.
24:00
Sally Gimon: You can't get blood from a stone.
24:02
Sally Gimon: All those assets are protected.
24:03
Sally Gimon: And then the fourth way I'm not sure if you're aware of the 2024 Corporate Transparency Act from the Treasury Department.
24:10
Sally Gimon: It's a paperwork the Treasury Department is asking for With the Benson Financial Trust.
24:15
Sally Gimon: You're exempt from doing this paperwork.
24:17
Sally Gimon: I'm not a conspiracy theorist, but I don't know what they plan to do with the paperwork.
24:21
Sally Gimon: I mean, they want my driver's license number, they want my EIN number, they want my passport number, they want my phone number.
24:27
Sally Gimon: They don't need to have that information in one location.
24:30
Sally Gimon: That's just my personal belief.
24:32
Erin Gray: So and then, what are some of the like, if you want to say, like drawbacks or hesitations or reservations for not wanting to set it up, or why you wouldn't want to do this my my one drawback.
24:47
Sally Gimon: I'll be honest.
24:47
Sally Gimon: Yeah, I went with wells fargo to have my uh, this is a beneficial trust.
24:52
Sally Gimon: I have family living in singapore, poland, alaska, all over the place.
24:56
Sally Gimon: Wells fargo will not give me a credit card on my trust.
25:00
Sally Gimon: That's just one thing they won't do.
25:02
Sally Gimon: Yep, easy to set it up, easy to talk to them, everything else.
25:05
Sally Gimon: So I'm building um business credit for dun and bradstreet under my two different eins.
25:10
Sally Gimon: So I now just got two credit cards one for the business trust, one for the beneficial trust from sofi and from another bank.
25:17
Sally Gimon: I can't get a wells fargo uh, I have a debit card, I can't get a Wells Fargo, I have a debit card, I can't get a credit card.
25:22
Sally Gimon: That's my only regret, or that's my only thing I don't like about the trust.
25:27
Erin Gray: I agree with you.
25:28
Erin Gray: I think that there's a lot of.
25:29
Erin Gray: There's the knowledge of because you know, when I learned about the trust, when I ended up getting us our trust and then there's the banking system or the financial system, and, depending on who you bank with and who you who is your financial advisor or planner or brokerage it can be sometimes a little bit of a interesting conversations Like um.
25:53
Erin Gray: For a long time we did not have a well, probably four or five months, right, we didn't have an actual um.
25:59
Erin Gray: We had an online mailbox because we were just living out of suitcases and I was declined by a brokerage company because I did not have a physical address.
26:08
Erin Gray: So it's like we create these wonderful things but then there's a disconnect between the idea, right, and what we're creating versus the banking systems, the financial systems that can actually carry it out right, and what we're creating versus the banking systems, the financial systems that can actually carry it out Right.
26:23
Erin Gray: And there have been numerous conversations that I've had is like, yes, you can do this, you know, get me your manager or get me somebody else.
26:31
Erin Gray: Because, because it's true, like what Sally is saying, is that the, the the intricacy of the vehicle that you're using right, like in this case, the spend, spend, thrift, trust and then the knowledge of the people that actually need to carry it out, to make it, because, just because you do a trust, you still have to what's called fund it.
26:50
Erin Gray: Right, like, you have to put the assets inside the trust and you have to work with people A lot of times.
26:56
Erin Gray: Right, the attorneys will help you do that.
26:59
Sally Gimon: Um, we have a whole team that works with you what we'll do that.
27:07
Sally Gimon: We have a whole team that works with you.
27:08
Sally Gimon: We'll do that.
27:08
Sally Gimon: My personal banker here in North Carolina.
27:09
Sally Gimon: I have to get on his calendar.
27:09
Sally Gimon: No big deal I really did this January of 2024.
27:11
Sally Gimon: I took my 12 notes and my other properties and I made separate bank accounts for each one of them because one of my notes was not paying me on time and I needed proof so I could start the foreclosure process.
27:23
Sally Gimon: I mean, it took us about two hours.
27:25
Sally Gimon: He was very easy to work with and then in May, when I finally foreclosed on the property in Ohio, the trust handled it, the trust got the money and then the trust bought another note with that, with the money I earned from that.
27:38
Sally Gimon: You know, I, I, I own the property in Ohio.
27:40
Sally Gimon: Yeah, I just wholesaled it because I didn't know what they, I didn't know what the condition of the house was.
27:45
Sally Gimon: I've never been to that.
27:46
Sally Gimon: So, yeah, it was other than taking the two hours in January to set this up correctly.
27:51
Sally Gimon: So I do have 16 different bank accounts but all go all under the same EIN number, so I get one.
