Welcome, everyone to the abundance group trusted advisor training. Today is Tuesday, June 28. And this is week two of our trusted advisor training. So for those of you that were either here last week, or that listened to the replay of last week, have you had any further thoughts about what you learned last week?
was last week helpful?
Yes, the breakdowns of the different examples, from one through four, were really helpful. But I know you said they will eventually walk through setting up something so. But how you broke it down in the charts, that was very, very helpful and clear.
Awesome. So this week, is a little bit more of the same. What I have basically decided, is, given the way that clients businesses tend to be those essentially, eight different structures, for those businesses that have active income, that ended up becoming one of the things we will end up recommending for them. And you guys don't have to worry about the recommending part because that happens before they ever get to you. So last week, we went over the first four, this week, we're gonna go over far more. Now, this doesn't take into account things like our intellectual property slash personal trust, or IP slash business trust. But that's an unchangeable with personal trust or business trust. So these are pretty close to the ways that 99% of the clients, businesses ended up working. Now, these structures are typically used for one of two things, either clients that have active business income, or the clients for clients that have real estate investing businesses, with more than just a couple of problems. Otherwise, all I really need is a personal trust, or a personal trust and a foundation. So don't forget that that's a possibility, too. We will go over how to implement just the personal trust, or just trust foundation. When we get started next week, we can literally start going through the instructions for the person's trust was definite. Starting on the next time, that's when we get done with that. Instructions for the business trust. Well, we have trainings that are available for clients on those things, the difference between our trusted advisor training, and what we have for clients is really this call. It's about a lot behind it, not just the how to do it'll be easier to help clients go through the process. So with that said, let's get started with the next structure. Now, if you've listened to last week's training, the difference between last week and this week is very simple. It's the addition of the foundation. Why is that an important distinction? Well, once you get the foundation to the four structures we talked about last week, we can get clients down to a $0 tax liability. We can also have clients have a way to pay for things like food that they couldn't otherwise pay for travel that they couldn't otherwise paid for under the trust. So the combination is really really powerful. As we move forward, I really want us to be working with clients or also setting up foundations to me that it's really important. It's important for the world and important for the client. So structure number five picking up where we left off last week. That's going to be an LLC with a personal interest and foundation that can be used as their active business income and can't afford or don't want to do In this choice with this structure, the clients still going to receive a 10k, one for 3% of in that concert, they can take 30% of that, and put it into the foundation. So they can end up with a 2% tax liability. They're gonna need some monies outside of the trust and the foundation for stuff, no fun stuff, welding, things like that. So I don't care how much they're making, if we can get it down to 2%. That's a really good
structure number six is going to be a business just with a personal just with a foundation, but no entity. Now, if they have payroll, and they are withholding taxes from other people, they should not be using option number six, it is not a good idea to have the business just acting as a withholding agent, as we talked about last week. Using that structure, I usually say my answers still gonna end up getting taxed on the site are between 12 and 18%. Of net profit for business. However, at the foundation and the public's like can actually come down to a $0 tax liability. So that's a really cool structure. So I call it the trifecta package. Structure number seven, same as number six, but with the addition of the entity. You're not like striking on our screen, that's pretty cool. striction number seven business just post personal trust plus entity plus Foundation assets in the personal Trump's, if the client has active business, they cannot hold the assets for the business in the business jobs. Otherwise, they're gonna pay taxes on 100% of the net income in the business, there's just no events or buts about it, there's no way to get around it. What mitigates taxes on active outcome is leasing the asset from the personal trust to the business trust, thereby converting a portion of active income passive income. Normally we have that structure might still ends up getting taxed on 12 18% of income. But when we add that foundation piece to it, it's a beautiful thing, because we can literally get the plant down below $0 tax. And then the last structure is the same as number seven business trust plus personal trust plus foundation with without an entity, but the assets are held in the business trust not in the personal trust that is also going on produced is $0 tax that can only be done if the income is coming from either passive income or capital gains income. If then back down can we can use the structure. So let's take these apart one at a time, like we did last week. On if I can figure out what that me just touched. I don't know what this is, is something up on screen and I don't know how to make it go away. We'll see if I can figure that out okay. So this is the structure, this instruction number four that we talked about a few minutes ago. We have gross revenues that are paid to the LLC. Then the LLC is going to have a backup because the assets the assets are held in the entity count length are gonna be sold by the entity to the business owner business on they're gonna get sold to the personal checks. And from that they'll have at least agreement between the personal just an entity that lease agreement allows the entity or the animals in this case, to pay up to 70% off bits, do the person on trust, that's the lease payment. That's helping to convert the active income on the LLC to passive income to the personal trust. So 300% tax on the remaining 30% is meant for personal interest and 9%. See, we then have 90% of that 30%, which equals 27%. That is going to end up being personal trust share the profit as a
personal tries to get a k one on that 27%. That leaves a remainder of 3% of profit, that would go to the business owner on a k one. Then we're gonna take 30% or 1% and donate it to the foundation. That's $1 for dollar reduction of the adjusted gross income on the owners 1040 Return on government that way, it brings tax liability down to 2%. However, well, that's a really great structure for tax litigation. It's the only one thing that lets just like it did last week without the foundation. And that's the future income of the LLC, is that risk the event of a judgement. So if they can afford it, it is way better to add business trust and trying to achieve Trifecta package so that you don't leave that risk. Now, how do you implement that one? It is almost exactly the same as what we talked about in structure number one last week. First thing we do is we create a statement of membership interest in management, naming the personal trust as a 90% limited partner, and there's a link on this that will take you directly to that it's not conveyances folder, violence called template dash, LLC operating agreement. It's not a whole operating agreement. It's just
can you make your screen larger? Gina
gets as big as it goes.
