Why is it that some families in this country seem to have it all?  Do they work harder? Are they luckier? Where they born under a lucky star?  More than likely it is none of those.  More than likely they are the benefactors of preceding generations that had a strategic plan, forethought and wisdom to set them on the right path and with that wisdom from prior generations came the responsibility to do the same for their heirs.  There are a lot of examples that we can point to where the family name is synonymous with wealth i.e. Rothschilds, Rockefellers, Getty’s, and Carnegies.

These family dynasties just didn’t happen. There are a vast number of families that had as much money as these famous names, but weren’t able to hold onto their wealth – does the Vanderbilt name ring a bell?  Although they still have the prestigious name, their family wealth is nowhere near where it once was.  How does this happen?

Maintaining Wealth Takes the Right Strategy

It can be argued these families didn’t pass along the knowledge of how to acquire and keep wealth, nor did they create a strategy to perpetuate their fortune to the next generation. As Nelson Nash pointed out in his book, Becoming Your Own Banker: The Infinite Banking Concept, “If by some authoritative power distributed all the money in the world equally among all the people in the world, within 10 years time 97% of the money would be under the control of 3% of the people.”

You might be wondering how this all applies to you. To help you understand, I would like to share a conversation I had with a client about this same topic.  Let’s call him Ben. Ben is 65 years old and wanted to pass along the gift of his estate, as well as the knowledge needed to retain that gift for future generations. The best way to do this was to get everyone together, so Ben, Carl (45), Jimmy (25), and I met.

Ben wanted to gift $20,000 per year to his son, who was taking over the family business. So, I proposed a uniquely structured life insurance policy owned by his son, Carl, on the life of Ben. When Carl passes, the death benefit on him would be paid to Carl.

At age 85, or year 20, of the policy Ben passes away. Although his passing was difficult, he has instilled his next generations with valuable wisdom. He taught them to take the money from his life policy and start a new policy on Carl, and if they have the proper strategy, they will be able to use the policy as collateral to help finance the business.

Now we take the Death benefit from Ben’s policy and without any new money we purchase a policy on Carl and pay for it over the next 5 yrs.  Notice the cash value Carl still has access to in the event he wants to use it in his business.  Now, when Carl passes away in year 20, or age 85, there is a $1,413,137 death benefit passed to Jimmy, income tax free.

Now Jimmy takes the Death benefit from Carl’s policy and places the money in another properly structured policy over a 5-year period, with no out of pocket money on his part. This policy gives him access to the total net cash value for cash flow purposes, and at age 85 when Jimmy passes away the insurance company will issue out a Death benefit of $3,187,771 tax free and the cycle would continue for his children and grandchildren.

A Good Strategy Leads to Generational Wealth

Now we have intergenerational wealth being passed down, as well as access to the money to help run the business with a pool of safe, liquid money that can be used to grow and expand the family enterprise or take advantage of opportunities when they arise – all for 12 cents on the dollar!

Imagine how this would have turned out if the son and grandson were as generous and funded these policies like Ben did at the beginning with the $20,000 per year! Did I mention that all these death benefits are income tax free?

You Have the Tools to Build Your Own Wealth

At Sage Wealth Strategy, it is our goal to show our clients how those that have money think about money, so you are not part of the 97% without control. We want to show you a process that will give you access to a financing system that has been around for centuries and provide you with a means to avoid wealth destroyers like fees, taxes, and inflation. At Sage Wealth Strategy, we will teach you a way to leverage a dollar for today’s use in your personal financing system, as well as provide future generations with the knowledge and money to perpetuate the family’s wealth.

If you’d like to learn more about incorporating a Long-Term Care insurance policy into your financial plans.