27:58
Sally Gimon: How do I say this?
28:00
Sally Gimon: I get 16 different statements and then one major statement from Wells Fargo.
28:04
Erin Gray: The reason why you did that is because you were trying to decipher and really have a paper trail to to for to be able to foreclose on that one homeowner Right.
28:13
Erin Gray: But for most people they would just have one bank account or maybe a savings account or something of that sort, like they would have brokerage bank account or maybe a savings account or something of that sort.
28:25
Sally Gimon: Like they would have brokerage accounts or investments account, things of that sort, correct, and you know how he set it up with me it's the name of the street, not the house number, but the street, the name of the street for those accounts and it's it's easy to work with.
28:36
Sally Gimon: Another thing, that kind of funny thing that Wells Fargo did they wouldn't open up my uh trust accounts, either my business or my benefit beneficial trust account until I had an associate trustee.
28:46
Sally Gimon: Because if I walked out of the building and got hit by lightning or hit by a school bus, yep and I'm like I I need, I need a few, I need a few days.
28:54
Sally Gimon: I need to talk to my nephew.
28:55
Sally Gimon: I mean I'm in phoenix, he's in north carolina, we had a conversation.
28:59
Sally Gimon: He's like and I'm sorry what I had to get the paperwork to him.
29:02
Sally Gimon: He had to get the paperwork back to me.
29:04
Sally Gimon: We suggest the law firm and myself suggest you have somebody in case something happens.
29:10
Sally Gimon: But Wells Fargo was making it mandatory and it did take me an extra week to do that.
29:16
Erin Gray: We create these intricate vehicles in the financial industry, because one of the things I also noticed was, even though I do not have a spend thrift trust yet, but with our revocable trust, even like, um, the mortgage company wanted to see our entire trust, even though I gave them the certificate of trust.
29:35
Erin Gray: So does the spin, does the spin thrift trust have like a certificate of trust where you can just give to the financial system and it?
29:45
Erin Gray: Hopefully they will accept that and that's sufficient enough, is that?
29:49
Sally Gimon: correct.
29:49
Sally Gimon: I have.
29:49
Sally Gimon: I have that.
29:50
Sally Gimon: Um, I've done several real estate deals in here in North Carolina, everything's with an attorney.
29:55
Sally Gimon: I just take my whole trust booklet.
29:57
Sally Gimon: If they want to make copies of it, I just I just let them have it.
30:00
Sally Gimon: I mean, they know who I am, they know what the trust is.
30:05
Sally Gimon: Some people just don't.
30:07
Sally Gimon: Most people have never heard of this and they're like can I just read through this?
30:10
Sally Gimon: I'm like please do I mean from one of the attorneys I worked with.
30:13
Sally Gimon: He's now sending clients to me, so I'm happy to share my information as much as possible.
30:17
Erin Gray: Yeah, information as much as possible.
30:18
Erin Gray: Yeah, that's what I was going to say.
30:19
Erin Gray: I think a lot of it is people don't know about it, so they are immediate no for it.
30:23
Erin Gray: Right, especially within the financial and the banking industry, and so, um, yeah, that was going to be a question I have.
30:30
Erin Gray: It's like so what do you suggest?
30:31
Erin Gray: I mean you get your certificate of trust, or if they want, but then it's kind of like defeats the purpose, like we want to be.
30:37
Erin Gray: We don't want it to be right, we want it to be.
30:41
Sally Gimon: One of my clients in Chicago was very adamant.
30:44
Sally Gimon: He didn't want to take his trust booklet into the, into the bank.
30:48
Sally Gimon: So he took the.
30:49
Sally Gimon: It's a 17 page group we have and they said you can't open the account here.
30:52
Sally Gimon: He searched and went to two different banks to finally, by the third bank, finally found out who would take the 17 pages.
30:59
Sally Gimon: He's like I don't want them to know exactly what I have.
31:06
Sally Gimon: That's, it's a choice, right, it's a choice.
31:07
Sally Gimon: I'm, maybe I'm much more trusting that, maybe I'm much more you'll.
31:10
Sally Gimon: And he's just like no, he has quite a bit of property in Chicago.
31:13
Sally Gimon: He didn't want them to know exactly what he was doing and it was he found.
31:18
Sally Gimon: He found the bank that worked with them.
31:19
Erin Gray: Yeah, I think that that's what it goes down to.
31:21
Erin Gray: It's like one, do you want your energy spent on finding the banks and all the things?
31:25
Erin Gray: Or I mean you could look at it as like, oh, I'm so defeated, I'm having to like, but it's like that's what I got to the point with our mortgage company.
31:31
Erin Gray: I was just like you know what.
31:32
Erin Gray: It's not even worth it to look at it.