I don't think so.
Yeah, that's false.
do Ctrl plus plus
it's not a Mac
made it worse live
should be able to make it bigger. These are all though in the folder, we can open them up and from the convenience folder.
I don't want to put the stuff up on the top here. But it makes this small
magnifying glass five icons in that should help make the document bigger rather than the window itself.
No, that doesn't do that any better.
No, but go ahead.
Okay, I made it bigger. I made the top part smaller. Such for some reason on my computer control minus minus instead of Control Plus,
there you go. It's getting a little bit bigger.
Is it making any bigger turn people anywhere, but
I just wonder why it's showing up so small. Because I've even reduced all the players to the side to make the other side big, but you can go ahead.
Oh, my laptop so it's almost 17.9 inch screen. Maybe that's it?
Maybe Lou just a suggestion. It's Bruce. I'm watching this on my iPad and I can do a pinch and squeeze and make it a lot bigger just because you have that.
Very good.
Yeah, it helps for a blind blind person like me.
In my mind is a touchscreen as well, but it won't expand. Okay.
Oh, I've done it accidentally. Okay, so after we create the statement of membership, they're interested in management. And this is very simple. You're gonna name whoever the members are no awesome. As a percentage of general partner and the percentage number. So if you have one person in there 100% Remember, the 10% General part, if you have two people that are equal owners, they're each a 50% member, and a four point and a 5%. limited partner, then you name the trust, as a 90% limited partner in the client's share of the business, it's a single member, then it will have the trust name by its trustee. And then 90% limited partner, if there's a partnership, and only one of the plans as the trust, then it's going to have the name of the trust by its trustee, and it's gonna have 45% limited partner, then you name whoever the current manager is, everybody signs it, then you have the meeting, she went over doing that on the last step do is we've got to sell the assets on an entity to get them into the personal trust. That's a two step can make. The entity doesn't income distribution of equity to the owner, which is essentially a sale basis, then me on turns around and does a sale at the same value to the person on trust on a second bill of sale. If it's real estate up is the deeds as well as bills of sale. If there's leases or notes, then there's assignment of note forms or assignment of these forms. Pretty straightforward. steps two and three, step four is really not a step. It it's reminding the client at the end of the tax year, that if they really want to get the maximum benefit from their foundation, they need to figure out early on like, at the end of January, what the tax liability is not look like personally, with this structure, they should only have 3% of the net profit of the LLC that they're getting taxed on. Unless they've got w two income or other income from a spouse or other source, whatever that looks like, they can donate up to 30% of their AGI to the foundation. It's only needed once a year, they don't have to do it any more frequently than we will be sending out reminders to clients in June or about it, you should reach out to your clients and remind them about it. They have until March 5 of the following year to make the donation and still take it off on their taxes for the prior tax year. So income that came in in 2022 the donation must be made to the foundation not later than March 5 of 2023. Plenty of time to get the ACGME figured out as long as they don't procrastinate. I don't think we can remind them students frequently on that by the first of the year I'm sending out emails because if they miss them to mine nothing will help them get that back. It's a hard fast deadline. So it's not a step on the implementation. It's just a reminder at the end so what does the tax consequence look like?
Last one of my slides, so tax consequence gets thrown down the 2%. If we look at the next structure, which is just structure number six when there's active business income, this is a business just a personal trust and a foundation but with no entity as we discussed a few minutes ago with the structure in a minute
my slides were mixed up so just bear with me for one second I get one backup. Six nevermind. Okay. So at this structure, they have an entity but they're going to ditch the entity once everything is set up. So they're going to have the entity this sell the assets to the owner. It's an incoming distribution of equity, stung the exact same way it was with structure number five bills of sale, these assignment of no assignment of lease, then the owner conveys to at the same value to the personal trust. Now, this is somebody who's going to have a business trust. This might mean that they have an entity that isn't an LLC, we can do this with pretty much any entity. But the thing to understand is when we start conveying assets from entities, if it's anything but an LLC, it can have negative tax consequences for the client, when we try to get the assets put in a little personal trust, we have to get that out, we can't mitigate their taxes if they've gotta have income. But it's been an issue as of late. So if they have an S corp, or C Corp, before they can give me assets, we have to reorganize the entity to turn it into an LLC. Now, if it's an S corp, more often than not it started out as an LLC. It's just chosen to be taxed as an escort. If that's the case, the easiest way to find that out is to look it up. It's the state's business, Secretary of State's office isn't as Inc, at the end of the name, it didn't start out as an LLC, it started out as a corporation, or it was an S corp pointed out five. If you're gonna guide them through getting the assets into the personal trust, you need to know what structure that is. So if it's an S book that started out as an LLC, how can we get that back to an LLC, they would have to file a Form 8832 requesting to be taxed as a partnership, instead of isn't asked for. If they're going to change from an escort back to an LLC, or if they have a C Corp that needs to be turned into an LLC, I strongly recommend that trusted advisors do not try and walk them through that process. Yet, the tax advisor they're going to choose to work with, I'd prefer that to be Dave Phillips and his team. And let them guide the client on this process. Because it can have major tax consequences. For example, if it's a nice score, and we don't get it read on as a partnership for tax purposes, so that we take it back to an LLC taxed as a partnership or limited partnership, then assets can only sold at fair market value. If we tried to sell them or ask them for market value, they're gonna get a nice tax bill from the IRS. Very, very good chance. So we have to make sure that this gets done properly, and tax team or the people that don't know how to do it properly. Not even walk you through how to do that with a secret because it's very complicated. It can take 90 days or longer. As long as the comments, texting, how help them with that, it is totally fine knowing that in the end, they're gonna go back to being an LLC, taxed as a partnership, that's totally fine to do the conveyance of the assets. We just may not be able to get them executed and dated until such time as we get confirmation that the change has happened. Get them on sooner rather than later switch Delta client.
Okay, so that's step one. In the income distribution of equity fund entity Geneon. Do the bills of sale deeds assignments, that the owner does the same to the personal trusts at the same value. Once we have the assets in the personal trust, we then need to create an equipment and IP lease between the business trust and the personal trust. Basically, the personal trust is leasing the assets to the business trust for up to 70% of the net profit I had a situation just yesterday, where the client really didn't know a lot of assets they had a computer does in a chair. That was it. And they're doing over a million dollars a year. Well, if I have those three assets under the personal trust and leased to the business trust, there is no way I can justify a $700,000 a year lease payment, to lease one computer, one chair, and one that's it was a business that employs traders to do day trading. They're just one and this was taxes for traders. there just weren't enough assets to do that. So in that instance, if we want the traders to get tax evasion, the only option not to use business trust. If we do it with the LLC, using struction, number fine. At least we've got 90% of the taxes mitigated by making the just a 90% limited partner in the LLC, and let the LLC have the income from trade. But you got to have a reasonable value on the lease, you can't just say 70% of net profit. One of the things I hear often with clients on equipment and IP lease is, well, I don't know what that's gonna look like terms of dollars can change from one month to the next. It can't. The lease has to be for at least an annual lease. So you need to use last year's numbers to predict what this year's numbers are going to look like. Figure out how much profit there was per month last year, we're going to try and use that 70% number. But we have to have the client assess this for themselves. They need to figure out is that a reasonable amount for a lease payment? Or is it artificially inflated? And realized the other day that when I'm guiding a client through implementation in my head, I'm thinking about it as if an audit was going on right now. And I'm trying to plan based on an audit going on right now. Because with this stuff, we can't be too careful some of it, the plant can go back and amend things, even in the event of an audit happens, they could potentially do that. But some things, you just can't make that happen. So especially with the lease agreement, it's one of the things the IRS is cracking down on. And they just can't unofficially pick a number out of thin air and say, okay, 70%, it's up to 70% it needs to be as close to one a fair market value, these wouldn't be as possible. If all else fails, they can go out and actually look at what is the fair market. But the easiest way to get it up to the full 70% is to have intellectual property that gets put into a personal trust through a sale, so that there's IP that can be leased to the business trust. Whether that's an operations manual, a customer list, a prospect list, any kind of IP, or domain, the toll free number can be IP their packaging their logo, even if it's not actually a registered trademark, copyright or patent. Those things have value. And we need as many things as possible to get that lease up to the full 70%.