31:36
Erin Gray: Fine, you know, have have it.
31:38
Erin Gray: Um, are there any other uh questions that I maybe have not asked that?
31:46
Sally Gimon: um, one question I get and it's kind of it's mostly based on louisiana.
31:49
Sally Gimon: They're like hey, louisiana has napoleonic law for their state law.
31:53
Sally Gimon: This is on the federal level, so it doesn't matter there.
31:56
Sally Gimon: But I mean, I'm helping clients everywhere.
31:58
Sally Gimon: And you know somebody I was just on a conversation with.
32:01
Sally Gimon: She's like well, I'll do this when a tax season.
32:04
Sally Gimon: I'm like you don't understand.
32:05
Sally Gimon: You're paying taxes every single month.
32:07
Sally Gimon: Someone I talked to last week an anesthesiologist nurse where we're going to save them $90,837 a year per month July, august, september, october, november, december an extra $7,569.
32:23
Sally Gimon: I mean, he's still working as hard as he is, but he's getting an extra paycheck per month on that.
32:29
Sally Gimon: He's just like that's a no brainer, start it now.
32:31
Sally Gimon: But some people are like no, I don't have to worry about this until I follow my taxes.
32:34
Sally Gimon: I'm like we're paying taxes week by week, month by month.
32:39
Erin Gray: I think that's a lot of people.
32:40
Erin Gray: That's how we you know us wise, right?
32:47
Erin Gray: It's like oh, you, uh I was just talking to a CPA the other day about this it's like and the way that he does his with his clients, it's like, no, we do almost.
32:52
Erin Gray: Like two or three times a year we're talking about we're seeing like where's cashflow, what is profit, you know, and like we're planning right, very holistically, versus old school way of doing taxes is like oh, it's January, let me send you the organizer and then you tell me what you generated and then we'll figure out your taxes, right?
33:09
Erin Gray: So something that.
33:10
Erin Gray: And also you don't want to wait.
33:12
Erin Gray: I always think about like you don't want to wait till the end, because if there's lots of other people that wait till the end, right.
33:17
Erin Gray: And so either you could be like, hey, sorry, I've got too many clients next year, we can look at this, and or you're rushing through a process Like I think here we go back to sovereignty and empowerment.
33:28
Erin Gray: Like you also need to read the trust, you need to look at it and you need to verify that what you and the attorney talked about is actually what is in the trust and things of that sort.
33:39
Erin Gray: So giving yourself ample space to do that and you know, to ask your questions and and and to take care of that stuff.
33:48
Sally Gimon: Quite frankly, this gentleman who I spoke to last week, he's just like that's going to pay for us to go on vacation in August.
33:54
Sally Gimon: I'm like, hey, that's a great thing, he's got 11 year old, a 13 year old, a 15 year old.
33:59
Sally Gimon: He's like I gotta figure out where to go.
34:02
Erin Gray: Yeah yeah.
34:02
Erin Gray: We talked about beneficiaries.
34:08
Erin Gray: We talked about oh so do, do CPAs?
34:09
Erin Gray: If you were to ask your not you, sally, but if you were to go and ask your CPA are they going to know about this?
34:13
Erin Gray: Like, do most CPAs and attorneys know about this type of trust?
34:19
Sally Gimon: Unfortunately not Okay.
34:20
Sally Gimon: Two, two different stories, if you don't mind me telling you this.
34:23
Sally Gimon: In April of 2023, the multifamily apartment convention was here in Charlotte.
34:30
Sally Gimon: I bought a ticket.
34:31
Sally Gimon: I went to lunch with five other people.
34:34
Sally Gimon: One gentleman is up in New York.
34:36
Sally Gimon: He scheduled a meeting with me because he thought it was going to be great.
34:40
Sally Gimon: Get on the Zoom.
34:41
Sally Gimon: He's just just like my cpa, says you're lying, I don't want to talk to you and got off the zoom.
34:44
Sally Gimon: We were done okay.
34:46
Sally Gimon: Second, I think I do a monday night presentation.
34:49
Sally Gimon: It was a grown child.
34:50
Sally Gimon: Um, his parents have three apartment buildings in the bronx that they're planning on selling.
34:55
Sally Gimon: You know, talk to him.
34:57
Sally Gimon: He called.
34:57
Sally Gimon: He sends me an email saying I don't think my cpa agrees with this.
35:01
Sally Gimon: I send him back saying tell the cpa about scott nasher on trust black law a dictionary.
35:07
Sally Gimon: You know there's certain places, look for this.
35:08
Sally Gimon: A week later I have somebody on my calendar.
35:12
Sally Gimon: It's his cpa and she's like I have so many clients here selling their apartment buildings.