Then the last step is the same as the last structure which is around January reminding the owner they have until March 5 to get the donation rate. In this case, we're not using the entity for tax purposes. So let's look at what this is going to look like for tax purposes. If the money came into the business trust, business trust paid the expenses paid for the lease of assets. So 70% paid to the personal trust as a lease payment. The remainder of the 30% is a pasture from the business trust to the personal trust. That's typically going to mean that the personal trust is going to have a formula applied The net income, whatever portion came from active business income, typically reports on 1099, the owner, as you've heard me, say 12 to 18% of net profit is the norm. It's not the rule, it's just the norm. If the personal interest in STEM donated what ever that amount was, that came from active income to the foundation, then potentially, you wouldn't have to worry about 1099 Going to the owner. So it's an either or thing. We can have a personal trust, make the donation and the foundation, get it to a $0 tax liability. The personal trust can pay up to 100% of its income as a donation to the foundation. It doesn't have to do all of it, you can do some of it. So if the owner decides they want to have some monies get taxed. It's their prerogative, it's up to them. All we can do is help them understand what that looks like. So yeah, go ahead, Scott.
Dr. Gina, the owner is that the trustee of the trust
doesn't necessarily have to be the trustee, the trust, it's whoever the owner of the business was. And whoever is the one operating the business. If anything, it would be the trustee of the business trust, not adjusting of the personal trust, although that could be the same person. Could be it doesn't have to be right, great, thanks.
So it's up to the client as to how much they really want to get taxes, basically, bottom line, I can literally sit down with a client that has all three trusts, including the foundation at the beginning of the tax year, I can say, How much do you want to pay in taxes this and I can build the overall structure based on how much they want to pay in taxes. And I know that might sound strange, but there are plenty of clients who really do want to pay something in taxes, so not okay, paying no taxes. So if they want to pay taxes, we'll help them figure out how much they want to pay. They don't want to pay taxes, well, they'll figure out how to make that up. But with all three trusts in place, it gives you that level of flexibility. So struction, number seven, for active business is same as structure number six, but they're going to keep the empty, which means implementation is going to be very similar to the last one, we have the entity, the entity is going to have to sell assets from the entity to the owner as an entertaining distribution of equity. And the owner is going to sell those assets to the personal trust so that they can be leased from the personal trust, to the business trust. So we're going to do the lease the equipment and IP lease. And then the last step is a professional services agreement between the entity and the business trust. Professional Services Agreement I should talk about for just a minute. Also, because it's another one clients can sometimes get stumped. That professional services agreement is for up to 95% of the net, after payroll and expenses in the entity. Again, it needs to be done at least on an annual basis or longer, it can't be a month to month professional services agreement. So clients gonna have to use last year's numbers to figure out what amount to put into the professional services agreement. If it's a brand new business, and they've had no experience with it, they're gonna have to do a budget to figure that out and make an a worst case scenario. But they've got to pick a number same thing with the equipment and IP lease. And the last step is really just the reminder again, because this is an active business income situation. We need to remind the client first of the year that they need to make their donation by March 5. That donation It can come from the personal interest, it can come from the business owner, it can come from both. Really, it just depends upon where they have income, and how low they want their tax liability to be. Any questions on that structure before I go on to the textbooks witnesses
make sense, the only thing I would say is we it sounds like we need to have as a task. To make a calendar, I know we're going to put in reminders, and you'll have that as part of the emails, but I think we should have an actual just calendar link for some of these dates that people can refer to off of the main main website.
That's the only date I can think that it's just the march 5,
all but there's also then the preparation that then just as, as I think, for all of us to then, you know, help the tax team, because there's going to be otherwise people panicking, and, you know, I gotta get it done today, when it's, you know, still six weeks out.
Okay, so we're quiz shopping to create taxes at abundance. group.com has an email address, so that we can then create a Google Calendar for it, then you go put in all the dates. So the March is the date to donate to your foundation. So you can take it up from last year, we know April 15, Tax Day, gotta get your taxes filed or get your extensions filed with a payment, you got to do something, right. So there's not that many dates, though, they really aren't. And the tax team is gonna be reminding you of those dates. The only date I plan on us really sending out reminders for is the march 5 date, because the tax plan is gonna remind them about all the others. But if you think there's not a date thing to put on that calendar to do it.
You know, another suggestion on tasks to do, I would just suggest where it says business structure number seven, that there'll be a sub statement under there saying what business structure number seven is, without having to go back and refer to the various, the list that you have. Right? The
things I was trying to finish up at the beginning of the call and just didn't get it done.
Okay. And the other thing I was going to suggest is you've made some comments along the way. That, for example, that means say the transfers from one to the other includes this, that and the other thing, just maybe in a paragraph right on the box, you just put those comments right in there as well.
I will do that. But we're there's a whole lot on depth on those that we're gonna get into in the written instructions. And that is detail about instructions, maybe what I should do is refer to the step in the instructions, and then you can get the detail from that because there's not going to be enough room to put it on here. Perfect. That I can do.
Excellent, thank you.
And I have instructions written for both personal trust in business trust, I do not have instructions written for foundations, yet, by the time we get to the instructions for foundations that we're going to do for you guys, I will have gotten that person up to I want to have all three of them completely offline. So tax consequences of the structure, it can mean literally $0 tax liability, just up to the owner how they want to do it, it's as close to zero as we're gonna get, let's put it that way. There's still going to be that Ed bitty little portion. If they have an LLC, that's going to go to the owner based on that 5%. But that 5% is a half a percent if they have an LLC, a half a percent of the net profit of the overall business that reports on a k one two, the owner of which that little itty bitty half a percent 30% of that can get donated to the foundation. Cya. No, it's 30% of a half a percent. It's what is that? What 1% they'd end up getting taxed on point three 5% of their net profit. Unless they got you know 10s of millions dollars net profit, it's not a whole lot. It's a very beautiful thing.
Business transplants personal transplants Foundation, with the assets held in the business choice. This is the one that can only be used. If they have 100% passive income or capital gains income, because structure, we're not going to have a lease agreement between a personal trust and the business trust. So if the acids out and the person in the business trust, they got down all the capital gains income or passive income that we know are 100% tax deferred, otherwise, the active income because the assets are held in the business just there's no way to convert it to passive income. And while the business Justin donate 100% of that active income to the foundation, I am certain clients are not gonna like the idea of donating 100% of their net profits in the foundation, just to have taxes. So only hold the assets in the business just if it's passive income or capital gains, and that includes intellectual property. And since that's paxville, in this structure, it's really, really simple to set up. They have step one entity sells the assets to the owner, step to honor sells the assets of a business just step three be set up a professional services agreement between the entity and the business trust, if they're going to keep the entity more often than not clients that use this structure, don't end up keeping that there's no good reason to do so. And then step four is that reminder at the beginning of the year to make the donation to the foundation
and back into make the Edit real quick on the step 4,000% instead of 100%.
Hey, nice.
We can dream we can dream.
Now, notice that that does say and this applies to all of the structures, notice that that is the trust can donate up to 100% of its income. If it's donating from purpose, not from income, there might be tax consequences. It's a question the client should reach out to their tax professionals and discuss is there's a good chance there's gonna be a tax consequences donating for the purpose and not just be aware of that.
And that's because of distribution.
Yes, okay. But other than that, this is 100%. So get to know their dollar tax liability restriction number eight. That was the last flowchart I didn't finish off finish that point. So this is why I'm so in love with the foundations. Every single one of these four structures, when you add the foundation do it, you can get down almost to a $0 tax liability. And we get the leverage that the foundation gives you on top of all of that leverage from the fact that you can pay for food out of a tax exempt organization, instead of out of personal finance. Leverage from having family retreats and site visits paid for out of a foundation instead of out of personal funds. Leveraging that you can get donations into the foundation from people other than your family, you can get grants donated to the foundation. So you've got much more money in the foundation that can then be used in joint ventures with the business trust. You can do it with a personal choice you just have to do it more carefully. Way better to do those things with the business trust all the different things we talked about in the foundation training all apply from a leverage perspective. So with any luck you guys softens for structures as compared to last year. Why my favorite structures On the foundation, I will also do a diagram for you of just a personal trust with the foundation with no LLC, no business, just just those two, I don't find the need for that very often. But every so often does come up. So it is an instruction to be aware of the personal trust in the foundation without business trust or entity. So we've covered eight different structures so far. What questions do you guys have about structure?
The last structure you just mentioned, where it's just the personal trust in the foundation? Isn't that best for? Or is that best for just rental properties in you have a foundation? Is that it? Or would you suggest something else?
So if you're doing rental properties with the foundation, and you only have a few properties, let's say five or less than personal trust and foundation, right? Structurally, it's okay. If you're gonna do more than five properties, I really, really think it's better to do it with the business, just not just the personal.
And we'll tell
you why. We want Why am I so in love with doing the business trust, as well as the personal trust for real estate investors with over five properties?
Well, you know, the thing is, with the business trust, we can have each property in its own division. And having that division with passive income, because of the leasing back and forth between the two entities, it gives us the opportunity to have our cake and eat it too, gives us the privacy gives us the protection, and it gives us the ability to go ahead and have the passive income coming to the personal trust.
So it's gonna get you down to a $0 tax liability. But that addition of the privacy, you don't get that if you're using just the personal trust in the foundation, all your properties are gonna have your personal trust name on it. And that by itself presents risks that doesn't need to be there.