35:16
Sally Gimon: Let's jv together, perfect.
35:18
Sally Gimon: So it depends how open someone is and how soft someone is, because the family's still going to have to file a regular 1040 tax return.
35:27
Sally Gimon: They were just talking about saving the capital gains on an apartment building you bought in 1972.
35:32
Erin Gray: That's going to be huge you know and and is it as long as the sale happens within the trust?
35:39
Erin Gray: So like it, even though that, like you're talking about this one family with the apartment, even though that the apartment has not been in this trust for 40 plus 50 years, as long as, at the time of sale, that the asset is inside the trust, that is when your air quotes protected from taxes.
35:56
Erin Gray: Is that a good way to?
35:57
Sally Gimon: okay.
35:57
Sally Gimon: And then you know another person I worked with for the month of June.
36:00
Sally Gimon: He's selling a bakery.
36:02
Sally Gimon: Bakery.
36:02
Sally Gimon: All the depreciation he took on the equipment, um, his cpa did a whole bunch of things.
36:07
Sally Gimon: Yep, now the bakery's in the trust he doesn't have to pay all that back and he's just like that saved me thousands of dollars because the equipment was written off over you know 15 years or something and it saved him thousands of dollars on that.
36:21
Erin Gray: Yeah, I don't know if section 179 comes to mind.
36:24
Erin Gray: I don't know if that's specifically, but it's depending on what type of depreciation schedule you have right, like you have all that depreciation that's been written off, anything else that I haven't asked that people, because you're aware of this and you know this that People keep telling me how come I don't know this or how my CPA doesn't know this.
36:44
Sally Gimon: Yep, no offense to CPAs.
36:46
Sally Gimon: They they study what they need to do.
36:48
Sally Gimon: 97% of all tax returns in the United States are 1040 tax returns Most a million attorneys out there.
36:55
Sally Gimon: Only 4% are trust attorneys, so only 4% study Scott and Asher, it's.
37:01
Sally Gimon: It's just information that people don't have.
37:03
Sally Gimon: Yeah, we just don't know the fingertips, unfortunately.
37:05
Erin Gray: yeah, I know that you are associate with the law firm is.
37:09
Erin Gray: Are there?
37:10
Erin Gray: Obviously they can come to you.
37:12
Erin Gray: Are there other law firms and things of that sort or like?
37:15
Sally Gimon: tell us.
37:17
Sally Gimon: I'm in a group called the jp directory.
37:19
Sally Gimon: One of the gentlemen who run the group, his girlfriend, works for a manhattan law firm that has the trust I don't know the title of it.
37:26
Sally Gimon: They won't work with somebody until they prove they have eight million dollars in the bank account and I'm like, okay, okay, you know.
37:31
Sally Gimon: For me personally, in my real estate group, the average person joining is a 56 year old gentleman who wants to make some money before he retires.
37:38
Sally Gimon: If they wholesale or fix and flip a house and make $50,000 on it, at 22% they're going to save $11,000.
37:46
Sally Gimon: At 24% they're going to save $12,000.
37:49
Sally Gimon: Do two real estate deals in one year, you've got it paid for and you're leaving a legacy for future generations.
37:54
Sally Gimon: The trust is.
37:55
Sally Gimon: I'm biased, but the trust is an amazing thing.
37:59
Erin Gray: So where can people find you, learn more about you, things of that sort, and I'll put this in the show notes as well.
38:05
Sally Gimon: My squeeze page website is wwwthetrustisyoucom.
38:09
Sally Gimon: I have a free class on the Great Discovery.
38:13
Sally Gimon: It's just my first name and my last name wwwsallygibboncom.
38:16
Sally Gimon: If you want to set up a 30-minute tax breakthrough session with me, I'll walk you through.
38:20
Sally Gimon: Take you want to set up a 30 minute tax breakthrough session with me, I'll walk you through.
38:23
Sally Gimon: Take you out to nerd wallet, a free website.
38:24
Sally Gimon: Show you the formula for taxes.
38:25
Sally Gimon: Again, it's just something for people.
38:28
Sally Gimon: They don't know about education.
38:31
Erin Gray: Exactly, that's like.
38:33
Erin Gray: My biggest thing is like educate people, because a lot of you know, you always hear that saying the rich get richer and the poor get poor, and I'm like and we all get to get richer right, like let's all find out and know about these things that can help us, and so, um, I will definitely put all your information in the show notes.
38:50
Erin Gray: Thank you for coming on and sharing your knowledge for having me.
38:53
Sally Gimon: I appreciate it and I wish you and your family a beautiful week then.
38:57
Sally Gimon: Okay, thank you, take care.