Yep, keeping the eggs out of one basket. Yeah.
So what you're saying is the ownership of the property would be the business trust division name, not the trustees name. That is correct. Awesome.
So that's a big now is still saying that the trust is production. So I don't think it's likely that someone's going to get to the assets in the personal trust if you're holding them there. But it just puts a target on your back. Because you've got so many properties in one entity, or Donald divisions, you don't have a target on your back, you got one property, you got one vehicle. That's it.
To me, the explanation that's good is to tell people think about Coca Cola, it owns many different brands, and each brand is its own company. And if anyone attacks that one company, they're not getting everything that Coca Cola owns.
Yes. And the other one that often will use a personal trust tied to a foundation without any other entities or structures is people have IP income. It's an IP personal just stickers coaches, officers info printers, membership site holders satisfied arms. That's a perfect structure to use if they don't have employees, just a one man band, but all the IP and personal trust and have the personal trust tied to the foundation as the other one is for what often or for people who are getting older, or really retired even from real estate investing. And all I've got going on is crypto investments, stock investments, and that just making passive income. Still a good idea to have the leverage that you can get from the foundation tied to a personal trust. What other questions you guys have about these various structures?
How do you figure out the value of the IP
Good question. I will be going over that. At the end of going through the personal trust instructions. There are four different valuation formulas that are pretty mainstream. And I'm gonna go over each one of those. Again, when we look at the IRS, the IRS is all about reasonable standards. What they hate is when you pull a number out of thin air, but if you can show them that this is a reasonable standard, it's a Industry known valuation standards. They're not likely to question it, you just have to be able to prove to them that that is true. So we're gonna go over what are the four pretty mainstream ways of valuing IPR now can change from one type of IP to another, but the formulas will take that into account.
Gina, you had mentioned the various types of IP, but you said them very quickly, a lot faster than my pen could move. Speakers authors, Could you restate those?
So what isn't? Various types of IP as various types of people? Speakers? Yes. Authors. Coaches in photo printers ma'am membership site on SAS platform honors. patent holders, I mentioned that the first time.
Anybody else think that other kinds of people that have IP income
might have said it that authors?
Speakers coaches authors info personal coaches? Said it the first time I didn't say the second
inventors,
and inventors and artists as well.
And then would you want to put branding? Because I know that's not a person. But
no, that's the type of IP musicians are another one is editions have licensing deals? Right. So videographers hundreds of IP, say that again? videographers, videographers? Yeah.
Documentary producers,
any kind of movie producer doesn't matter what time. And in fact, they have a client, it's a movie producer. Any other kinds of people that you can think of IP?
Well, even you think about someone that has a winery, well, they have a process and a formula for doing what they do. So anybody with a process, anybody with a formula that they use to create whatever it is they create, even to some degree, a chef or a baker, they have certain appy that they use for their particular
craft. Show. That one's an interesting one. Because I would have said the same exact thing until your half two years ago. You cannot protect recipes, like not with anything. You could protect the name of a recipe as a trade name, but you can't get a copyright on a recipe or a recipe book. So there's actually a US Supreme Court case that says chefs do not have IP in town because the recipes cannot be copyrighted.
Interesting. Very interesting. No,
I would have agreed with you until I read that case. What about
anybody with a process though? Let's say that they do something, you know, draw something out for 14 days, and then they put it into a special machine. As you know, they probably have
a client, Dr. Ed, I like to call Dr. Ted has a process for curing meats. Some of the times they're cured for over a year. And the processes are quite detailed. Beautiful example, IP income. Well, and
Coca Cola for example. They have a special formula for making Coca Cola supposedly, that's very unique and they have a patent on in that formula, right, right. Absolutely. So that would be P.
Yes, it would. So lots of people have IP income, they don't realize that they have IP. And it's up to us to help them understand that they could be deferring 100% of the tax liability on the income from the IP, even people who have our social media faces and interest influencers. They make their money from IP. And people that get paid for their advertising because they have such huge followings on YouTube. That's IP income. Pretty high.
I have a question that just came to mind. This is kind of tricky to speak it. You said patent holders. And I know Lou is aware of like land trusts. So if you have land patent, can you make that into an IP because it's intellectual property once you establish your property properly?
I've asked him to do some legal research on that. Maybe
it's a patentable process, in other words, that no one else has published or claimed a patent on the process, then it might be patentable. And
Samantha's thinking about is if you take your property back to colonial title, yeah.
What she's really talking about is the process of doing so.
Now, she was thinking about expenses, the income that could come from that property. Was that VIP income. Right, right. I would think it would be hard pressed to turn that in like,
yeah, my boys can't do that. If that's the solution, I'm interested.
Right. That's why That's why I came to mind. I was like, I don't know how to say this. But this is what just popped in my head.
I can understand why you think that. So given what we've been talking about the last couple of hours, doesn't surprise me at all. I do have to go do the research. I don't know what the IRS is you be. And it's interesting, because the IRS didn't even come into being in the early 1900s. Land patents were issued back in the 1800s. So maybe the some of the early early cases and tax court dealt with land patents, I just have to go look.
Well, same way with these trusts, right. These trusts were around before the IRS was around. Yeah, type of trust structure. And that's why they had to create the carve out in the tax code for this.
Absolutely.
Interesting question.
I know we've talked about it, but do we want to have a separate set of steps just for documentation purposes on the fictitious business name, process?
That's a hard one to do steps for, simply because it varies by state or county, depending upon the jurisdiction. And like here in Florida, it's done at the state level. But in California, it's done at the county level. In some places, even city level. It's really hard to come up with steps.
I was thinking maybe like South Dakota since a lot of the administration for folks is done in South Dakota. So some people can do it in South Dakota.
You want to take a stab at Wyoming South Dakota in Tennessee. But I wouldn't do anything more than those three states. It's really not a hard process. Figure out what jurisdiction you want to be in. Go Google fictitious name finally in fill in the blank with the jurisdiction, you're going to get the steps right there. It's It's not that I'm opposed to things being documented as steps and stuff. But you know, Google has so much covered forests. It's just easier. Any other questions about structure? Structure is the one thing guys that has kept me from having a lot of clients assigned to just advisors. So often when we have clients with active business income, either me or Barry ended up being the trusted advisor, because they're going to need help with structure for quite some time because they have many different businesses. If you guys can't really wrap your heads around structure, and why one structure over another, at least to the point where you can meet with the client, figure out what the need is, and then be able to send the message to me or me or Barry, so that we can guide you on the structure, and then you're okay, taking it from there, that would be such a godsend, because I have way more people than I should, but I am the trusted advisor for just because they've got so many businesses, and it's going to take a year or more to get the structure down for all of them. I gotta find a way to get that off for me, and on the you. Because you guys give me making really good money when we've got people with Trifecta packages, is you're gonna get paid on each of the three structures. That's huge.
So some, some of those. What do you call them? Some of those clients that you have? Maybe next call? Could you just talk about three? And then let us try to say which package? You know which structure we would
trade ideas? Very, very good. Yes, I
can definitely do that. I got some ones that are gonna be really good for you to practice. Perfect. And we'll talk about let you guys try and figure it out. But talking about the why behind. And it can get really convoluted, especially with clients that I'm getting from some of our wealth managers, I've got almost 20 points now that have citizenship in more than one country. And therefore they have businesses in more than one country. Oh, boy, you talking about it really convoluted, complicated structure that really can get convoluted and very complicated. I also have a referral partner, who's in the UK as an international audience, but many of them are also paying less taxes for one reason or another. He wants the ability to send us five to 600 new clients a year or more. Oh my gosh, it's a gift. But it's not a gift I can take on today. Not knowing it, you guys up to speed on that stuff. So there's tons and tons and tons of need for trust advisors, which is why so many of you are here as trainees, because I don't think it's gonna take us very long to make use of every one of you. Any other questions, good suggestions. And if you guys have specific things you want to learn, that maybe aren't on the personal instructions, or the business just instructions are what will become the foundation instructions. Feel free to send me a text with what you want to learn and I'll find a way to incorporate it or penance.
One thing I'm thinking is that some people would not object at all to having their console recorded and shared. Another idea is to have a consult as part of a group call that someone agrees to be used as a guinea pig and all of us are listening in as you're working with them on the structure. And
so I think that we're more likely to get yeses to that. Either one of those options, if they're already clients, and we're doing their first call to set up their structure. I have several of those coming up. I will definitely take that on and see if I can't get them to let us do it on a Tuesday at
all. So all of you can either Oh, that'd be fantastic.
That's a really good idea. I think the clients are going a lot more out of it too. Okay, guys, well, same time, same place but the next time weeks.
What do you guys take it away today? Got a study structure.
Yes, just because they start with one structure doesn't mean they can't change to a different structure. If circumstances change. This is my email, they say all the time that my favorite thing about the trust is they are so flexible than the biggest personal trust, they are so flexible and flexible enough to accommodate changes down the road. In some of those trust structures that are just very basic, like an LLC, tied to a personal trust, that's usually a stepping stone. As the client's business grows, they typically move away from that on a personal trust with a business trust and the entity and then down the road, they can even at the foundation later. So that happens quite often. And many times within the first year, they end up with everything. But especially because they perceive there being a huge learning curve when they first get started. A lot of times, they're just so fearful of the learning curve, that they want to start with one trust. And I'll start with the personal trust, to an LLC, then once they're bad around the personal trust, and realize that they were making it harder than it needed to be, then the line of business trust. Once they get that done, then they think about it and go yeah, really should have a foundation, this has been happening more and more frequently. So it's not always a permanent thing. We need to do the structure, the modified download.
And I really do agree with that approach, because I think it's overwhelming when there's a conversation about all three of them at one time. And the money that goes with that is like a in their mind, it's an all or nothing. And I think that's a mistake. If we can get them started somewhere, then they can see the value the benefit and the intelligence of adding the others on rather than just overwhelming them with the whole story.
Yeah, totally agree. Totally.
Agree. And Jean, I agree. Yeah, it's been my experience too much is too much, that the mind is only capable of absorbing so much on in the beginning, and they get new levels of awareness as they mature through the process, and then they're ready for the next the next step.
This is one of the reasons that I start people off with the land trusts and personal property trusts so they can get their head around that get their feet wet, and then say, Okay, now based on your particular situation, here's another option that likely makes more sense. And then graduate them into the elite trust and then so on from there.
Oh, I don't know if you've thought about having people read the art of passing the book, at least Volume One, volume two. But one of the things I've noticed is that it makes it so much easier to wrap their head around the chest and why they're so important. The minute they read the art of passing the buck. Charles Arthur is the author. And you know, he's around. He does a podcast all the time, fantastic podcast, he can even get Charles to teach a session with you to incorporate into your trainings, because I think it will make it a lot easier to move them from the land trust to the elite trust with that in the mix.
Sure. Sounds interesting. And that's that's where they would have to actually buy it off the Amazon or do we give them a link to it or what?
Yeah,
just get an Amazon affiliate. Okay, sounds Arthur is the author. Say that 10 times fast?
Well, I'm a publisher on Amazon. I don't know if that means anything.
It doesn't but because you're a publisher, if you go to Amazon, you can get your affiliate link without me doing anything else. Okay. Thank you. So anyway, just a suggestion that I have had that happen in the other one that gets them to wrap their head around both the need for the personal trust and the business trust is the unknown Corporation beyond incorporation by James Miller. I think
you know, James billings, James Billings.
Thank you. Those two
I've been telling people to go to is what would the Rockefellers do?
Yeah, I like to say, The Art of passing better.
Uh huh.
Yeah, the Rockefeller one that talks a lot about like, cash value life insurance and infinite banking concept instead of the trust.
Okay,
yeah. Talks about trusts.
Gina, I know you said it, there's multiple volumes 123 Which one is the only one by one?
expensive one, it's like 100 bucks. So not gonna get a lot out of anyone. Because it's all cases, all of our Angeles nothing but it's very helpful for somebody like, or somebody like, it's just not out for for the average client, they would get lost in it.
And the reason you're saying that is because it's a specifically for grantor trusts. That's why you were making the recommendation for Lou.
And making the recommendation because it's really about trust. Even though it's focuses on grantor trusts. It doesn't beautiful job of getting your head wrapped around the concept of a trust as a person separate from you. What trusts are all about how to look at the roles within the trust, whether it's the fiduciary role of the trustee, whether it's the beneficiary of all, and it just makes it that much easier to get them to accept that you typically don't have a trust, you typically need multiple trusts that goes directly to passing the buck.
Aha, now, the artist passing the buck have finally gotten to the right screen to make the note is by Charles Arthur,
Arthur. Charles are so yes.
Okay. And the next one you mentioned the unincorporated as the corporation, the on Corporation.
Stances last name
James Billings. Thank you.
Thank you.
Now, Janet with if it had to be an order. Lou James Billings. Book is simple read, like super fast read. And then really about
business trusts, right? Going to wrapping your head around the concept of trusts,
right. And that's where I was going to that's exactly what I was going to tell them the difference between the two and what, without him having to read both. But I talked to James about his book because he talks about business trusts. But in there he that threw me off and that's why I called him was, it's a line that says, Not, business trusts are not business card like you don't set them up as a trust. You can set them up as an LLC or S corp or C Corp. So that teaching right there that line kind of throws me off with what I've learned from you all.
That's because his business trusts, grantor trusts, grantor trusts. Gotcha. And that's the whole reason that line is in the book. He you need to get him talking to me.
We I can she travels so many he travels often setting up different trusts. But the book like you said is definitely about that so I can see what he'll say. I just have to get on
understands that there's something called a non grantor trust and a section 643 of the tax code will be a very interesting conversation. For sure, for sure. Anyway, thank you so much, everybody. See you next Tuesday or justifies a call or tomorrow if you're going to the personal trust